Filing Chapter 7 Bankruptcy in Alabama (2026)
Reviewed by DocDraft Legal Team · Alabama · Last updated August 18, 2026
Chapter 7 bankruptcy is federal law, but the property you keep is set by Alabama. Alabama is an opt-out state: under Ala. Code 6-10-11 you must use Alabama's exemptions and cannot choose the federal 522(d) list. This page explains Alabama's $18,800 homestead exemption under Ala. Code 6-10-2, the $9,400 personal-property exemption that also covers a vehicle, the wage protection under 6-10-7, the means-test median income, and the three federal bankruptcy courts where Alabamians file. Chapter 7 discharges most unsecured debt but not most student loans, recent taxes, or child and spousal support.
Does Alabama use state or federal bankruptcy exemptions?
Alabama is an opt-out state. Under Alabama Code section 6-10-11, a debtor filing bankruptcy in Alabama must use Alabama's exemptions and cannot elect the federal 11 U.S.C. 522(d) list. You keep only what Alabama's exemption statutes protect, so knowing the Alabama homestead, personal-property, and wage figures is essential before you file.
Can I keep my house if I file Chapter 7 in Alabama?
Often yes. Under Alabama Code section 6-10-2, the homestead exemption protects up to $18,800 of equity in a home on up to 160 acres, effective for claims on or after April 1, 2024. A married couple filing together can each claim it. If your home equity fits within that amount, Chapter 7 generally lets you keep the house.
Can I keep my car if I file Chapter 7 in Alabama?
Often yes if your equity is modest. Alabama has no separate motor-vehicle exemption, so you protect a car using the $9,400 personal-property exemption under Alabama Code section 6-10-6. That exemption is flexible and can cover vehicle equity, cash, or household goods. A married couple can each claim the $9,400.
What is the income limit to file Chapter 7 in Alabama?
For cases filed on or after July 15, 2026, the U.S. Trustee median income figures for Alabama are $64,321 for one earner, $77,451 for two, $92,698 for three, and $106,740 for four, adding $11,100 per additional person. At or below your household figure, you pass the first part of the means test.
Alabama's Opt-Out Rule, the $18,800 Homestead, and the $9,400 Wildcard
Alabama is a bankruptcy opt-out state. Under Alabama Code section 6-10-11, a debtor filing in Alabama must use Alabama exemptions and cannot choose the federal 11 U.S.C. 522(d) set. Alabama's exemption figures are adjusted for inflation every three years by the State Treasurer under Alabama Code section 6-10-12. The current amounts, effective for claims on or after April 1, 2024, are a $18,800 homestead exemption on up to 160 acres under Alabama Code section 6-10-2, and a $9,400 personal-property exemption under Alabama Code section 6-10-6. Alabama has no separate motor-vehicle exemption, so filers protect a car with the flexible personal-property amount. Wages are protected under Alabama Code section 6-10-7, which exempts 75 percent of earned but unpaid wages. A married couple filing jointly can each claim the homestead and personal-property amounts, effectively doubling them. Alabamians file in one of three federal bankruptcy courts: the U.S. Bankruptcy Court for the Northern, Middle, or Southern District of Alabama, based on where they have lived for most of the prior 180 days.
Relevant Laws
Alabama Homestead Exemption (Ala. Code 6-10-2)
Sets the homestead exemption at up to $18,800 of equity (as CPI-adjusted, effective for claims on or after April 1, 2024) in a home not exceeding 160 acres. This is the exemption that lets many Alabama homeowners keep their house in Chapter 7. A married couple filing jointly can each claim it.
Alabama Opt-Out From Federal Exemptions (Ala. Code 6-10-11)
The statute by which Alabama opts out of the federal 11 U.S.C. 522(d) exemptions. In a federal bankruptcy case, property is exempt only to the extent allowed under Alabama law and non-522(d) federal law, so Alabama filers must use the state exemption set.
Alabama Personal Property Exemption (Ala. Code 6-10-6)
Exempts up to $9,400 of personal property other than wages (CPI-adjusted, effective for claims on or after April 1, 2024). Because Alabama has no separate motor-vehicle exemption, this flexible wildcard is what filers use to protect a car, cash, or household goods.
Federal Bankruptcy Code Exemptions and Means Test (11 U.S.C. 522, 707)
The federal law behind Chapter 7. Section 522(b)(2) lets a state opt out of the federal 522(d) exemptions, which Alabama has done, and section 707(b) sets the means test measured against state median income.
Regional Variances
Alabama Chapter 7 Exemption Table
Homestead
Ala. Code 6-10-2: up to $18,800 of equity in a home not exceeding 160 acres, effective for claims on or after April 1, 2024. Adjusted for inflation every three years by the State Treasurer under Ala. Code 6-10-12. A married couple filing jointly can each claim it.
Motor vehicle
Alabama has no separate motor-vehicle exemption. You protect vehicle equity using the $9,400 personal-property exemption under Ala. Code 6-10-6. Equity above the amount you apply may be reachable by the trustee.
Wildcard / personal property
Ala. Code 6-10-6: up to $9,400 in personal property other than wages, effective for claims on or after April 1, 2024. This flexible amount functions as Alabama's wildcard and can be applied to a car, cash, electronics, or household goods.
