Debt Collection Laws in Alabama
If you're dealing with debt collection in Alabama, here's what actually protects you: a cap on how much of your paycheck can be garnished, a base amount of home equity and bank funds creditors can't touch, and a deadline after which a debt lawsuit generally can't succeed. Current as ofJuly 2026 — sourcing for each section is linked below.
Alabama's 2026 debt outlook
Bankruptcy filings in Alabama ran 21,170 in the 12 months ending March 2026, versus 19,719 the year before (+7.4%), per official U.S. Courts data. See the full 51-state filing ranking.
Serious mortgage delinquency (90+ days late) in Alabama sits at 0.9%, trending toward roughly 1% by the end of 2026 (elevated and rising). See the full 51-state outlook and methodology.
Debt collection complaints to the CFPB from Alabama residents ran 5,075 so far in 2026, versus 3,098 over the same window in 2025 (+64%). See the full state-by-state surge ranking.
How much of my paycheck can be garnished in Alabama?
Alabama gives you no extra protection beyond the federal minimum: a creditor can take up to 25% of your disposable weekly earnings, with at least $217.50/week (30 times the federal minimum wage) always protected, whichever leaves you more.
Alabama's own general wage-exemption statute technically protects 75% of wages from ordinary judgments, but in practice, consumer debt garnishment runs on the same 25%/30x-minimum-wage formula mirrored from the federal Consumer Credit Protection Act — the state court's own garnishment worksheets separate 'consumer debt' from 'non-consumer debt' specifically to apply this.
Child support garnishment follows a completely separate federal scale and can reach 50-65% of disposable earnings depending on arrears and whether you're supporting another spouse or child — this cap doesn't apply to support obligations at all.
Can a creditor take money from my bank account in Alabama?
Alabama protects $10,225 in bank deposits and other personal property combined — one of the lower personal-property exemptions in the country, and that figure just stepped up from $9,400 as of the July 1, 2026 cost-of-living adjustment.
This is a single shared exemption bucket covering bank funds along with other non-wage property, not a bank-account-specific allowance on top of everything else you own. The base figure written into the statute is actually just $7,500 — the higher current number comes from a mandatory cost-of-living adjustment the State Treasurer applies every three years, on July 1 of the adjustment year.
Is my home protected from creditors in Alabama?
Alabama protects $20,475 of equity in your home, on up to 160 acres — that figure just stepped up from $18,800 as of the July 1, 2026 cost-of-living adjustment, the same one that raises the bank-account exemption.
Like the personal-property figure above, the number written directly into the statute is a lower $15,000 base; the current, higher figure comes from the State Treasurer's mandatory three-year CPI adjustment rather than a legislative change, so it climbs on a predictable schedule every July 1.
How long can a debt collector sue me in Alabama?
A collector has 6 years to sue you in Alabama over credit card debt or any other written contract, but only 3 years if the debt is an open account rather than a signed agreement — a distinction that's frequently disputed when a debt buyer sues on an old balance.
| Debt type | Statute of limitations |
|---|---|
| Credit card / written contract | 6 years |
| Open account | 3 years |
A contract signed 'under seal' gets a longer 10-year window, but that's rare outside specialized commercial contracts and generally doesn't apply to ordinary consumer debt. The clock resets on a partial payment or a written acknowledgment of the debt — a real trap for anyone making a small goodwill payment on old debt without realizing it can revive an otherwise-expiring claim.
Does Alabama have its own debt collection law beyond the federal FDCPA?
Alabama doesn't have a dedicated state law adding extra consumer protections on top of the federal FDCPA — no state call-time restrictions, no separate state-law claim for deceptive tactics. What exists instead is a licensing and tax requirement for collection agencies operating in the state.
That license tax runs $100 a year in towns of 20,000 or more people, and $25 in smaller towns — a revenue and registration requirement more than a conduct rule. Agencies that fall outside the federal FDCPA's definition of a 'debt collector' are also exempt from this licensing requirement, so it doesn't reach every entity that might contact you about a debt.
Where can I find free or low-cost legal help in Alabama?
If you're dealing with a debt lawsuit, garnishment, or collector dispute in Alabama, a good starting point is the state bar's lawyer referral service or one of the legal aid organizations below — both can point you to self-help court resources even if you don't qualify for free representation.