Table of ContentsAlabama Bankruptcy Exemptions: Can I keep my house?Get Help from an Alabama Bankruptcy Attorney Aside from football, Alabama might best be known for its rich agricultural history, the birth of Booker T. Washington’s “Atlanta compromise” in the civil rights movement, and being a big employer for colleges and the military. Alabama also is home to a lot of bankruptcy filings. Things are rough with the economy right now. If you’re struggling with your finances, one of the biggest concerns when filing for bankruptcy in Alabama is how much of your property you might lose to creditors. One way to understand how this works is to understand what is supposed to happen in a bankruptcy case. Alabama Bankruptcy Exemptions: Can I keep my house? Alabama has decided that its citizens, when filing for bankruptcy, can only use the list provided for in Alabama’s laws along with a limited number of federal exemptions that are not in the “federal list.” One of the most important items on the Alabama list is the homestead exemption (Alabama Code 6-10-2), which is limited to $15,000 ($30,000 if a husband and wife file together). This means if there is more than $15,000 (or $30,000 in a joint filing) of equity in a house, it cannot be kept when filing for bankruptcy. Equity is the value of the house minus the balance due on the mortgage or mortgages on the house. To qualify, the property must be your residence, and it can include a mobile home. The homestead is limited, though, to 160 acres. Finally, in order to use the homestead exemption in Alabama, you must file a declaration with your county before you file for bankruptcy. More exemptions, for reference, can be found in The Code of Alabama 1975, but we’ll go over a few more of the bigger ones in detail below. Alabama Bankruptcy Exemptions The top 5 exemptions under Alabama Code. Type of exemptionAlabama law Homestead$16,450 of equity in principal place of residence; double if filing jointly with spouse Personal propertyClothing is exempt, but no exemption for furniture; can use $7,500 wild card exemption VehicleNone; only the $7,500 wild card exemption Wages75% Pension/retirementExempt per federal tax law Alabama Vehicle Exemption There is no specific exemption for an automobile, but there is a “wild card” exemption of $7,500 per debtor for anything the debtor wants to use it for, and this exemption can be used for a car. Again, it is the “equity” in a car, the value minus the loan. For most cars that are financed, and for most leased cars, there is no “equity” in the car at all, and in such cases the debtor can keep the car so long as they continue to make the payments. Wages and Personal Belongings For wages owed to a debtor, 75 percent is exempt. However, this exemption has little meaning, as it would only apply if someone filed after the work had been done but before being paid. Thus, if your paycheck is received on a Friday, but is for the work done for the two weeks that ended on the Friday before, and the filing was in the middle of the two Fridays, the debtor would only keep 75 percent of the paycheck. (All future earnings are kept by the debtor.) The amount of non-exempt wages and salary would normally be so small that the bankruptcy Trustee would not bother taking it. Personal clothing is exempt, but there is no specific exemption for furniture. However, the “wild card” exemption can be used. It also is usually the case that the used furniture in a debtor’s place of residence would have so little value if sold that it would not be bothered with. See also: Can I Keep Livestock and File Bankruptcy? Unemployment and Retirement Benefits Unemployment compensation and workers’ compensation are both exempt, as are some other public benefits, such as aid to the blind, aged, and disabled; crime victim’s compensation; public assistance; and coal miners benefits for lung disease. Retirement benefits that are qualified under federal tax law are exempt in Alabama. These would include usual pensions, IRAs, 401(k) plans, and any other retirement account exempt from taxation under federal law. The federal exemptions that Alabama uses are not those in the U.S. Bankruptcy Code itself, but other exemptions throughout federal laws. These include exemptions for retirement benefits for federal employees, federal death and disability benefits, and certain other federal benefits. Get Help from an Alabama Bankruptcy Attorney As always, it is best to consult a qualified Alabama bankruptcy attorney to make sure you properly claim all the exemptions to which you are entitled. If you cannot afford an attorney, there may be organizations that can help you on this important part of the filing. It is especially important that you do your research, as the exemption amounts periodically change based on inflation and could be different than what you find on the internet. Depending on your situation, you can often come through bankruptcy with a fresh start on your finances, and with most, if not all, your property intact. Wondering if bankruptcy is right for you? You may also be interested in the following articles: How Many People Filed for Bankruptcy in 2016? Household Debt Near Great Recession Level: What Does it Mean? How to Screw Up Your Bankruptcy Discharge How to Pay Off High-Interest Credit Card Debt Should Filing Bankruptcy Be the Last Resort? 