Personal property
The $9,400 personal-property exemption under Ala. Code 6-10-6 is the primary protection for tangible personal property in Alabama, since the state does not list separate category exemptions for household goods. Married debtors filing jointly can each claim the amount.
Wages
Ala. Code 6-10-7: 75 percent of earned but unpaid wages are exempt. The bankruptcy court may allow a larger exemption for a low-income debtor. Filing also triggers the automatic stay, which pauses ongoing wage garnishment.
Retirement
ERISA-qualified retirement plans such as 401(k)s and most pensions are excluded from the bankruptcy estate under federal law, and IRAs are protected up to the federal cap under 11 U.S.C. 522(b)(3)(C) and (n), which applies even in opt-out states. Confirm plan-specific treatment before filing.
Suggested Compliance Checklist
Confirm the current Alabama means-test median income
Before you file days after startingCheck your household size against the U.S. Trustee Alabama median income figures in effect on your filing date, since these update periodically. For cases filed on or after July 15, 2026 the figures are $64,321 for one, $77,451 for two, $92,698 for three, and $106,740 for four, adding $11,100 per additional person.
Complete the pre-filing credit counseling course
Within 180 days before filing days after startingTake an approved credit counseling course from a provider authorized for your Alabama district and keep the certificate. You must file it with your petition. Skipping this can get your case dismissed before your debts are addressed.
Value your assets against Alabama's exemptions
Before preparing your schedules days after startingValue your home, vehicle, and personal property so you can apply the $18,800 homestead (Ala. Code 6-10-2) and the $9,400 personal-property exemption (Ala. Code 6-10-6). Alabama has no separate car exemption, so plan how to allocate the personal-property amount across your assets.
Prepare and file your petition and schedules
Filing day days after startingFile your petition, schedules, and exemption claims in the correct court: the Northern, Middle, or Southern District of Alabama, based on where you have lived for most of the prior 180 days. Filing triggers the automatic stay that pauses collection and garnishment.
Attend the 341 meeting and finish the debtor education course
Before discharge days after startingAttend the 341 meeting of creditors and answer the trustee's questions under oath, then complete the required post-filing financial management course and file the certificate. Both are required before the court will grant your discharge. An attorney can help with contested exemptions.
| Task | Description | Document | Days after starting |
|---|---|---|---|
| Confirm the current Alabama means-test median income | Check your household size against the U.S. Trustee Alabama median income figures in effect on your filing date, since these update periodically. For cases filed on or after July 15, 2026 the figures are $64,321 for one, $77,451 for two, $92,698 for three, and $106,740 for four, adding $11,100 per additional person. | - | Before you file |
| Complete the pre-filing credit counseling course | Take an approved credit counseling course from a provider authorized for your Alabama district and keep the certificate. You must file it with your petition. Skipping this can get your case dismissed before your debts are addressed. | - | Within 180 days before filing |
| Value your assets against Alabama's exemptions | Value your home, vehicle, and personal property so you can apply the $18,800 homestead (Ala. Code 6-10-2) and the $9,400 personal-property exemption (Ala. Code 6-10-6). Alabama has no separate car exemption, so plan how to allocate the personal-property amount across your assets. | - | Before preparing your schedules |
| Prepare and file your petition and schedules | File your petition, schedules, and exemption claims in the correct court: the Northern, Middle, or Southern District of Alabama, based on where you have lived for most of the prior 180 days. Filing triggers the automatic stay that pauses collection and garnishment. | - | Filing day |
| Attend the 341 meeting and finish the debtor education course | Attend the 341 meeting of creditors and answer the trustee's questions under oath, then complete the required post-filing financial management course and file the certificate. Both are required before the court will grant your discharge. An attorney can help with contested exemptions. | - | Before discharge |
Frequently Asked Questions
Under Alabama Code section 6-10-2, the homestead exemption protects up to $18,800 of equity in a home not exceeding 160 acres, effective for claims on or after April 1, 2024. The State Treasurer adjusts the figure for inflation every three years under Alabama Code section 6-10-12. A married couple filing jointly in Alabama can each claim the exemption.
Alabama has no separate motor vehicle exemption. Instead, Ala. Code 6-10-6 gives you a $9,400 personal-property exemption you can apply to a car, household goods, or other belongings. If your equity in those items fits within the $9,400, Chapter 7 generally lets you keep them.
Under Alabama Code section 6-10-7, 75 percent of your earned but unpaid wages are exempt from garnishment and pass into a Chapter 7 case with that protection. The bankruptcy court may allow a larger exemption for a low-income debtor. Filing also triggers the automatic stay, which halts most ongoing wage garnishment while your case proceeds.
No. Chapter 7 discharges most unsecured debt like credit cards and medical bills, but it does not erase most student loans, recent income taxes, child support, or spousal support, and it will not discharge debts from fraud. Secured debts like a car loan remain unless you surrender the collateral or reaffirm the loan.
You file in the federal bankruptcy court for your area: the U.S. Bankruptcy Court for the Northern, Middle, or Southern District of Alabama. The Middle District sits in Montgomery and the Southern District in Mobile. You file where you have lived for most of the prior 180 days.
Other Alabama guides
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