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Alabama Bankruptcy Records
What are Alabama Bankruptcy Records?
Bankruptcy records contain information regarding bankruptcy cases filed in the state of Alabama. Bankruptcy courts in Alabama are special courts that have jurisdiction over all bankruptcy filings in the state. Alabama bankruptcy courts operate through federal legal guidelines to provide financial relief to overburdened debtors, either by discharging accumulated debt or by providing a means of managing a poor financial situation. There are three bankruptcy courts in Alabama;
- United States Bankruptcy Court Northern District of Alabama
- United States Bankruptcy Court Middle District of Alabama
- United States Bankruptcy Court Southern District of Alabama
Debtors may file the bankruptcy petition in the court with jurisdiction on the area where the debtor lives, where the business is located, or where the debtor has the principal asset. By filing the petition, debtors declare themselves as unable to settle outstanding debts and have to follow the procedure to get a mostly clean slate. Bankruptcy courts generate bankruptcy records as a means of conserving information during the execution of their duties. The file's content includes details of the bankruptcy case and the entities involved (the debtor and the creditor).
In the state of Alabama, bankruptcy is a debt relief option provided by federal laws and rules and available to insolvent individuals, businesses, and municipalities. There are many bankruptcy options available to interested parties under the U.S. Bankruptcy Code. However, persons must meet the eligibility criteria and satisfy all conditions before initiating the process.
What Do Alabama Bankruptcy Records Contain?
Alabama bankruptcy files are a collection of all the information generated during a bankruptcy case from its start to its disposal. The details include:
- Parties involved in the bankruptcy case and documents generated by court action throughout the case.
- Type of bankruptcy claimed
- Name and address of the debtor
- Name and address of the creditor(s)
- Name of the trustee appointed to the case
- Case number
- Date of case filing
- Name of the attorneys and the assigned judge
- Assets in the case
- Court docket
- All court motions
- Court schedules
Are Bankruptcy Records Public Information?
Alabama bankruptcy records are public files, and members of the public can request and copy these documents per Title 11 U.S.C. § 107 (2018), which stipulates the public's right to open information. However, there are some limitations to accessing these files. Sealed bankruptcy files are inaccessible to the public. Also, records that contain sensitive information may be restricted from public view to prevent any injury. In addition, courts may impose restrictions on the availability of a record, or restrictions may be triggered automatically for some records.
Record seekers may also obtain bankruptcy records from third-party websites. These non-governmental websites often come with tools that help simplify the search for single or multiple records. However, record availability on third-party sites tends to vary because they’re independent of government sources. To obtain bankruptcy case information using third-party sites, record seekers may need to provide:
- A complete name of the debtor involved in the record
- A bankruptcy case number
What is the Downside of Filing for Bankruptcy in Alabama?
Bankruptcy has a lot of financial implications. First of all, filing a bankruptcy in Alabama cost between $278 and $1,738 as of December 2020. This does not include other court fees or the cost of hiring a bankruptcy lawyer or accountant for the case if the debtor chooses to hire one. This is especially the case when filing a business bankruptcy. Moreover, the filing process can be extensive and stressful, especially for bankruptcy that deals with reorganization (Chapter 9, 11, 13, and 15).
Persons should note that filing a bankruptcy does not settle all the filer's debts like alimony, child support, student loans, and criminal fines. Therefore, the debtor has to find a way to pay these debts while bankrupt. Furthermore, bankruptcy can lead to loss of assets during liquidation. In Chapter 7 and some Chapter 11 bankruptcy cases, the debtor’s property shall be sold to settle certain debts. Bankruptcy may also lead to individuals keeping a strict budget to reduce expenses, while corporations may face company layoffs and changes in business management.
In addition, bankruptcy records are mostly public, which means it is open to credit reporting agencies, potential employers, landlords, and so on. As per the Fair Credit Reporting Act, the reporting agencies shall report a bankruptcy – regardless of disposition – on an individual’s credit report for a period not exceeding ten years. As a result, a debtor’s credit score can fall considerably, except in some cases when the credit was originally low. This may lead to more problems like:
- The credit card company canceling debtor's credit card
- Difficulty in getting another credit card for some time
- Higher interest rates with lower credit scores
- Difficulty in getting loans and mortgages for some years
Also, landlords and employers may decide to run a credit report and may deny the debtor’s application subsequent to finding the bankruptcy record. In relation, a debtor may not be able to get a money-handling or managerial job role for some time. Lastly, debtors may lose their reputations and may face ostracism.
How to Get Alabama Bankruptcy Records
Bankruptcy records in Alabama are obtainable through multiple means. The first is through PACER (Public Access to Court Electronic Records), the centralized information database for all federal courts). Using PACER incurs a service charge, where the user will pay for every page viewed. Interested parties must also create an account and register to use this service. Usually, bankruptcy records requested through PACER contain the most comprehensive information available for a bankruptcy case, including the court docket.
