Alabama Bankruptcy

Bankruptcy is a legal process under federal law that allows an individual or business that cannot pay its debts to obtain a financial fresh start. In Alabama, this process is governed by federal law, but state-level rules play a crucial role in determining what property you can protect. Alabama uses its own exemption system rather than the federal exemption framework, meaning your ability to keep assets depends largely on Alabama-specific laws.

How to File Bankruptcy in Alabama

Any individual or business that files for bankruptcy in Alabama must complete all federal requirements and follow local court procedures. You must obtain government-approved credit counseling and gather all required financial documents (such as income, debts, assets, and bank statements). You must have last year's federal tax returns. If you do not file a return and pay any taxes due for the previous year, you must file before proceeding with a bankruptcy.

It is vital to choose the appropriate bankruptcy chapter and file a petition with the proper federal bankruptcy court. You must pay the filing fee ($338 for Chapter 7, $1,738 or $1,571 for Chapter 11, or $313 for Chapter 13) or apply for a waiver. While filing the petition, you must submit pay stubs to the court.

The debtor must attend the 341 meeting of creditors and present valid identification. You must complete a second debtor-education course and follow court instructions until discharge.

Alabama Bankruptcy Types: Chapter 7, Chapter 13 & Chapter 11

To ensure that your case proceeds smoothly, you must choose the correct bankruptcy chapter. Depending on your situation, you can choose:

Chapter 7: (Liquidation of Assets)

This is suitable for individuals with limited income (below Alabama's median income) and large unsecured debt. It allows you to sell your non-exempt assets to repay your debts. Alabama allows debtors to use state-specific exemptions to protect certain assets (such as homestead and personal property).

Chapter 13: (Reorganization for Individuals)

It is suitable when you want to avoid property loss by seeking a repayment plan over three to five years. This option is good for wage earners. The repayment plan requires payment of all disposable income to creditors for years, with court oversight.

Chapter 11: (Business Reorganization)

This chapter is used mainly by businesses and some high-debt individuals. It allows you to continue operations under a court-approved reorganization plan. Alabama's exemptions may influence the valuation of assets and creditor negotiations, but the process is more complex and often involves legal counsel.

Steps in Filing for Bankruptcy in Alabama

To stay organized, you may follow this simplified checklist for Alabama bankruptcy cases.

• Complete required credit counseling
• Gather financial records
• File petition and exemptions
• Pay the filing fee or request a waiver/plan
• Attend the 341 meeting
• Respond to court notices
• Complete debtor-education course
• Obtain discharge (or complete repayment plan)

Alabama Bankruptcy Courts & Record Access

Bankruptcy is filed in one of Alabama's three federal districts, and you must file in the district that covers your county of residence.

Court Locations

• The Northern District of Alabama: The court district is headquartered in Birmingham. The court has divisional offices in Huntsville, Anniston, and Tuscaloosa. The main courthouse of the United States Bankruptcy Court for the Northern District of Alabama is:

  United States Bankruptcy Court

  Northern District of Alabama

  1800 Fifth Avenue North

  Birmingham, AL 35203

  Phone: (205) 714-4000

• The Middle District of Alabama: The main courthouse is located in Montgomery and covers cities in Opelika and Dothan. The address for the main courthouse is:

  United States Bankruptcy Court

  Middle District of Alabama

  One Church Street

  Montgomery, AL 36104

  Phone: (334) 954-3800

• The Southern District of Alabama: The main court is in Mobile, with another divisional office in Selma (for hearings only). You can contact the main courthouse at:

  United States Bankruptcy Court

  Southern District of Alabama

  113 Saint Joseph Street

  Mobile. AL 36602

  Phone: (251) 441-5391

Record Access

The Bankruptcy Courts for the Northern, Middle, and Southern Districts maintain bankruptcy records in Alabama. Anyone may access their records through the Public Access to Court Electronic Records (PACER) system. There is a $0.10 fee to search and view case documents, such as petitions and court orders.

Also, individuals may use the Multi Court Voice Case Information System (McVCIS) to access basic case information from any telephone by calling (866) 222-8029. The system is free and provides details such as the case type, debtor name, filing date, case number, debtor attorney, attorney phone number, closing date, trustee, and discharge date.

Moreover, anyone may visit the courthouse in person during regular office hours on weekdays to view case documents. There are also public terminals in each courthouse that allow you to view case files.