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Bankruptcy and debt law in Alabama covers the legal processes and rights associated with managing overwhelming financial obligations. If you are unable to pay creditors, bankruptcy can provide relief or a new start. Alabama follows both federal bankruptcy laws and specific state exemptions, which outline what property you may keep and which debts can be dismissed. In addition to bankruptcy, debt law covers negotiation with creditors, debt collection practices, and protection from harassment or unfair collection efforts. Understanding your rights and options is crucial to making informed decisions about your financial future.
Navigating bankruptcy and debt-related matters can be complex. Here are some common situations where you may benefit from professional legal assistance:
A qualified attorney can explain your options, protect your rights, and guide you through each step of the legal process.
Alabama residents must comply with both federal rules, under the United States Bankruptcy Code, and state-specific exemptions when filing for bankruptcy. Here are key aspects to consider:
Most individuals file under Chapter 7 or Chapter 13. Chapter 7 is liquidation bankruptcy and requires qualifying based on your income. Chapter 13 reorganizes debts into a 3-to-5-year repayment plan for those with regular income.
Alabama's exemption laws may allow you to keep a certain amount of equity in your home or vehicle. In many cases, if your equity is below the exemption limit and you keep making payments, you can retain these assets. Always consult an attorney for your specific situation.
Not all debts are dischargeable. Common debts like credit cards and medical bills may be wiped out, while child support, most student loans, and certain taxes are usually not eligible for discharge.
Creditors can obtain a court order to garnish a portion of your wages. Alabama law limits garnishment to 25 percent of your disposable earnings or the amount by which your weekly wages exceed thirty times the federal minimum hourly wage, whichever is less.
A Chapter 7 bankruptcy will appear on your credit report for up to ten years, while a Chapter 13 bankruptcy typically remains for seven years from the filing date.
No. Both federal and state laws restrict the time and manner in which debt collectors can contact you. They must follow the Fair Debt Collection Practices Act, which generally prohibits calls before 8 a.m. or after 9 p.m.
Co-signers can still be responsible for the debt if you file Chapter 7. Chapter 13 includes a "co-debtor stay" which can temporarily protect the co-signer, but only while you remain in the repayment plan.
Alabama law requires you to use state exemptions rather than federal ones. These exemptions may be less generous, especially for property or home equity, compared to some other states.
Bring a list of your debts, income sources, assets, recent tax returns, and paperwork about any legal actions or collections. The more information you provide, the better the attorney can advise you.
Court filing fees for Chapter 7 are usually about $338 and about $313 for Chapter 13. Attorney fees are additional and vary based on your case's complexity. Some legal aid organizations may offer help if you cannot afford a lawyer.
If you need more information about bankruptcy and debt issues in Alabama, consider the following resources:
If you are facing financial hardship and considering bankruptcy or need help with debt in Alabama, taking the right steps is crucial. Here is what you should do:
A legal professional can help you understand your best options under Alabama and federal law, minimizing potential pitfalls and stress as you work toward financial recovery.
