Each state has its own set of rules regarding what property you can protect in a Chapter 7 bankruptcy or Chapter 13 debt consolidation. In Alabama, there are various rules and statutes that give precise guidance regarding exactly what property that creditors can’t seize to collect for a judgment. In Alabama we follow our own exemption system. Many states however follow the federal guidelines which are imposed by Congress. This is why it's important that you call The Sellers Law Firm and speak with one of our experienced Montgomery bankruptcy attorneys so that we are able to assist you in keeping all the assets and property in which you are entitled.
In Alabama, the property that you can keep is governed by various Alabama statutes for Chapter 7 bankruptcy and Chapter 13 debt consolidation. In regards to personal property each debtor can keep up to $7,500 worth of equity. For example, personal property would include such things as your car, furniture, electronics, ATVs, motorcycles, and such. It does not include real property. A mobile home is also considered personal property. This is because of a unique provision under Alabama law that a mobile home is similar to a vehicle since it was delivered by using axles and wheels. There are separate equity provisions for land and houses.
If you file a bankruptcy or debt consolidation with your spouse, then your total exemption limits for personal property would be $15,000. Your equity in real property is $15,000 for a single debtor and $30,000 for joint debtors (joint debtors would be a married couple). For example, if you have a home worth $100,000 and you owe $90,000 and you are either a single or joint debtor, then you have $10,000 worth of equity. There is no exemption problem in this situation because you're below the $15,000 equity exemption for a single debtor and also below the $30,000 equity exemption for joint debtors. In this second example, let's assume you own a home that is worth $100,000 and you owe $70,000. In this situation, there is $30,000 worth of equity. If you are a joint debtor, then you are still safe, but if you are single debtor, then you exceed the exemptions limit since you may only exempt $15,000. It doesn’t mean that you will lose your home, but it does mean that you need an experienced Montgomery bankruptcy attorney to discuss your options.
In a personal property illustration, you should consider the following example: if you owe an auto lender $20,000 on a car and the car is worth $20,000 then you have no equity in the car. If you own it and you owe $20,000, and the car is worth $40,000 then you have too much equity and you would have to speak to an experienced Montgomery bankruptcy attorney to determine whether a Chapter 7 or Chapter 13 would be best for you in this situation. We would generally recommend that your best option is a Chapter 13 if your intention is to keep the car.
In Alabama, there are other types of property that are completely exempt from your creditors. Some of these would be life insurance, family photographs, burial plots, retirement accounts, public benefits like unemployment compensation, workers compensation, and disability proceeds are also exempt.
Unlike some states there is no motor vehicle exemption in the state of Alabama.
The calculations of what exemptions apply in a bankruptcy and the value of those exemptions can be tricky. We recommend that you always speak to an experienced attorney in situations where exemptions may be a problem. At The Sellers Law Firm, we calculate exemptions for Chapter 7 bankruptcy and Chapter 13 debt consolidation every day! We have four offices in Central Alabama to serve you better; we are located in Montgomery, Selma, Greenville, and Troy. Call us at 334-LAWYERS (529-9377) to set an appointment. You may also reach us by using the “text us” link or Contact Form on our website. Consultations are always free at The Sellers Law Firm! Remember doing nothing, changes nothing so call us today!