Filing Bankruptcy in Birmingham, Alabama
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Written by the Upsolve Team.
Updated January 13, 2021
A Birmingham bankruptcy is designed to help honest folks get a fresh start. It allows you to get rid of credit card debts, medical debts, or other debts that may be weighing you down. Filing bankruptcy in Birmingham allows you the freedom of answering the phone without fear. Debt collectors go away, you can breathe again and not be afraid to open the mail. When you file a Chapter 7 bankruptcy in Birmingham, you are filing in Jefferson County. Jefferson County (yes, the whole county!) had to file a bankruptcy on November 10, 2011 to deal with $4.23 billion dollars in liabilities. It’s difficult to even relate to that amount of debt. Most folks are filing Chapter 7 for amounts as low as $20,000. Knowing that a very large county had to file bankruptcy may make you feel better about having to do the same.
The first question you have to ask yourself is whether Chapter 7 is a good fit for you, or whether you should consider a Chapter 13? Not everyone qualifies for a Chapter 7 because to get the significant and virtually immediate relief it provides you must pass the Means Test. The difference between Chapter 7 and Chapter 13 may be very small in terms of income. But, there are other considerations to keep in mind. If you have a home and are facing foreclosure, Chapter 13 might be better if you have enough regular income to make your mortgage payment again. Also, if you have tax issues or valuable assets, such as an expensive car or truck that is paid off, Chapter 13 might be a better fit.
In searching for free legal aid help you may want to speak with someone at Cumberland School of Law. The Legal Aid Society only accepts referrals directly from a Court.
Birmingham Bankruptcy Lawyers - Estimated Cost
Some folks need to hire the services of an attorney when filing bankruptcy in Birmingham. The cost of a bankruptcy lawyer varies quite a bit. Many attorneys offer a free consultation and will typically let you know the total cost of filing before you finish that consultation. You need to also know the information the attorney will need before they file a bankruptcy for you. Don’t just look at the Birmingham bankruptcy lawyer cost. Make sure you feel comfortable with the attorney, and their staff. Filing fees are $338 for a Chapter 7, but there may be other costs in addition to attorney fees. Be sure to ask for a breakdown of all fees and costs when talking to a local bankruptcy attorney.
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How to File Bankruptcy in Birmingham, Alabama for Free
Filing bankruptcy in Birmingham is a process, but not an impossible one. Just follow the steps shown below, and like most folks in your situation, when you’re done, you’ll have a very satisfactory result.
Collect Your Birmingham Bankruptcy Documents
When filing an Alabama bankruptcy, you will need to have the last two years of your income tax returns. If you filed online, you should be able to print out a copy. If you had a tax preparer do the work (such as H&R Block) you will be able to get a copy from them. If necessary, you can order a return transcript online from the Internal Revenue Service. Effective July 1, 2019, you can even order a safer, redacted transcript. It’s safer because it only shows the last four digits of your social security number and limits other personal identification information. For your Birmingham bankruptcy, you will need at least your last 60 days of pay stubs and bank statements. If possible, it’s better to obtain six months of documents to make sure you have adequate information to help prepare your documents. Most employers will give you pay stubs if you have not kept the ones you received at the time of being paid. If you do day labor, or work for cash payment, the best document to verify income may well be your bank statement. If you don’t deposit cash into the bank, and don’t have pay stubs, it may be difficult to prove what your income has been prior to filing, as you’ll only have historical tax return information to rely on. In that case, start tracking everything now, so you can build a record of the information you’ll need when filing bankruptcy in Birmingham.
Take Credit Counseling
It’s required that all persons filing an Alabama bankruptcy have to take a credit counseling course before they can file their case with the Court. You need to take a course that is approved by the Bankruptcy Administrator for the Northern District of Alabama. The purpose of the course is to look at your financial situation and help you understand how you find yourself in the position of needing bankruptcy relief and what your options for relief are. The course can be done online or over the phone and should take approximately one hour to complete. You will receive a certificate of completion that you will file with the Clerk of Court with your other required documents. Your Chapter 7 bankruptcy in Birmingham will be off to a good start once you’ve completed this course, as it’ll reassure you that you’ve made your decision based on the options available to you.
Complete the Bankruptcy Forms
You will need to complete a Voluntary Petition, your Schedules, and a few different statements before filing bankruptcy in Birmingham. That may sound overwhelming, but if you take your time and carefully follow the instructions, it is totally doable. It will be helpful to you in completing the forms necessary if you have a copy of a statement from each of your creditors. Filing bankruptcy in Birmingham will be easier if you take a look at prior bank statements and try to put together a realistic budget based on your real monthly expenses. We want to encourage you to be as thorough as possible. You don’t need surprises and having a clear picture of where you stand financially will be a huge help to you. A successful Chapter 7 bankruptcy in Birmingham requires you to disclose truthful, realistic and complete information about your debts, your property, and your financial history in your bankruptcy forms.
