Every day I have to confront Alabama’s meager homestead exemption (Ala Code Sec. 6-10-2). Homestead exemptions across the country differ per state if the state has opted out of the federal exemptions. Mississippi’s homestead exemption is $75,000 and there are some states where the homestead exemption is unlimited. Alabama, however, has a meager $5,000 exemption to protect your home. This means that is you own your home and get behind on your bills, if the equity in your house exceeds $5,000 you would lose your house if you file a Ch. 7 bankrutpcy petition or would be forced to file a Ch. 13 repayment bankruptcy in order to protect your home from creditors. The more equity you have in your house the more money you have to pay in a repayment plan, regardless of whether you can afford the payment or not. How does that help the consumer? It doesn’t.
Thankfully, now with the help of Alabama Appleseed, a bill has been proposed to the state legislature which would increase the homestead exemption in Alabama to $10,000. I know, not a tremendous increase but it is a start. The sponsor of the bill, Jeff McLaughlin, is at least making an attempt to protect people’s property in the midst of one of the most disastrous economic era ever.