How To File Bankruptcy for Free in Alabama

Collect Your Alabama Bankruptcy Documents

The first step to filing bankruptcy is collecting certain documents you’ll need to fill out the bankruptcy paperwork that will make up your bankruptcy petition. These documents are required regardless of whether you have an attorney. The required documents are:

• Your tax returns for the past two years. 

• Your paycheck stubs for the past two months. 

• A bank account statement that covers the bankruptcy filing date.  

Other documents may also be helpful to have as you prepare your bankruptcy petition. These include bank account statements for the past six to 12 months, creditor statements or bills, and letters from debt collectors or collection agencies. 

It’s also helpful to pull your credit report to verify your debts and get your creditor’s information. Each year, the three credit reporting agencies are required to give you a free copy of your credit report. You can request your report online.

Take a Credit Counseling Course

You must take an approved credit counseling class within the six months before you file bankruptcy. Federal bankruptcy law gives this six-month window so you have plenty of time to learn about your options. When you complete the course, you’ll get a certificate, which you must file with the bankruptcy court along with your bankruptcy petition. 

There is a fee to take the course, but you can always ask the course provider for a waiver. You must take the course from an approved provider. Each Alabama district has its own list of approved course providers:

• Northern District of Alabama

• Middle District of Alabama

• Southern District of Alabama

Complete the Bankruptcy Forms

You’ll have to fill out several forms as part of your bankruptcy filing. The forms are the same nationwide, and they come with detailed instructions. You can download them for free online as fillable PDFs at USCOURTS.GOV. Although the forms aren’t hard to fill out, there are a lot of them. Make sure to go slowly and fill them out accurately. Filling them out correctly the first time will save you some headaches down the road. 

If an attorney is handling your bankruptcy filing, the attorney (or their staff) will fill out the forms for you after you provide your information.

Get Your Filing Fee

The filing fee for a Chapter 7 bankruptcy is $338. You’ll need to pay the fee when you file your case. In Alabama, you’ll need to pay with a cashier’s check or money order made payable to "Clerk, U.S. Bankruptcy Court.” You can apply for a fee waiver if your current income is below 150% of the poverty guidelines. (See the Alabama Fee Waiver Eligibility Table below).

As soon as you file your bankruptcy petition and the court assigns a number to your case, an automatic stay goes into effect. This is a part of the bankruptcy law that stops creditors from trying to collect your debts from you through wage garnishment, foreclosure, repossession, or other measures. For example, suppose a creditor has started proceedings to have your wages garnished or is trying to foreclose on your house. The automatic stay requires them to stop those actions immediately. 

If your creditors are coming after you to collect on your debts you may be in a hurry to get your bankruptcy case filed before you can pay the entire $338 filing fee. In that case, you can ask the court to let you pay the fee in monthly installments. Usually, you’ll have to pay an initial minimum amount of 25% of the filing fee within 30 days of filing the petition. You’ll then pay monthly installments of no less than 25% of the filing fee. You must pay your full filing fee in no more than four installments. 

Paying in installments can be a good option for people who need to file in a hurry to stop the creditors’ debt collection actions. But beware, if you miss any of your payments, the court may dismiss your bankruptcy case.

Print Your Bankruptcy Forms

If you don’t have a lawyer and you’re filing on your own, you’ll need to submit a paper copy of your bankruptcy forms to the court. Print the forms on regular, white letter-size paper (8.5" x 11"), in black ink, on only one side of the page. A lot of the forms look alike, so use a checklist as you print to make sure you don’t miss any. Also, make sure you sign on every signature line. Finally, it’s smart to make at least one copy of the complete set of documents for your records.

File Your Forms With the Alabama Bankruptcy Court

The federal courts use an Electronic Court Filing System (ECF), but only attorneys may use this online filing system. All other filers must file their forms in paper form.

Alabama has three judicial districts: the Northern District, the Southern District, and the Middle District. Each district has its own bankruptcy court, but you can only file your Chapter 7 bankruptcy papers in certain offices. 

For the Middle District of Alabama, you must file your case in the Montgomery office. In the Southern District, you must file your case in Mobile. In the Northern District, you can file your bankruptcy petition in Birmingham, Decatur, Anniston, or Tuscaloosa. Regardless of where you’re filing, you’ll need to have a picture ID to show to the clerk. 

