The Bankruptcy Process in Alabama: A Step-by-Step Guide
Filing for relief under the U.S. Bankruptcy Code is meant to give honest debtors a fresh start, but each state adds its own rules and exemption limits. In Alabama, the procedure follows a predictable timeline that you can prepare for in advance. Whether you pursue a swift Chapter 7 bankruptcy or a longer Chapter 13 repayment plan, understanding each milestone helps you move forward with confidence. Loris Law Firm has guided more than 15,000 Southwest Alabamians through these steps, making it one of the largest consumer practices in the state.
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Step 1: Evaluate Debt and Alternatives
Begin by listing every creditor, monthly income source, and essential expenses. If unsecured balances exceed your ability to pay—even after trimming non‑essentials—bankruptcy may beat options like high‑fee debt consolidation in Mobile, AL. A quick call with our bankruptcy lawyer can confirm whether state law exemptions will protect the assets that matter most.
Step 2: Meet With an Alabama Bankruptcy Lawyer
An initial consultation with a skilled bankruptcy attorney in Alabama clarifies which chapter fits your goals, how much relief you qualify for, and what paperwork you will need. Bring six months of pay stubs, two years of tax returns, and recent creditor statements so your lawyer can spot red flags early.
Step 3: Complete Mandatory Credit Counseling
Federal law requires a pre‑filing counseling session from an approved nonprofit provider within 180 days of the petition. You will receive a certificate that must be filed with the court. Skipping this step will result in immediate dismissal under 11 U.S.C. § 109(h).
Step 4: Pass the Means Test & Choose Your Chapter
Alabama debtors compare household income to state medians published by the U.S. Trustee Program. For petitions filed between November 1, 2024, and March 31, 2025, the income cap for a single filer is tied to the census‑based table issued by the Department of Justice. If your income falls below the threshold—or disposable income is minimal after allowable expenses—you may qualify for Chapter 7; otherwise, Chapter 13 remains open. Our Mobile, AL bankruptcy attorney will run the full Form 122 calculation for you.
Step 5: Gather Documents and File the Petition
Your attorney prepares Schedules A/B through J, a Statement of Financial Affairs, and the local verification forms. Filing instantly creates a case number in the Southern District of Alabama and triggers the automatic stay. Court fees are $338 for Chapter 7 and $313 for Chapter 13, payable in installments if needed.
Step 6: Benefit From the Automatic Stay
The stay freezes garnishments, foreclosures, and collection lawsuits the moment your petition hits the docket. Creditors must obtain a court order before resuming efforts—an invaluable breather for clients considering debt consolidation but wishing to halt aggressive phone calls.
Step 7: Attend the 341 Meeting of Creditors
About four weeks after filing, you (and your spouse, if filing jointly) meet the trustee via Zoom or in person. Bring photo ID, Social Security card, and recent pay stubs. In most consumer cases the meeting lasts under 10 minutes, and creditors rarely appear.
Step 8: Address Secured Debts, Exemptions, and Plans
Alabama exemptions rose again on April 1, 2024, allowing filers to shield up to $18,800 in home equity and $9,400 in personal property per debtor. Your AL attorneys will apply these limits to protect vehicles, tools, and family heirlooms. In Chapter 13, a three‑ to five‑year plan proposes curing mortgage arrears or reducing car interest rates. In Chapter 7, you may reaffirm a loan, redeem collateral, or surrender it without further liability.
Step 9: Complete Debtor Education and Obtain Discharge
A second “financial management” course is required before discharge. File the completion certificate (Form 423) within 60 days of the 341 meeting. Chapter 7 discharges arrive in about 90 days from filing; Chapter 13 discharges follow the final plan payment. A discharge injunction forever bars creditors from collecting pre‑petition debts.
Fresh Start, Real Results
Loris Law Firm has helped thousands eliminate or restructure debt through Chapter 7 and Chapter 13, leveraging homestead protections, median‑income tests, and negotiated payment plans to safeguard homes and paychecks. When you are ready to act, our bankruptcy lawyer in Mobile, AL stands ready to file fast, stop lawsuits, and chart a practical route back to solvency—often within 90 days for Chapter 7 cases or 36 months for a tailored repayment plan. Contact us today for a free, no‑pressure consultation and reclaim the financial future you deserve.