For borrowers struggling with unsecured debts, chapter 7 bankruptcy can provide a path towards solvency, eliminating many obligations and allowing you to reclaim your life. In exchange, the trustee of the court seizes some of your assets to pay back creditors. However, state and federal law makes a variety of assets exempt, potentially letting you keep a significant portion of property. Below are a few exemptions available to struggling borrowers in Alabama.
Property Exempt From Seizure in Alabama
The Homestead Exemption
If the equity in your primary residence is less than $15,500 (or $31,000 if you’re filing jointly with a spouse), you may be able to keep the property after the bankruptcy. To calculate the equity, subtract the outstanding loan balance from the current market value of your property.
Any Personal Property
The trustee in a chapter 7 bankruptcy generally won’t seize clothes, but there’s no automatic exemption for furniture or other household possessions. Instead, each person can exempt up to $7,750 in assets of their choosing, including electronics, jewelry, and the equity in their vehicles. Married couples filing together can exempt up to $15,500 in assets.
Any tax-exempt retirement account is exempt from bankruptcy under federal law. Borrowers considering a chapter 7 bankruptcy won’t have to worry about losing their pensions, 401(k), IRA, or other retirement savings.
Life Insurance Benefits
The proceeds of life insurance policies are exempt from seizure by the trustee or your creditors, as are the value of most permanent insurance plans. Disability benefits up to $250 per month are also exempt, along with workers’ compensation and other public benefits.
If you’re struggling with credit cards, medical expenses, or other debts, the chapter 7 bankruptcy lawyers at The Gil Law Firm will help you get financial relief. Since 2000, they’ve helped borrowers throughout Alabama, Georgia, and Florida navigate the complexities of the system with personalized attention and in-depth legal advice. Visit their website or call (334) 673-0100 to schedule a consultation. Follow their Twitter for more legal tips and insight.