Bankruptcy in Montgomery, AL

Feeling overwhelmed by constant financial pressure in Montgomery? When bills keep stacking up and creditors don’t stop calling, it’s easy to feel like you’re running out of options. 

But no matter how deep the debt, there’s a legal path forward—and it may be closer than you think. With Alabama-specific protections in place, you may be able to keep key assets like your home and car.

Take the first step today. Let us help you find an attorney in Montgomery to walk you through the process and protect your future. You don’t have to navigate this alone.

Types of Bankruptcy in Montgomery, Alabama

Bankruptcy is a legal tool designed to give individuals and businesses a second chance when debt becomes unmanageable. By filing, you may be able to eliminate certain obligations and create space to rebuild financially. In Montgomery, you must show that you’re facing legitimate financial hardship—something that makes it impossible to keep up with payments as they come due.

However, it’s important to understand that not every debt can be erased. Obligations such as unpaid child support, overdue taxes, alimony, and most student loans are typically excluded from discharge and will still need to be paid.

If you’re considering bankruptcy, there are three main paths: Chapter 7, Chapter 11, and Chapter 13. The right option will depend on your current income, the value of your assets, and what you hope to accomplish. Speaking with a local attorney can help you make the right call and avoid missteps that might set you back.

Bankruptcy cases in Montgomery are handled by the U.S. Bankruptcy Court for the Middle District of Alabama. While the main courthouse is in Montgomery, there are also locations in Dothan and Opelika.

Chapter 7 Bankruptcy

For many Montgomery residents struggling under the weight of debt, Chapter 7 bankruptcy can offer a clean slate. But this option isn’t right for everyone. Before you file, it’s important to evaluate whether your income and financial situation meet the legal requirements. A bankruptcy attorney can walk you through the specifics and help you decide whether liquidation aligns with your goals.

Generally, Chapter 7 is reserved for those who have lost a steady source of income or experienced a major financial setback. It can wipe out unsecured debt, but it comes with a tradeoff—you may be required to surrender valuable assets.

To qualify for Chapter 7 in Alabama, you’ll need to pass a Means Test. This test compares your household income against the state median for a family of your size. If your income falls below the threshold, you may be eligible to proceed. 

Finally, you’ll need to complete a mandatory credit counseling session before your case can move forward. This course, which is often available online, must be taken through a provider approved by the Middle District of Alabama.

Chapter 11 Bankruptcy

Chapter 11 bankruptcy is typically reserved for businesses or individuals with significant assets who need to restructure their debt without liquidating everything they own. It allows you to propose a reorganization plan that makes repayment more manageable over time—usually four to eighteen months.

This chapter is more complex than others and often requires court approval for each step. It also involves negotiating directly with creditors while maintaining control over your property and operations.

If you’re filing for Chapter 11 in Montgomery, be prepared to submit the following:

• File a petition and pay the $1,738 fee
• Certificate of Credit Counseling
• Summary of assets and liabilities
• List of creditors
• Statement of income and financial affairs

Chapter 13 Bankruptcy

Chapter 13 bankruptcy offers a structured path for individuals with regular income to manage overwhelming debt without losing key assets. In Montgomery, once you file, a trustee is appointed to evaluate your financial situation and oversee your repayment plan, which typically spans three to five years.

This chapter is ideal for those who want to protect their home or car while catching up on overdue balances. It may also lead to the discharge of remaining unsecured debts once the repayment period ends.

Montgomery filers must follow Chapter 13 requirements set by the Middle District of Alabama, including:

• Filing a petition and paying a $313 fee
• Providing proof of credit counseling
• Submitting a complete list of creditors
• Preparing a summary of assets and liabilities
• Disclosing income and expenses
• Filing a repayment plan using the local form

The Bankruptcy Process in Montgomery, Alabama

There’s rarely a perfect moment to file for bankruptcy. But if your current debts can’t reasonably be paid off within five years, it may be time to consider a legal reset. Bankruptcy can help you regain control by stopping collection efforts and protecting essential property.

To begin the process in Montgomery, you’ll need to organize detailed financial documentation. This includes your monthly income, outstanding debts, household expenses, and a list of assets. The court uses this information to evaluate your eligibility and determine how your case proceeds. Missing or incomplete records can delay or even derail your petition.

Alabama law does not allow bankruptcy filers to choose federal exemptions. Instead, you must use the exemptions provided under state law. Current protections include:

• Up to $16,450 in home equity under Alabama’s homestead exemption
• Pensions and retirement accounts
• Clothing, family photos, and necessary books
• A wildcard exemption of up to $8,225 for personal property

There is no specific vehicle exemption, but many filers use the wildcard to retain their car. These exemption limits are reviewed every three years. Updated amounts are published by the Alabama State Treasurer.

Finally, be aware that credit card spending and luxury purchases in the months before filing can hurt your case. You’ll also need to complete a credit counseling course from an approved provider. Once finished, you’ll receive a certificate to include in your filing. If this is missing, the court may reject your petition outright.

Work With an Experienced Montgomery, Alabama Lawyer

Remember, bankruptcy is not the only solution. Depending on your situation, options like debt consolidation or credit counseling may offer a better path forward. 

But if you’re facing immediate financial pressure, a local attorney can help you move quickly. Submit a request online or call us today at (866) 345-6784 to speak with an experienced lawyer in Montgomery!

About the Author

Aaron is a professional legal writer with a B.S. in English Education from Southern Illinois University – Carbondale. He has written, published, and edited thousands of legal articles for RequestLegalHelp, which has connected over 5 million people to legal help in the United States.

With over five years of experience writing thousands of legal articles for law firms across the U.S. and Canada, Aaron specializes in covering federal, state, and city-level legal issues ranging from auto accidents to wrongful terminations.