The second means is through the MCVCIS (Multi-Court Voice Case Information System), a toll-free, automated telephone service through which a caller can request and receive information on a bankruptcy case. Requesters can use this service by dialing (866) 222-8029, following the button prompts, and inputting the appropriate response. MCVCIS provides fewer details compared to the PACER, but at least it offers basic information.
The third means of access is via the public access terminals located at each courthouse. The terminals are electronic systems to obtain case file information. This system provides details as comprehensive as that of PACER, and it is free to use. However, printing copies of a record attracts some fees. Bankruptcy records in Alabama are also accessible through third-party websites.
How Do I Find Out if My Bankruptcy Case is Closed in Alabama?
The status of a bankruptcy case is one of the pieces of information contained in a bankruptcy record. Hence, interested parties can visit the court to obtain bankruptcy files to get information on a case's status. Bankruptcy case documents are also accessible through the PACER system, the MCVCIS system, the public access terminals in the courthouse, or third-party websites. The most convenient system for checking a bankruptcy case status is the MCVCIS system, allowing individuals to access case information through a telephone call. The public access terminal is also a free alternative but will require a physical visit to the courthouse.
Can Bankruptcy Records Be Expunged in Alabama?
It is possible for a bankruptcy record in Alabama to be expunged, but it rarely ever happens. Although judges have the authority to expunge bankruptcy records in Alabama, most of them are reluctant to grant an expungement. One of the reasons is, bankruptcy files are public information. Nevertheless, bankruptcy records containing sensitive information can be sealed or restricted from public view.
What is Chapter 11 Bankruptcy in Alabama?
Chapter 11 Bankruptcy is a reorganization bankruptcy that deals with settling debts through restructuring debts and coming up with a reorganization plan. This option is available to individuals, celebrities, businesses, and the railroad industry in Alabama. Debtors who file Chapter 11 bankruptcies do not necessarily have to lose their assets or stop business operations, but the individual or business can get rid of non-profitable properties to help with repayment.
A reorganization plan makes it possible for debtors to restructure debts by renegotiating terms, adjusting amortization dates, and making other debt-reduction actions while planning a way to increase profits and make monthly payments. However, Chapter 11 is a complicated process that may take months from filing to the confirmation hearing, whereas the implementation stage may take years before the court discharges remaining unsecured debts and closes the case.
Individuals and businesses may file for bankruptcy under Chapter 11 if their income or debts level exceeds the limits of Chapter 7 and Chapter 13 bankruptcies. However, the following persons may be ineligible:
- Stockbrokers and commodity brokers
- Persons who did not take complete a credit counseling class within the past 180 days of filing
- Debtors who had their previous bankruptcy petition dismissed in the last 180 days
A Chapter 11 bankruptcy record shall be available in the court record for public viewing and duplication unless sealed or removed from public access.
What is Chapter 7 Bankruptcy in Alabama?
A Chapter 7 bankruptcy is a liquidation process that provides debt relief through selling assets, sharing proceeds, and discharging eligible debts. This form of bankruptcy can also be a no-asset case, meaning that the debtor will not lose any property under exemption laws. Eligibility under this chapter is measured by the means test - an examination that uses income, household size, and expenses to determine the debtor's ability to settle debts under this chapter and not others. For instance, qualified persons include those whose income is below Alabama’s median income and whose disposable income (income after expenses) is too low to settle debts under Chapter 13 of the Bankruptcy Code.
The Chapter 7 bankruptcy procedure is less complicated than other types of bankruptcy and typically involves:
- Passing a means test to determine eligibility based on income
- Taking a credit counseling course
- Filing the petition
- The 341 hearing or meeting of the creditors
- Taking a financial management class
- Court discharge order
The entire process from filing to discharge takes about four to five months, while persons have to wait two to three months before debts are zeroed out in the credit report. However, this record may last indefinitely in the court file and shall be publicly available unless closed from public view by a court seal or expungement.
What is Chapter 13 Bankruptcy in Alabama?
Chapter 13 Bankruptcy is a wage earner's debt relief option that involves debtors developing a plan to repay debts within three to five years. Like with Chapter 11 bankruptcy, this form of bankruptcy deals with reorganizing debts and making monthly payments with disposable income. As of April 2019, only individuals (or couples) with secured not exceeding $419,275 and unsecured debts not exceeding $1,257,850 shall file a bankruptcy petition under this chapter. However, these persons must fulfill the following conditions:
- Complete a credit counseling course within 180 days before filing
- Present copies or transcripts of income tax returns filed in the recent years
- The debtor’s disposable income should be high enough to cover monthly payments
- The debtor should not have a bankruptcy petition dismissed within 180 days before filing
This form of bankruptcy does not give as much power to creditors as can be found under Chapter 11 but helps discharge non-priority unsecured debts. Records of the entire Chapter 13 bankruptcy procedure shall be publicly available unless sealed or expunged.
What is the Difference Between Chapter 7 and Chapter 13 Bankruptcy in Alabama?