You can also mail in your documents in Alabama, but it’s better to hand-deliver them. This way, the clerk can tell you whether you’ve submitted all the necessary documents. The clerk will give you your official case number once your case is filed. 

In light of the COVID-19 pandemic, the Alabama federal courts have also implemented various COVID-19 policies. The North District of Alabama’s administrative order allows judges to hold hearings through telephone or video at their discretion. The Southern District and Middle District have similar protocols.

Mail Documents to Your Trustee

As soon as you file your bankruptcy papers in Alabama, the court will also assign a number to your case and appoint a trustee. Bankruptcy trustees make sure the bankruptcy process goes smoothly and that the debtor's property is handled properly. The trustee may reach out to you first, and the court will notify you who your trustee is. 

The next step is preparing for your creditors' meeting (more on this below). At least seven days before this meeting you must give your trustee:

• Your two most recent federal income tax returns, and 

• A bank statement that includes your bankruptcy filing date. 

The trustee may ask for other information such as your pay stubs from a certain time period. All of these documents help the trustee verify that the information you’ve given them is correct. You need to submit your documents promptly to the trustee and comply with all of the trustee’s requests.

Take a Debtor Education Course

Before the bankruptcy court enters an order discharging your debts, you must complete an approved debtor education course. Each district has its own list of approved course providers:

• Northern District of Alabama

• Middle District of Alabama

• Southern District of Alabama

After you complete the course, you need to file your certificate of completion with the bankruptcy court. This course focuses on financial management skills so you can make the most of your fresh start. You can take the course before or after the creditors’ meeting, but you must take it within 60 days of the meeting. If you don’t complete the course, the court may close your case without entering an order discharging your debts. Click on the links above or contact the bankruptcy court in Alabama where you plan to file to get a list of the approved debtor education courses for that court.

Attend Your 341 Meeting

The 341 meeting is also called a creditors' meeting or meeting of creditors. As the name suggests, your creditors are allowed to attend to ask you questions, but this is very rare. Usually, only you and the trustee will attend the meeting. 

The bankruptcy court schedules the 341 meeting, and it usually happens about a month after you file for bankruptcy. The 341 meeting is usually held in a courthouse office but not in a courtroom. As part of recent COVID-19 precautions, the Alabama districts are holding creditors’ meetings via telephone or video conference. When the court schedules your creditors’ meeting, it will tell you how and when to attend.

Make sure to bring a government-issued picture ID and acceptable proof of your Social Security number. You can’t proceed with the meeting if you forget these. 

At the meeting, your trustee will place you under oath and ask some standard questions. Your trustee may also ask more questions if your information is incomplete. Creditors’ meetings tend to be very short and often go off without a hitch, but sometimes things can go wrong. The most common glitch is a debtor forgetting to bring the proper identification. 

When you're done with your creditors’ meeting, you’re almost done with the bankruptcy process.

Dealing with Your Car

If you’re filing for Chapter 7 bankruptcy, you may want to know if you can keep your car. Alabama doesn’t have a specific exemption for motor vehicles, but you may be able to claim an exemption on it under the state’s wildcard exemption (more on this below).  

If you’re leasing your car and you’re current on your lease payments, you can agree to keep the lease and the car. If you do, you’ll continue making the lease payments as if you hadn’t filed for bankruptcy. Alternatively, you can give up the car, and you won’t have to make any more payments on the lease. This may be the right choice if you’re behind on your lease payments or they don’t fit into your budget.

If you’re financing a car with a car loan, you have several choices:

• You can surrender your car. You won’t have your car anymore but you also don’t have to pay what you owe on the loan. This might be a good idea if you owe more than the car is worth. 

• If you’re still making monthly loan payments and you want to keep your car you may have to enter into a reaffirmation agreement. To do this, you must be current with your loan payments and be able to continue making them as outlined in your loan agreement.

• If you want to keep your car but not the loan, you’ll have to pay the car’s current value to the creditor. This is called redemption. The downside is that you have to pay for the car in one lump sum, but the upside is that you can get out of a bad loan.

Remember, you can always buy a car after bankruptcy. It’s often good to wait a little while to let your credit score recover if you plan to finance the car purchase.