Get Your Filing Fee
The filing fee for a Chapter 7 bankruptcy in Birmingham is $338. The purpose of the fee is to cover the cost to the United States Bankruptcy Court of handling and processing the paperwork in your case. A portion of the fee will also go to yourChapter 7 Trustee for conducting the 341 meeting and fulfilling their basic duties. The 341 meeting allows the Trustee to question you under oath, and to make sure everything is fully disclosed and understood. If you are able to pay the fee in a lump sum you should do so; it will be out of the way and off of your mind. If you are unable to make the payment in one lump sum, the Court may agree to either waive the fee or allow it to be paid in installments. It really is a matter of whether you can afford to pay $338 after filing bankruptcy in Birmingham. Remember at at point, you’re no longer paying any credit cards or medical bills.
Print Your Bankruptcy Forms
Filing bankruptcy in Birmingham requires that you print out all of your bankruptcy forms for the Clerk of the U.S. Bankruptcy Court. It’s always a good idea to print out at least one extra set of the forms so you can have them stamped with the date and time your Alabama bankruptcy case was actually filed. Keep those for your records and to have your case number handy right away if you get any collection calls after filing, but before creditors receive notice. If you don’t have a printer in your home, you should be able to visit the local public library and print your documents for a small fee. You can also visit an office supply store and have them printed. Don’t print on both sides of the forms even if it’s cheaper that way. The Clerk will not accept them if you do. Save yourself from having to reprint them.
Go to Court to File Your Forms
The U.S. Bankruptcy Court in Birmingham is located at the Robert S. Vance Federal Building, 1800 Fifth Avenue North near Linn Park. The Clerk’s office is open from 8:00 A.M. until 4:00 P.M. Monday through Friday. It’s always closed on weekends and federal holidays. Be prepared to go through a metal detector when entering the building. This precaution is for your safety as well as that of others. Do yourself a favor and leave any sharp objects, such as a pocketknife at home or in your vehicle. Otherwise, you may be told to leave the property and come back without those items. Your Birmingham bankruptcy process will be smoother if you remember to shut off or silence your phone before you head inside. You are much better off hand delivering your documents, rather than mailing in everything you need for your Chapter 7 bankruptcy in Birmingham. If the Clerk discovers a place that needs to be signed and was overlooked, you can deal with it on the spot, instead of having to wait for a deficiency notice from the Clerk’s Office.
Mail Documents to Your Trustee
You will have a Trustee appointed to handle your case. After you file your Chapter 7 bankruptcy in Birmingham, your Trustee will send you a letter telling you what documents to send to their office. They will tell you when the documents are due and you’ll want to make sure you get everything there on time. The Trustee is going to review your documents, including your tax returns and pay stubs. They will also go through the documents you have filed with the Court. This helps the Trustee to do a good job in discovering any issues that need to be dealt with, which in turn helps you get to your dischargequicker. It is likely that the Chapter 7 Trustee will also want to review your bank statements from the time right before and right after you filed bankruptcy in Birmingham. Your Birmingham bankruptcy does not need to be difficult; just provide as much information as the Trustee requests and follow their instructions, and most people in your situation do just fine.
Take Bankruptcy Course 2
Filing bankruptcy in Birmingham requires you to take a second class before you can get your discharge. Like the credit counseling course you took before you filed your case, this course on financial management is required by the Bankruptcy Code. If you were satisfied with the company that gave you the first course, perhaps you should stay with them for the second, provided they are approved to give it. Like the first course, you have the option to take the course online or over the phone. It’s longer than the first course and designed to help you prepare for life after filing bankruptcy in Birmingham with a heavy emphasis on budgeting and planning. We recommend you take the course before attending your 341 hearing. This avoids the out of sight, out of mind, issue that can happen otherwise. Take it while it’s fresh in your memory. If you forget to take it, you may end up having your case closed without a discharge being entered. The discharge is what you are asking for in your Alabama bankruptcy case; it’s the order that tells the creditors that your debts are no longer due, and they can’t ask you to pay them ever again. When done with the course, make sure you submit your certificate of completion to the Court, so everyone knows you’ve fulfilled this requirement of seeking Alabama bankruptcy relief.
