Filing for Chapter 7 bankruptcy can offer a fresh financial start for Alabama residents overwhelmed by debt. However, qualifying isn’t automatic—specific legal requirements must be met. At Backus Law Group, we assist individuals across Alabama in determining their eligibility and navigating the bankruptcy process with confidence.

Understanding Chapter 7 Bankruptcy

Chapter 7 bankruptcy, also known as “liquidation bankruptcy,” allows individuals to discharge most unsecured debts such as credit card balances, medical bills, and personal loans. In exchange, some of the debtor's non-exempt assets may be sold to repay creditors. Fortunately, many filers are able to retain all or most of their property through Alabama’s exemption laws.

Key Requirements to Qualify for Chapter 7 in Alabama

1. Pass the Means Test

The primary qualifier is the means test, which compares your income to the median income for a household of your size in Alabama. If your income is below the median, you pass. If it is above, further calculations of your disposable income are needed to determine eligibility.

For example, as of recent data, the median income for a family of four in Alabama is approximately $90,000. Those earning more must prove that their disposable income is insufficient to repay creditors through a Chapter 13 plan.

2. Credit Counseling Course

Before filing, you must complete a credit counseling course from an approved provider. This must be done within 180 days prior to filing. It’s a mandatory step intended to help you evaluate your financial situation and alternatives to bankruptcy.

3. No Recent Bankruptcy Discharge

You cannot file for Chapter 7 if you’ve had a Chapter 7 discharge within the past 8 years or a Chapter 13 discharge within the past 6 years. This rule prevents abuse of the bankruptcy system.



4. Asset Evaluation

Alabama has specific exemption laws that allow filers to protect certain property, such as a portion of the equity in their home, household items, and tools of

the trade. If your non-exempt assets are minimal, Chapter 7 is likely viable.

Common Reasons People File for Chapter 7

• Job loss or reduction in income
• Medical expenses
• Divorce or separation
• Overwhelming credit card or personal loan debt

Filing Chapter 7 can eliminate these debts and halt creditor harassment, lawsuits, wage garnishments, and collection calls.

How Backus Law Group Can Help

Our Alabama-based team at Backus Law Group offers personalized legal guidance tailored to your situation. We evaluate your eligibility, prepare your petition, and represent you in bankruptcy court. Our goal is to help you gain relief while protecting as many of your assets as possible.

Conclusion

Qualifying for Chapter 7 bankruptcy in Alabama involves meeting strict criteria, but it can provide powerful relief for those who qualify. If you’re considering bankruptcy, don’t go through it alone. Backus Law Group is here to assist every step of the way.