The Bankruptcy Code includes federal exemptions in 11 U.S.C. section 522(d), more than half of the states legislatures, including the Alabama Legislature, have enacted statutes which replace the federal exemptions with state exemptions. Consequently, available exemptions vary from state to state. See section 6-10-11, Code of Alabama (1975).
Even in states like Alabama where the federal exemptions have been replaced, federal law still requires that exemptions may be claimed only on property owned by the debtor on the date of the bankruptcy filing. Alabama law goes further and dictates that only exemptions in existence at the time the debt was created may be claimed.
Exemption |
Code of Alabama |
|
| Homestead of $5,000.00 for individual or $10,000.00 per couple | section 6-10-2 | |
| Personal property of $3,000.00 per individual or $6,000.00 per couple | sections 6-10-6, 6-10-126 | |
| Cemetery lots and pews or seats in church | section 6-10-5 | |
| Certain earnings | section 6-10-7 | |
| Rights of some beneficiaries/assignees of life insurance policies | section 6-10-8 | |
| Partnership property | section 10-8-72 (b)(3) | |
| Benefits under public employees’ retirement systems | sections 16-25-23, 36-27-28 and 78 | |
| Benefits provided under certain “qualified trusts” | section 19-3-1 | |
| Benefits from unemployment compensation fund | sections 25-4-53(b), 25-4-140 | |
| Workers’ compensation benefits | section 25-5-86(b) | |
| Proceeds/loan value of life insurance policy for benefit of dependent | section 27-14-29 | |
| Disability benefits | section 27-14-31 | |
| Annuity contracts | section 27-14-32 | |
| Benefits from fraternal benefit societies | section 27-34-27 | |
| Public assistance | section 38-4-8 | |
There are also some provisions of the Bankruptcy Code which act effectively as exemptions, such as the exclusion under section 541(c) of a debtor’s interest in an ERISA-qualified retirement plan from “property of the estate”. Patterson v. Shumate, ___ U.S. ___, 112 S.Ct. 2242, 119 L.Ed.2d 519 (1992). The Eleventh Circuit has extended this exclusion to a debtor’s individual retirement account (IRA) if it is exempt from garnishment by creditors under applicable state law, even though the IRA document allows the debtor to withdraw the IRA funds at any time by paying a penalty. In re Meehan, 102 F.3d 1209 (11th Cir. 1997).