How Chapter 13 Bankruptcy Works in Alabama – Legal Reader | Vette Leader

A Chapter 13 bankruptcy in Alabama is a legitimate option, but attorney fees are often higher than for a Chapter 7 bankruptcy, and there are also trustee fees to consider.

Financial difficulties can be stressful and cause anxiety, leading you to consider Chapter 13 bankruptcy in Alabama.

You may find that you qualify for Chapter 7 bankruptcy in Alabama, but that Alabama homestead bankruptcy exemptions make it impossible to file for Chapter 7 bankruptcy and keep your home.

What now?

The purpose of this article is to walk you through the Alabama Chapter 13 bankruptcy and help you estimate your monthly payment schedule and weigh the pros and cons before embarking on the Chapter 13 bankruptcy journey.

We’ll also highlight all the details on an Alabama Chapter 13 bankruptcy, as well as additional opportunities on the path to financial freedom. This article aims to outline the main aspects of a chapter 13 bankruptcy in Alabama.

Chapter 7 vs. Chapter 13 bankruptcy in Alabama

We’ll dive into Alabama-specific issues soon, but first, let’s understand the differences between a chapter 13 bankruptcy and a chapter 7 bankruptcy.

Chapter 13 Bankruptcy:

A Chapter 13 bankruptcy in Alabama is a payment schedule bankruptcy. Debtors assume responsibility for the debt through an installment plan that runs between 3 and 5 years.

Most often, lawyers are helpful in these procedures. So why is Chapter 13 so popular with debtors? The main reason is that most of them could have high incomes that preclude them from filing for Chapter 7 bankruptcy. In addition, they may own valuable property or assets. It is important to note that payment is monthly.

Chapter 7 Bankruptcy:

Chapter 7 bankruptcy in Alabama is often the cheapest and fastest option for debt relief. In this case, debtors are unable to pay their debts; So they’re trying to pay off the debt through a Chapter 7 bankruptcy. As long as you qualify for this bankruptcy you will find that it is less expensive and you can close after 120 days.

You may consider Chapter 7 bankruptcy if you are facing an Alabama wage garnishment or debt collection process.

By now, we’re confident that you know the difference between Chapter 7 and Chapter 13 so that we can delve deeper into Alabama’s Chapter 13 bankruptcy.

How much does it cost to file for bankruptcy in Alabama?

You’re probably wondering the cost of filing for bankruptcy in Alabama. The cost of a Chapter 13 bankruptcy is $313 and the cost of a Chapter 7 bankruptcy is $338.

While filing fees are lower, Chapter 13 attorney fees could be three times as much, so it can be important to consider these when deciding the best option for you.

Calculation of chapter 13 plan payments in Alabama

A calculator on a yellow background; Image by Clayton Robbins, via

Your payment for the Alabama Chapter 13 plan will depend on your individual finances, so a Chapter 13 calculator based on the forms can be helpful.

Let’s look at some of the factors that go into your Chapter 13 bankruptcy plan.

If you have assets, the amount of non-exempt equity could play a role in paying your Chapter 13 plan. So if you have a lot of equity through the homestead exemption, your plan payment can be very high.

Your disposable income could play an important factor in your plan payment, since the court may want to use that income to pay unsecured creditors.

Some debts such as taxes, alimony, or child support may affect your plan payment, and financial transactions that have occurred recently may affect your plan payment.

With the Chapter 13 plan payment estimate, you can now compare what you are currently paying per month to the estimate to see if you may be eligible for debt relief if you file for Chapter 13 bankruptcy in Alabama. You can also compare this to your other options.

Alabama means testing

The Chapter 7 Alabama bankruptcy means test helps the courts determine whether you have the “means” to pay off a portion of the debt or if you should qualify for Chapter 7 relief.

Numbers are updated approximately every 6 months and the most recent numbers are for cases filed on or after May 15, 2021.

Please note, however, that in some cases individuals in Alabama may still qualify for Chapter 7 bankruptcy even if income is slightly higher than the median income for your state if you have certain expenses and deductions.

Bankruptcy exemptions in Alabama

Before you apply for Chapter 13, it’s important to know if you have assets in excess of the allowances. Although you qualify for Chapter 7, owning a significant equity position in assets makes a Chapter 13 or debt settlement a more appropriate option for you.

When filing for bankruptcy, remember that Alabama has bankruptcy exemptions and specific laws that should be considered. If you own assets that are more valuable than the Alabama exceptions, they may be liquidated. We’ve included the full list of Bankruptcy exemptions in Alabama.

Chapter 13 Bankruptcy Trustees of Alabama

The task of the trustee is to regulate the bankruptcy proceedings and also to liquidate the non-tax-exempt assets of the debtor. There are many chapter 7 trustees, but there are often not as many chapter 13 trustees.

Per the Chapter 13 Bankruptcy Trustees in Alabama, You will note that the United States Trustee Program does not currently administer a bankruptcy estate, so the Department of Justice provides the following address to direct your questions

The Administrative Office of the US Courts

Department of Bankruptcy Judges

1 Columbus Circle, NE, Suites 4-250

Washington, D.C. 20544

Phone: (202) 502-1900

Court locations and bankruptcy districts in Alabama

Alabama has three bankruptcy districts: Northern, Middle, and Southern. So if you want to file for bankruptcy in Alabama, where is the exact address you will go to? Let’s go through the details.

Let’s look at the court websites to see the court locations:

Should I File Chapter 13 Bankruptcy in Alabama?

A Chapter 13 bankruptcy in Alabama is a legitimate option, but attorney fees are often higher than for a Chapter 7 bankruptcy, and there are also trustee fees to consider. They also have a 3 or 5 year plan which many people don’t prefer.

However, you are often able to protect your home and assets, which may not be the case with a Chapter 7 bankruptcy.

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