Tuscaloosa Chapter 13 Bankruptcy Attorney

Who Is Eligible to File for Chapter 13 Bankruptcy in Alabama?

To qualify for Chapter 13 in Alabama, you must have regular income and combined secured and unsecured debt not exceeding $2,750,000, within the limits set by federal law. You must also complete a credit counseling course from an approved provider before your petition is filed, and a financial management course before discharge is granted.

You are ineligible if a prior bankruptcy case was dismissed within the last 180 days because:

• You did not appear in court
• You failed to follow court orders
• You voluntarily dismissed your case after creditors sought relief from the bankruptcy court to recover property they held liens on

Debt limits are adjusted periodically, so it’s worth confirming the current thresholds at the time you file. If you’re unsure whether you qualify, I can review your financial situation and help you understand which options are available.

Chapter 13 vs. Chapter 7 Bankruptcy

Chapter 7 bankruptcy is generally for those with limited income who can’t repay their debts, while Chapter 13 is for individuals with steadier income who can repay over time. In a Chapter 7 case, nonexempt assets may be liquidated to pay creditors, and most unsecured debts are discharged. Chapter 13 can help protect your assets through a structured repayment plan. Chapter 7 is faster, but you must pass the Alabama means test, which compares your income to the state median, to qualify. If your disposable income is too high for Chapter 7, Chapter 13 may still be an option. Both paths can address debts like credit cards and medical bills, though obligations such as student loans, most tax debts, alimony, and child support generally survive discharge under either chapter.

How the Chapter 13 Filing Process Works in Alabama

Here is what Chapter 13 typically looks like from start to finish in the Northern District of Alabama Western Division, which covers Tuscaloosa filers.

• Complete credit counseling: Before filing, you must complete an approved credit counseling course. This is a federal requirement and must be done before your petition is submitted.
• File your petition and proposed plan: You submit a petition, financial schedules, and a proposed repayment plan to the bankruptcy court. Filing immediately triggers the automatic stay, halting most collection actions, including foreclosure proceedings and wage garnishments.
• Begin plan payments: Payments to the Chapter 13 trustee typically begin within 30 days of filing, even before the plan is formally confirmed.
• Attend the 341 meeting of creditors: You answer questions under oath from the bankruptcy trustee and any creditors who choose to attend. In Tuscaloosa cases, the trustee is the Office of C. David Cottingham, operating under the Northern District of Alabama Western Division.
• Plan confirmation hearing: The court reviews whether your plan meets legal requirements, was proposed in good faith, and is financially feasible. Creditors may raise objections at this stage.
• Complete the repayment period: Once confirmed, you continue payments for three to five years. The plan term depends on whether your income is above or below the Alabama median income.
• Receive your discharge: After completing all plan payments and a financial management course, the court issues a discharge of remaining eligible debts.

Life doesn’t always go as planned during a multi-year repayment period. If your income decreases significantly, options may include modifying the plan, requesting a hardship discharge, or converting to Chapter 7. An experienced attorney can help evaluate which adjustment fits your circumstances.