Alabama Credit Card Debt: Statute of Limitations & Laws (2026)

Alabama’s 6-year statute of limitations under Ala. Code § 6-2-34

Alabama Code § 6-2-34(5) sets a 6-year statute of limitations for “actions founded on any contract or writing under seal.” Subsection (4) sets the same 6-year window for “actions for the recovery of money upon a loan upon a stated or liquidated account.”

Alabama appellate courts have consistently held that credit card debts fall under one or both of these subsections. The 6-year window applies whether the cardholder agreement was signed on paper, e-signed, or activated by phone with terms accepted electronically.

The 6-year clock starts at the date of last payment or written acknowledgment of the debt. Charge-off does not reset the clock. Selling the debt to a debt buyer does not reset the clock. What restarts the clock:

• A signed payment plan or settlement agreement
• A written admission of the debt
• A partial payment that the creditor applies to the account

A time-barred Alabama credit card debt is not extinguished automatically. The debtor must raise the SOL as an affirmative defense in the written answer within 30 days of service. Failing to raise the defense waives it permanently. Alabama courts have allowed amendment of pleadings to add the SOL defense if the original answer omitted it, but timing is uncertain; raise it on the original answer.

Wage garnishment under Ala. Code § 6-10-7

Alabama Code § 6-10-7 provides the state-law exemption from garnishment of 75% of wages, mirroring the federal 25% cap under 15 U.S.C. § 1673. The 30× federal minimum wage floor ($217.50/week in 2026) protects low-wage workers.

Alabama procedure:

1. Creditor obtains a money judgment in Alabama state court
2. Creditor files a Process of Garnishment writ with the court that issued the judgment
3. Court serves the employer
4. Employer must respond within 30 days with information on the debtor’s wages
5. Garnishment continues each pay period until the judgment is paid in full, capped at 25%

Alabama’s garnishment is continuous: a single writ captures wages until the judgment is satisfied. The creditor does not need to renew the writ unless the debtor changes employers.

Workers’ compensation, unemployment, and federal benefits (Social Security, SSDI, SSI, VA) are exempt from Alabama garnishment under federal and state law.

Alabama’s homestead and personal property exemptions

Alabama Code § 6-10-2 sets the homestead exemption at $16,450 per filer in 2026. The Alabama legislature reviews and may adjust this amount periodically based on CPI. The homestead protects a primary residence:

• Up to 160 acres outside a city or town
• A lot up to 0.25 acre inside city limits

Equity above the cap is reachable by a judgment creditor through forced sale. The homestead is doubled to $32,900 for joint filers who jointly own the property.

Other Alabama exemptions:

• Motor vehicle: $7,750 per filer (Ala. Code § 6-10-6.1)
• Personal property wildcard: $8,225 (Ala. Code § 6-10-6)
• Tools of trade: included in the personal property aggregate
• Retirement accounts: ERISA-qualified plans 100% exempt; IRAs exempt up to federal limits

Alabama is an opt-out state for bankruptcy exemptions under Ala. Code § 6-10-11, so the state amounts apply in Chapter 7 as well as state collection actions.

Alabama garnishment math vs settlement math

The pillar payoff calculator compares paths for an Alabama debtor facing a credit card judgment.

Scenario 1: $14,500 balance, single AL filer, $950/week disposable

Garnishment caps at the lesser of 25% of $950 = $237.50/week, or $950 - $217.50 = $732.50/week. The cap is $237.50/week, or $12,350/year. The original $14,500 grows with post-judgment interest at 7.5%, so total collection is approximately $16,000 over 16 to 18 months. Settling at 40% costs $5,800 paid in 90 days. Settlement saves about $10,200 vs full garnishment.

Scenario 2: $14,500 balance, AL homeowner, $250,000 home with $200,000 mortgage

Home equity is $50,000. The first $16,450 is protected under Ala. Code § 6-10-2. Remaining $33,550 of equity is reachable by judgment lien. Alabama’s 20-year judgment enforcement window means the lien can sit on the home for two decades (renewable), triggering payment at sale or refinance. Many AL homeowners settle for 35 to 50% of balance rather than risk the prolonged lien.

Scenario 3: $14,500 balance, AL retiree on Social Security plus IRA distributions

Social Security is fully exempt under 42 U.S.C. § 407. IRA distributions are protected under Alabama Code § 19-3B-508 to the extent the funds remain in an exempt retirement account. Once distributed to a bank account, the funds lose retirement protection but receive 31 CFR Part 212 protection if direct-deposited as federal benefits. This retiree is effectively judgment-proof against the credit card debt.

Alabama vs Southeast neighbors

Alabama and Mississippi together have some of the longer judgment enforcement windows in the country. The 20-year Alabama window means an unaddressed credit card judgment stays collectable for two decades, accruing interest at 7.5%. This makes the strategy of “do nothing and wait out the SOL” much weaker in Alabama than in states like North Carolina or South Carolina where wage garnishment is banned entirely.

Filing the Alabama Claim of Exemption

When a garnishment writ lands in Alabama, you have a narrow window to claim exemptions. The procedure under Ala. Code § 6-10-20:

1. File a Declaration of Claim of Exemption with the issuing court within 30 days. Alabama’s Administrative Office of Courts provides the standardized form on the judicial branch site. The form lists specific exemption categories with check boxes.

2. List the applicable exemptions:

• Federal benefits (Social Security, SSDI, SSI, VA, federal retirement)
• 30× federal minimum wage floor for low-wage workers
• Motor vehicle up to $7,750
• Personal property wildcard up to $8,225
• 100% of ERISA-qualified retirement
• Workers’ compensation, unemployment, life insurance proceeds

3. Serve the creditor’s attorney. Alabama requires service by certified mail or hand delivery within the 30-day window. The court schedules an exemption hearing within 30 to 60 days.