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Table of ContentsAlabama Bankruptcy Exemptions: Can I keep my house?Get Help from an Alabama Bankruptcy Attorney Aside from football, Alabama might best be known for its rich agricultural history, the birth of Booker T. Washington’s “Atlanta compromise” in the civil rights movement, and being a big employer for colleges and the military. Alabama also is home to a lot of bankruptcy filings. Things are rough with the economy right now. If you’re struggling with your finances, one of the biggest concerns when filing for bankruptcy in Alabama is how much of your property you might lose to creditors. One way to understand how this works is to understand what is supposed to happen in a bankruptcy case. Alabama Bankruptcy Exemptions: Can I keep my house? Alabama has decided that its citizens, when filing for bankruptcy, can only use the list provided for in Alabama’s laws along with a limited number of federal exemptions that are not in the “federal list.” One of the most important items on the Alabama list is the homestead exemption (Alabama Code 6-10-2), which is limited to $15,000 ($30,000 if a husband and wife file together). This means if there is more than $15,000 (or $30,000 in a joint filing) of equity in a house, it cannot be kept when filing for bankruptcy. Equity is the value of the house minus the balance due on the mortgage or mortgages on the house. To qualify, the property must be your residence, and it can include a mobile home. The homestead is limited, though, to 160 acres. Finally, in order to use the homestead exemption in Alabama, you must file a declaration with your county before you file for bankruptcy. More exemptions, for reference, can be found in The Code of Alabama 1975, but we’ll go over a few more of the bigger ones in detail below. Alabama Bankruptcy Exemptions The top 5 exemptions under Alabama Code. Type of exemptionAlabama law Homestead$16,450 of equity in principal place of residence; double if filing jointly with spouse Personal propertyClothing is exempt, but no exemption for furniture; can use $7,500 wild card exemption VehicleNone; only the $7,500 wild card exemption Wages75% Pension/retirementExempt per federal tax law Alabama Vehicle Exemption There is no specific exemption for an automobile, but there is a “wild card” exemption of $7,500 per debtor for anything the debtor wants to use it for, and this exemption can be used for a car. Again, it is the “equity” in a car, the value minus the loan. For most cars that are financed, and for most leased cars, there is no “equity” in the car at all, and in such cases the debtor can keep the car so long as they continue to make the payments. Wages and Personal Belongings For wages owed to a debtor, 75 percent is exempt. However, this exemption has little meaning, as it would only apply if someone filed after the work had been done but before being paid. Thus, if your paycheck is received on a Friday, but is for the work done for the two weeks that ended on the Friday before, and the filing was in the middle of the two Fridays, the debtor would only keep 75 percent of the paycheck. (All future earnings are kept by the debtor.) The amount of non-exempt wages and salary would normally be so small that the bankruptcy Trustee would not bother taking it. Personal clothing is exempt, but there is no specific exemption for furniture. However, the “wild card” exemption can be used. It also is usually the case that the used furniture in a debtor’s place of residence would have so little value if sold that it would not be bothered with. See also: Can I Keep Livestock and File Bankruptcy? Unemployment and Retirement Benefits Unemployment compensation and workers’ compensation are both exempt, as are some other public benefits, such as aid to the blind, aged, and disabled; crime victim’s compensation; public assistance; and coal miners benefits for lung disease. Retirement benefits that are qualified under federal tax law are exempt in Alabama. These would include usual pensions, IRAs, 401(k) plans, and any other retirement account exempt from taxation under federal law. The federal exemptions that Alabama uses are not those in the U.S. Bankruptcy Code itself, but other exemptions throughout federal laws. These include exemptions for retirement benefits for federal employees, federal death and disability benefits, and certain other federal benefits. Get Help from an Alabama Bankruptcy Attorney As always, it is best to consult a qualified Alabama bankruptcy attorney to make sure you properly claim all the exemptions to which you are entitled. If you cannot afford an attorney, there may be organizations that can help you on this important part of the filing. It is especially important that you do your research, as the exemption amounts periodically change based on inflation and could be different than what you find on the internet. Depending on your situation, you can often come through bankruptcy with a fresh start on your finances, and with most, if not all, your property intact. Wondering if bankruptcy is right for you? You may also be interested in the following articles: How Many People Filed for Bankruptcy in 2016? Household Debt Near Great Recession Level: What Does it Mean? How to Screw Up Your Bankruptcy Discharge How to Pay Off High-Interest Credit Card Debt Should Filing Bankruptcy Be the Last Resort?