Updated May 20, 2016
In bankruptcy, a homestead exemption protects equity in your home. In Alabama, you can protect up to $15,000 in your home (more if you are married filing jointly) if you file for bankruptcy. Read on to find specific information about the homestead exemption in Alabama.
For information about how the homestead exemption works in both Chapter 7 and Chapter 13 bankruptcy, see The Homestead Exemption in Bankruptcy. For more articles on exemptions, see our Bankruptcy Exemptions area.
Under the Alabama exemption system, homeowners may exempt up to $15,000 of their home or other property covered by the homestead exemption. However, the property cannot exceed 160 acres in area.
In Alabama, married couples filing a joint bankruptcy can double the amount of the homestead exemption. However, they must own the property jointly. This means that married couples are able to exempt up to $30,000 of their joint homestead in bankruptcy.
For example, if you and your spouse jointly own a house worth $50,000 and you have a $40,000 mortgage, your $10,000 of equity is protected by your homestead exemption if you file bankruptcy. So in a Chapter 7, the trustee would not be able to take your house and sell it. If you are single, you can only protect $15,000 of home equity with the Alabama homestead exemption.
To learn more about joint bankruptcy, see Nolo's section on Bankruptcy Options for Married Couples.
In Alabama the homestead exemption applies to real property including your home or condominium. It also applies to your mobile home. But to claim the homestead exemption you must occupy the property as your principal place of residence.
Some states allow bankruptcy filers to use the federal bankruptcy exemptions instead of the state exemptions. Alabama is not one of those states. If you reside in Alabama you must use the state exemptions.
(To learn more about which state exemptions apply to you, see Which Exemptions Can You Use in Bankruptcy?)
In Alabama, you must file a homestead declaration (a form filed with the county recorder’s office or office of the probate judge in your county to put on record your right to a homestead exemption) before you file for bankruptcy in order to claim the homestead exemption. Contact your county recorder or office of the probate judge for information on how to file a homestead declaration.
Alabama’s homestead exemption is found in the Alabama state statutes at Alabama Code § 6-10-2 and § 6-10-20. To learn how to find state statutes, check out Nolo’s Laws and Legal Research area.
The amount of the Alabama homestead exemption and other exemptions adjust periodically based on inflation so they are subject to change.