How To File Bankruptcy for Free in Alabama
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Filing for bankruptcy doesn’t have to be scary and confusing. We provide helpful tips and resources to help you file Chapter 7 bankruptcy in your state without a lawyer.
Written by Attorney Andrea Wimmer.
Updated February 15, 2022
If you’re looking up how to file bankruptcy in Alabama, you’re probably very stressed. You may be carrying around crushing debt from medical bills, student loans, car loans, or credit card debt. If you can’t make ends meet no matter how hard you try, then filing for Chapter 7 bankruptcy might be a good option.
If you’re embarrassed or ashamed by the thought of filing for bankruptcy, don’t be. Large corporations file for bankruptcy all of the time to restructure and manage their debt, why shouldn’t individuals be able to do the same? Rather than filing for bankruptcy, you could ask for debt relief from your creditors, but if you need a serious fresh start, bankruptcy may be the best path forward.
It’s pretty easy to file for bankruptcy if you have the right guidance, and the process often only takes four to six months. Finally, you don’t have to have a lawyer to file for bankruptcy, so it doesn’t have to be expensive.
How To File Bankruptcy for Free in Alabama
Filing for bankruptcy includes the costs of court filing fees, credit counseling fees, and attorney fees if you hire a lawyer. You may be able to get the court filing and credit counseling fees waived if you can show you can’t afford them. Because attorney fees are the highest costs of bankruptcy, people often choose to file on their own. The good news is that with some time, energy, and patience, you can file for bankruptcy on your own.
- Collect Your Alabama Bankruptcy Documents
- Take a Credit Counseling Course
- Complete the Bankruptcy Forms
- Get Your Filing Fee
- Print Your Bankruptcy Forms
- File Your Forms With the Alabama Bankruptcy Court
- Mail Documents to Your Trustee
- Take a Debtor Education Course
- Attend Your 341 Meeting
- Dealing with Your Car
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:
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:
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.
Alabama Bankruptcy Means Test
Not just anyone can file for Chapter 7 bankruptcy. Under the Bankruptcy Code, you have to pass a means test to qualify for Chapter 7. This compares your household income to the median income of similar households in Alabama. If your income is less than the income limit, you pass the means test and can file Chapter 7. But if your income is greater than the limit, you can move on to the second part of the test.
Part two of the means test looks at your disposable monthly income after monthly expenses. If your disposable monthly income is lower than a certain amount, then you’ll be eligible to file for Chapter 7 bankruptcy. If not, you can look into filing Chapter 13 bankruptcy, which gives you a 3-5 year repayment plan to pay your debts.
Data on Median Income Levels for Alabama
Alabama Median Income Standards for Means Test for Cases Filed In 2023
|Household Size||Monthly Income||Annual Income|
Data on Poverty Levels for Alabama
Alabama Fee Waiver Eligibility for Cases Filed In 2023
Eligible for fee waiver when under 150% the poverty level.
|Household Size||State Poverty Level||Fee Waiver Limit (150% PL)|
Alabama Bankruptcy Forms
Regardless of what state you live in, you fill out the same federal forms when you’re filing for Chapter 7 bankruptcy. The Alabama district where you file may also have some local forms you need to fill out, so check with the clerk’s office where you’re filing to find out.
The Middle District and Northern District have instructions for filers without attorneys.
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Alabama Districts & Filing Requirements
Alabama has three bankruptcy districts — the Middle District, Northern District, and Southern District.
Middle District of Alabama Requirements
The Middle District of Alabama includes three counties in central and southeastern Alabama, and it has three divisions. If you’re filing your Chapter 7 bankruptcy in person, you must go to the Montgomery courthouse to do it.
For people filing without an attorney, the Middle District accepts only cashier’s checks and money orders. The court doesn’t accept cash.
The Middle District has an administrative order that addresses changes in court procedures in light of COVID-19.
Northern District of Alabama Requirements
The Northern District of Alabama has courthouses in Anniston (Eastern Division), Decatur (Northern Division), Birmingham (Southern Division), and Tuscaloosa (Western Division). You’ll file your bankruptcy petition in the division in the county where you live.
The Northern District of Alabama accepts only money orders, cashier’s checks, and traveler's checks. The court doesn't accept cash or personal checks.