Generally, filing for bankruptcy under Chapter 7 or Chapter 13 bankruptcy in Alabama differs in the following ways.
- Eligibility: Chapter 7 bankruptcy is available to businesses and individuals, while Chapter 13 is available to individuals and spouses. Furthermore, debtors have to pass an income-based means test to qualify for a Chapter 7 bankruptcy, whereas Chapter 13 has a debt-based eligibility requirement and several other conditions.
- Filing procedure: Chapter 13 bankruptcy is more complicated than Chapter 13 bankruptcy because the latter involves creating a repayment plan and getting it confirmed by the court.
- Debt repayment procedure: Chapter 7 bankruptcy focused on liquidating assets to settle debts, while Chapter 13 bankruptcy is a reorganization process that involves creating a payment plan and making monthly payments.
- Speed: A Chapter 7 bankruptcy takes four to five months, while Chapter 13 bankruptcy takes three to five years. Hence, relief and recovering from debts is faster in a Chapter 7 bankruptcy than in and Chapter 13 bankruptcy
- Consequences: Chapter 7 bankruptcies may result in loss of assets, while Chapter 13 does not liquidate assets. On the other hand, Chapter 13 takes time and may lead to tighter budgets.
- Flexibility: Chapter 13 allows for debt adjustment and changes in the repayment plan, while Chapter 7 hardly makes room for modification.
- Discharge: Not all debts that are dischargeable under Chapter 7 are dischargeable under Chapter 13 bankruptcy.
What is Bankruptcy Protection in Alabama?
The core protection for persons who declare bankruptcy in Alabama is the Automatic Stay. Under Section 362 of the U.S. Bankruptcy Code, an automatic stay goes into effect immediately after a debtor files a petition and halts creditors’ actions to collect debts from a debtor. This includes wage garnishments, home foreclosure, vehicle repossession, and aggressive calls. Therefore, the debtor has space and opportunity to figure out a repayment plan and remains protected within this period as violators can be sued and required to pay for damages suffered.
However, not all activities shall halt while the stay is in effect. Actions of non-creditors like tax audits, ongoing criminal/civil proceedings, and payment of medical obligations are not covered. Furthermore, some pre-petition actions cannot be undone, such as completed foreclosures and legal actions of landlords.
Additionally, there are some restrictions on the duration of an automatic stay. The automatic stay will last 30 days if a debtor has one pending bankruptcy case or case dismissal within one year of filing the second petition, except the debtor obtains a letter of exemption within this month. There may be no automatic stay for two or more pending/dismissed bankruptcy cases unless the debtor files a motion. Lastly, a secured creditor may petition the court for relief if there is adequate cause to lift the stay.
What are Alabama Bankruptcy Exemptions?
Alabama bankruptcy exemptions are protections on a debtor's asset that restrict the sale of such properties and help debtors claim certain amounts in value. Only state bankruptcy exemptions are applicable in Alabama, and these include:
Homestead exemption: $16,450
Personal property wildcard exemption: $8,225 or double for spouses
Family Allowance: $16,450
Pension and retirement plan exemption:
- Roth IRAs, IRAs, and other eligible retirement accounts
- Pensions of judges, teachers, state employees, and law enforcement officers
- Spendthrift trusts
Personal property exemption:
- Family pictures and portraits
- Burial place for debtor and family
- Church pew for debtor and family
Public benefit exemption:
- Earned income tax credit
- Crime victim compensation
- Worker’s compensation
- Aged, disabled, blind, and other public assistance
- Southeast Asian War POW’s benefits
- Unemployment compensation
Tools of the trade exemption: Military uniforms, arms, and equipment of state military personnel
Wage exemption: At least 75% of disposable weekly earnings or 30 times the federal hourly wage
Federal non-bankruptcy exemptions are applicable in Alabama. These include:
- Pensions and retirements for federal civil service employees, military service employees, Foreign Service employees, and railroad workers
- Social Security
- Veterans’ benefits
- Military Medal of Honor rolls pensions
What are the Other Types of Bankruptcy in Alabama?
In line with the U.S. Bankruptcy Code, other types of bankruptcy available in Alabama are:
This is a bankruptcy chapter available specifically to municipalities in Alabama, such as counties, towns, cities, or villages in the state. It is a complicated reorganization process that deals with restructuring debts, adjusting terms, and proposing a payment plan. Liquidation is not permitted under this chapter.
This is a bankruptcy option reserved exclusively for family farmers and family fishermen with regular annual income. Under this chapter, eligible debtors can remain in business but will have to propose a reorganization plan that restructures finances and present a repayment plan that may last for three to five years.
This is a chapter that helps streamline a cross-country bankruptcy process. For instance, when a foreigner has principal debts in the home country but also owes creditors in the U.S. The chapter helps specify the rights of U.S. lenders in foreign courts, rights of foreign lenders in the U.S., and so on.
Note: In the case where foreign debtors have principal debts in their home country, bankruptcy should be filed in that country first.