4. Hearing. Bring pay stubs, account statements, vehicle title, and any documentation of exempt sources. The judge can release the garnishment in whole or in part, and order return of any wages already withheld if the exemption applies.

Alabama bank levy and the federal benefit protection

Alabama creditors can serve a garnishment writ on a bank holding the debtor’s account under Ala. Code § 6-6-390. The bank freezes the account up to the judgment amount and notifies the debtor and court. Protections:

• 31 CFR Part 212 requires the bank to perform a 2-month lookback on direct-deposited Social Security, SSDI, SSI, VA, federal retirement, and federal student aid. Protected amount is released within 2 business days.
• The $8,225 personal property wildcard under Ala. Code § 6-10-6 can be applied to bank balances if claimed within 30 days.
• Tracing exemption for funds derived from exempt sources (workers’ comp settlement, unemployment, etc.).

Alabama’s $8,225 personal property wildcard is generous compared to Kentucky’s $1,000 but smaller than Tennessee’s $10,000. Plan bank balances accordingly.

Alabama Deceptive Trade Practices Act overlay

The Alabama Deceptive Trade Practices Act, Ala. Code § 8-19-1 and following, gives consumers a private right of action against debt collectors for unfair or deceptive practices. Key Alabama provisions:

• Minimum damages of $100 per violation or actual damages, whichever is greater (Ala. Code § 8-19-10)
• Attorney’s fees and costs
• Treble damages for willful violations
• Misrepresenting wage garnishment caps or the SOL status of a debt is per se a violation

Alabama’s Attorney General Consumer Interest Division handles complaints and has authority to seek civil penalties.

Collection agencies operating in Alabama must be licensed under Ala. Code § 40-12-80. Unlicensed collection activity is a violation of state law and can result in dismissal of the underlying collection action.

When Chapter 7 bankruptcy makes sense in Alabama

Alabama’s 20-year judgment enforcement window under Ala. Code § 6-9-191 makes Chapter 7 bankruptcy more attractive than in states with shorter windows. Many Alabama debtors cannot reasonably wait out the SOL on judgments because two decades of post-judgment interest at 7.5% multiplies the original debt substantially.

The Chapter 7 means test uses the Alabama state median income. The U.S. Trustee Program publishes current figures. For 2026 a single filer earning under approximately $55,000 generally qualifies. Filing triggers the automatic stay under 11 U.S.C. § 362 and most credit card debt is dischargeable.

For Alabama homeowners with significant equity, Chapter 13 may be a better choice. A 3 to 5 year repayment plan protects the home while restructuring unsecured debt. Most AL Chapter 13 plans return 10 to 30 cents on the dollar to unsecured creditors.

Authoritative Alabama sources

• Ala. Code § 6-2-34, contract statute of limitations
• Ala. Code Title 6 Chapter 10, exemptions from execution
• Ala. Code § 6-9-191, judgment enforcement period
• Ala. Code Title 8 Chapter 19, Deceptive Trade Practices Act
• Alabama Attorney General consumer complaints
• Alabama Judicial Branch self-help
• Legal Services Alabama

Sibling state pages

• Georgia credit card debt laws
• Tennessee credit card debt laws
• Mississippi credit card debt laws
• Florida credit card debt laws
• Louisiana credit card debt laws

Related tools

• Credit card payoff calculator for settlement vs garnishment modeling
• Debt management plan calculator
• Can credit card debt garnish your wages?

Frequently asked questions

What is the statute of limitations on credit card debt in Alabama?

Six years from the date of last payment or written acknowledgment, under Alabama Code § 6-2-34(5) which governs actions on simple contracts. Alabama courts have consistently applied the 6-year window to credit card debt. After 6 years pass without payment or written acknowledgment, the creditor cannot win a lawsuit if you raise the statute as an affirmative defense in your answer.

Can credit card companies garnish wages in Alabama?

Yes, after a court judgment, capped at 25% of disposable earnings under federal law 15 U.S.C. § 1673 and Alabama Code § 6-10-7. The 30× federal minimum wage floor ($217.50/week) protects low-wage workers. Alabama procedure requires the creditor to file a garnishment writ after winning the judgment. The employer must withhold and remit each pay period.

What is Alabama’s homestead exemption for credit card debt?

Sixteen thousand four hundred fifty dollars of equity in a primary residence per filer under Alabama Code § 6-10-2, with joint filers able to double to $32,900. The cap is adjusted periodically by the legislature based on CPI. Alabama is an opt-out state, so the homestead applies in Chapter 7 bankruptcy as well. The homestead is limited to 160 acres outside a city or town, and a 0.25 acre lot inside city limits.

Does Alabama have a head-of-family wage exemption?

No, Alabama does not have a separate head-of-family wage exemption analogous to Florida’s. The federal 25% cap and the 30× federal minimum wage floor are the only wage protections for credit card debt in Alabama. Workers with disposable weekly earnings at or below $217.50 are fully exempt from garnishment under federal law.

How long can an Alabama credit card judgment be enforced?

Twenty years from the date of entry under Alabama Code § 6-9-191. After 20 years the judgment is barred unless properly renewed. Alabama’s 20-year enforcement window is among the longest in the United States. Post-judgment interest accrues at the rate set under Alabama Code § 8-8-10, currently 7.5% per year for judgments where no contract rate applies.