The Northern District has an administrative order that addresses changes in court procedures in light of COVID-19.
Southern District of Alabama Requirements
The Southern District of Alabama has courthouses in Mobile and Selma. You must file your Chapter 7 documents in Mobile, as the Selma courthouse is used only for hearings.
The Southern District allows filers without attorneys to file their documents using the court’s Electronic Self Representation (eSR) system.
The Southern District allows filers to pay with a money order or cashier's check, made payable to "Clerk, U.S. Bankruptcy Court." The Southern District does accept cash, but you must pay using the exact amount because they can’t provide change. The Southern District doesn’t accept debit cards, credit cards, or personal checks.
The Southern District has a specific form to fill out if you’re leasing your car and want to keep the lease after bankruptcy.
The Southern District has an administrative order that addresses changes in court procedures in light of COVID-19.
Alabama Bankruptcy Exemptions
Under bankruptcy law, certain property is exempt or protected. This means that no matter what your debt is, creditors can’t touch this property and you can keep it. Some property is considered non-exempt. Your trustee is allowed to sell this non-exempt property to pay the debt you owe to creditors. That said, in most Chapter 7 cases, filers get to keep all their property.
Exemptions exist so filers don’t have to start over completely just because they filed bankruptcy. Many household items, such as clothing, books, appliances, jewelry, are exempt. Vehicles and homes up to a certain value are also protected by state bankruptcy exemptions.
States can opt out of the federal exemptions and instead decide what their own exemptions and exemption amounts will be. Alabama is one of those states, so if you’re filing for bankruptcy in Alabama, you must use the Alabama exemptions.
In Alabama, you can also use what’s known as a wildcard exemption. Under this exemption, you can claim exempt property that’s not otherwise protected. For example, although Alabama doesn’t recognize an exemption for motor vehicles, you can claim your car under the wildcard exemption. The Alabama State Treasurer adjusts the limits on the wildcard exemption every three years. The current wildcard exemption limit is $8,225, and you can claim it for any personal property except for earned wages or salary.
Alabama Bankruptcy Lawyer Cost
Bankruptcy lawyers in Alabama typically charge a flat fee of between $815 and $1,500. The cost will depend on how complicated your case is and how much experience the bankruptcy attorney has. While you may not want to hire an attorney because it’s expensive, it may be well worth it if your financial situation is complicated.
Most bankruptcy attorneys offer a free consultation. This is a good time to discuss your financial situation and get advice on whether your case is simple enough to file on your own. It’s also a good time to see if you’d want to work with the attorney.
Alabama Legal Aid Organizations
There are numerous legal aid organizations in Alabama that provide low-cost or free legal services to Alabama residents who qualify. If you’d like some legal advice about your case but can’t afford an attorney, contact a legal aid organization to see if they can help you with your bankruptcy filing.
Legal Services Alabama, Inc.
2567 Fairlane Drive, Suite II & III, Montgomery, AL 36116
Nationwide Service (NYC Office)
Alabama Court Locations
Frank M. Johnson, Jr. United States Courthouse
One Church Street Montgomery, AL 36104
John A. Campbell United States Courthouse
113 St. Joseph Street Mobile, AL 36602
United State Bankruptcy Court
201 St. Louis Street Mobile, AL 36602
Tuscaloosa Federal Courthouse
2005 University Boulevard Tuscaloosa, AL 35401
Seybourn H. Lynne United States Courthouse
400 Well Street Decatur, AL 35601
Robert S. Vance Federal Building
1800 Fifth Avenue North Birmingham, AL 35203
Alabama Bankruptcy Judges
|Middle District of Alabama||Hon. William R. Sawyer|
|Middle District of Alabama||Hon. Bess M. Parrish Creswell|
|Northern District of Alabama||Hon. James J. Robinson|
|Northern District of Alabama||Hon. Tamara O. Mitchell|
|Northern District of Alabama||Hon. Jennifer H. Henderson|
|Northern District of Alabama||Hon. Clifton R. Jessup Jr.|
|Northern District of Alabama||Hon. D. Sims Crawford|
|Southern District of Alabama||Hon. Henry Callaway|
|Southern District of Alabama||Hon. Jerry Oldshue|