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Financial difficulties can be stressful and cause anxiety. You may realize that you qualify for a Chapter 7 bankruptcy in Alabama, but that the Alabama homestead bankruptcy exemptions make it impossible to file a Chapter 7 bankruptcy and keep your home. Now what? The purpose of this article is to walk you through Chapter 13 Bankruptcy in Alabama and help you estimate your monthly payment plan and consider the pros and cons before going down the Chapter 13 bankruptcy journey.

We will also highlight all the details regarding a Chapter 13 bankruptcy in Alabama, as well as extra opportunities on the path to financial freedom. This article aims to provide the primary aspects of a Chapter 13 bankruptcy in Alabama.

Chapter 7 vs Chapter 13 Alabama

We will soon look at Alabama-specific aspects, but first, let’s understand the differences between a Chapter 13 bankruptcy and a Chapter 7 bankruptcy.

Chapter 13 Bankruptcy: This kind of bankruptcy is also known as the ‘wage earners bankruptcy.’ It is a voluntary reorganization of debts as defined by the IRS. Debtors take responsibility for the debt via an installment repayment plan that runs anything from three to five years. Mostly, lawyers come in handy in these procedures. So, why is Chapter 13 so popular with debtors? The main reason is that most of them could be having a high income that disqualifies them from filing for Chapter 7 bankruptcy. Additionally, they might possess valuable property or assets. It is vital to note that the payment is monthly.

Chapter 7 Bankruptcy: Also referred to as ‘liquidation bankruptcy.’ This is the most common form of consumer bankruptcy as of the most recent government data in 2019. In this case, debtors are unable to pay their debts; therefore, they try and discharge the debt through a Chapter 7 bankruptcy. As long as you qualify for this bankruptcy, you will find it is less expensive, and you can close after 120 days. Here, we have highlighted a calculator that can assist you in estimating your Chapter 13 payment plan and whether you qualify for Chapter 7. By now, we are confident that you know the difference between Chapter 7 and Chapter 13, so we can delve deeper into Chapter 13 bankruptcy in Alabama.

Calculating Chapter 13 Plan Payments in Alabama

Your Chapter 13 plan payment in Alabama depends on your unique finances, which is why we build an free Alabama Chapter 13 Plan Payment Calculator below that you can use to estimate your Chapter 13 plan payment

Factors used when calculating a Chapter 13 plan include, but are not limited to:

  • Disposable Income — The amount of income you have each month after subtracting allowable payroll deductions and allowable living expenses from your gross monthly income.
  • Assets — In some cases, the value of your assets could increase the amount of your Chapter 13 plan if your assets have large amounts of non-exempt equity. We discuss Alabama bankruptcy exemptions in more detail below and how exemptions impact your Chapter 13 plan. 
  • Debts — Some debts must be paid in full through the Chapter 13 plan (priority unsecured debts such as taxes, alimony, child support, and administrative costs). Other creditors may receive partial payments, including unsecured debts, such as medical bills, credit card debt, and personal loans. Chapter 13 plans typically include back mortgage payments and car loan payments.
  • Recent Financial Transactions — Some recent financial transactions could impact your Chapter 13 plan. 

With the Chapter 13 plan payment estimate, you can now compare what you’re currently paying per month to the estimate to see whether you may be able to get some debt relief in a Chapter 13 bankruptcy in Alabama. You can also compare this to your other options.

Alabama Means Testing

The calculator illustrated above uses Alabama means testing data found here to estimate whether you qualify for Chapter 7. The information for the Alabama Means Test for cases filed on or after May 15, 2021. This information is also included in the table shown below. Please keep in mind that each person after nine people is $9,000.

# of People Annual Income
1 $49,798
2 $60,556
3 $67,098
4 $81,842
5 $90,842
6 $99,842
7 $108,842
8 $117,842
9 $126,842

Alabama Bankruptcy Exemptions

Before filing for Chapter 13, it is essential to know if you possess any assets that are above the exemptions. Despite qualifying for Chapter 7, owning a significant equity position in assets makes a Chapter 13 or debt settlement more suitable option for you.

When filing for bankruptcy, you should remember that Alabama has bankruptcy exemptions and specific statutes that should be considered. If you possess assets that are valuable than the Alabama exemptions, they can face liquidation. We have incorporated the full list of  Alabama Bankruptcy exemptions.

Chapter 13 Bankruptcy Alabama Trustees

The responsibility of the trustee is to regulate the bankruptcy proceedings and also to liquidate the debtor’s non-exempt assets. Chapter 7 trustees are plenty in number, but there are often not as many Chapter 13 trustees. Per the  Chapter 13 bankruptcy trustees in Alabama, you will notice that the United States Trustee Program does not administer bankruptcy estates at the present time, so the Justice Department provides the following address to address your questions to

The Administrative Office of the U.S. Courts
Bankruptcy Judges Division
1 Columbus Circle, N.E., Suite 4-250
Washington, DC 20544
Phone: (202) 502-1900

Alabama Court Locations and Bankruptcy Districts

Alabama has three bankruptcy districts: Northern, Middle, and Southern. So, when you want to file for Chapter 13 bankruptcy in Alabama, where is the precise address that you’ll go to? Let’s go through the details.

First, we found the map below from Debt Stoppers to be helpful to show which county is attributed to which bankruptcy district. If you are in Jackson County, it may be obvious that you are in the Northern District, but it may be less obvious if you are in Sumter County.

Next, let’s look at the court websites to see the court locations:

Should I Go Ahead with a Chapter 13 Bankruptcy in Alabama?

If debts swamp you, then a Chapter 13 bankruptcy in Alabama is a great and legitimate option. You can also opt for this bankruptcy if you are not eligible, or you don’t fancy a Chapter 7 bankruptcy. Bankruptcy aside, alternative choices include debt management and debt settlement.

It is highly advisable to consider the pros and cons before making up your mind. Our Chapter 13 calculator will compare the options on the table and provide the pros and cons. You are free to conduct your own research regarding the alternatives given or use the calculator. Debt can bring about tremendous stress, so we sincerely hope that this article has helped assist you on your way to freedom from debt.

Post Author: Ben Tejes

Ben Tejes is a co-founder and CEO of Ascend Finance. Before Ascend, Ben held various executive roles at personal finance companies. Ben specializes in Chapter 13 Bankruptcy, Debt Settlement, Chapter 7 Bankruptcy and debt payoff methods. In his free time, Ben enjoys spending time going on adventures with his wife and three young daughters.

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