Attend Your 341 Hearing
When filing bankruptcy in Birmingham, your Chapter 7 Trustee will hold a 341 hearing, sometimes called a meeting of creditors. It is, at least in theory, an opportunity for you to meet with your creditors and answer their questions. Most of the time in a simple Chapter 7 bankruptcy in Birmingham, creditors don’t bother to show up. If they do, they are allowed to ask you questions while you’re under oath. Don’t be afraid if they do come to the meeting. Just answer honestly, in as few words as possible, and you should be fine. Most people in your situation never see a creditor show up. These hearings are generally short, lasting only 5 to 10 minutes. You will need to bring a picture ID, usually a drivers’ license, and proof of your social security number. Your original social security card would be ideal, but the Trustee will also accept a W-2, if you are employed, or any document created by the government that lists your social security number. They will not allow you to use your 1040 tax return, because that is a document you created, or had created. If your Trustee believes they need more information, they may continue your hearing to allow additional time for you to provide the information or documents to their office.
Dealing with Your Car
Cars can be dealt with in several different ways, depending on whether they are worth more than you owe on them, which is generally called having equity. If you are under water (no equity), you need to decide if you want to keep the car. Should you decide to keep it, you will likely need to sign a reaffirmation agreement which will keep everything basically the way it was before your Alabama bankruptcy case was filed. When filing Chapter 7 bankruptcy in Birmingham, you also have the option of redeeming the vehicle. A redemption allows you to buy the vehicle for what it’s worth without regard for how much is left owing on the loan. It can be a good option if you’re able to come up with the money as a lump sum, because the interest rate on a loan to pay for the redemption may be so high that it offsets any savings you get. If the car is owned free and clear, you’ll be able to keep it as long as its value (or equity) is less than the available exemptions. You should also consider whether you want to give a vehicle that you’re financing or leasing back. Filing bankruptcy in Birmingham allows you to surrender your car without having to worry about the balance left on the loan. If the monthly expense is still going to make it difficult financially going forward, you should consider giving it up so you can truly benefit from the fresh start your Chapter 7 bankruptcy in Birmingham is giving you.
Alabama Bankruptcy Means Test, Bankruptcy Forms, and Exemptions for Birmingham
Alabama Bankruptcy Means Test
Filing bankruptcy in Birmingham makes you subject to the Means Test. The Means Test tells us whether a person has the ability to pay back at least some of their debts. If your income is lower than the Alabama median income you will be able to file a Chapter 7 bankruptcy in Birmingham. But even if you are above median you may still qualify to file a Chapter 7 under the Alabama bankruptcy Means Test if your net disposable income, after all expenses are considered, is not enough to make a meaningful dent in your debts even while under the protection of the Bankruptcy Court.
Median Income Levels for Alabama
Alabama Median Income Standards for Means Test for Cases Filed In 2023 | ||
|---|---|---|
| Household Size | Monthly Income | Annual Income |
| 1 | $4,344.83 | $52,138.00 |
| 2 | $5,283.42 | $63,401.00 |
| 3 | $5,854.17 | $70,250.00 |
| 4 | $7,140.58 | $85,687.00 |
| 5 | $7,965.58 | $95,587.00 |
| 6 | $8,790.58 | $105,487.00 |
| 7 | $9,615.58 | $115,387.00 |
| 8 | $10,440.58 | $125,287.00 |
| 9 | $11,265.58 | $135,187.00 |
| 10 | $12,090.58 | $145,087.00 |
Poverty Levels for Alabama
Alabama Fee Waiver Eligibility for Cases Filed In 2023Eligible for fee waiver when under 150% the poverty level. | ||
|---|---|---|
| Household Size | State Poverty Level | Fee Waiver Limit (150% PL) |
| 1 | $1,132.50 | $1,698.75 |
| 2 | $1,525.83 | $2,288.75 |
| 3 | $1,919.17 | $2,878.75 |
| 4 | $2,312.50 | $3,468.75 |
| 5 | $2,705.83 | $4,058.75 |
| 6 | $3,099.17 | $4,648.75 |
| 7 | $3,492.50 | $5,238.75 |
| 8 | $3,885.83 | $5,828.75 |
| 9 | $4,279.17 | $6,418.75 |
| 10 | $4,672.50 | $7,008.75 |
Alabama Bankruptcy Forms
You will file Schedules A-J, various statements, and a Voluntary Petition. All of the Alabama bankruptcy forms can be downloaded for free online, and you can even get a full set of official instructions to follow. The most difficult thing to get right on the Alabama bankruptcy forms will likely be your budget. It helps to review your spending in the last few months to see what your real cost of living actually is. Don’t leave things out when completing your Alabama bankruptcy forms. Also, when filing bankruptcy in Birmingham, remember to list all creditors. Don’t pick and choose; all creditors must be listed.
Alabama Exemptions
The Alabama bankruptcy exemptions have to be used by anyone filing bankruptcy in Birmingham who’s lived in the state for at least two years. If you’ve been in Alabama for less than two years, you’ll have to look to the laws of the state you lived in two years ago to determine which exemptions you can use when filing bankruptcy in Birmingham. The federal bankruptcy exemptions are never used when filing bankruptcy in Alabama.
