There are certain things that are related to financial issues. A few common reasons include overwhelming debt, sudden illness, divorce, foreclosure, or losing one’s job.
In fact, the average credit card debt in Arkansas is a whopping $5,578 per person. In addition, foreclosure rates are also as staggering, one out of every 4,890 AR homes is currently in foreclosure.
If you can relate to the scenarios above, then you are more than likely dealing with other personal problems that come with being in debt. The fear of losing your vehicle, house or your money can drain a person physically and emotionally. You may have even considered Claiming Bankruptcy .
If you are thinking “Can I File Bankruptcy?” you are definitely not alone. Just under a million people file bankruptcy each year in America. Bankruptcy is a tool provided by the US Government to help struggling Americans find relief from massive debt. You may want to consider personal bankruptcy if it’s best for you.
What Is Bankruptcy?
Bankruptcy provides people with the opportunity to lift their financial burden while still working with lenders in a legal capacity. It is started by a person filing a Petition with their nearest bankruptcy court. The Petition can be filed by an individual or married couples jointly. When the bankruptcy is finished, the filer will ‘exit’ and will have a chance for a fresh start on their finances.
Throughout the bankruptcy process, a trustee is appointed to oversee the particulars of the matter. His or her duties differ and depend on whether the person has filed for Chapter 7 or Chapter 13 bankruptcy.
Did you know that Arkansas ranks #10 in the nation for bankruptcy filings. In 2017 the number of personal bankruptcies was approximately 374 out of every 100,000 residents.
What Is The Difference Between Chapter 7 And Chapter 13?
People in Arkansas, who claim bankruptcy, can choose to file under Chapter 7 or Chapter 13 of the U.S. Bankruptcy Code. Want to know the difference? Look below for more information
The trustee of the bankruptcy will liquidate the assets, such as cars, homes, and other property of value in a Chapter 7 Bankruptcy proceeding, In exchange for dissolving all past due debts.
The proceeds collected during liquidation will be used to repay debtors that were listed on the bankruptcy filing.
If you have the means to pay some of your debts, a chapter 13 bankruptcy plan may work for you. You will be allowed to retain your valuable assets over a 3- to 5-year period.
In order to decide which chapter an individual can file, they will have to assess their ability to repay under the Bankruptcy Means Test.
What Is A Bankruptcy Means Test?
The goal of the Bankruptcy Means Test is to determine who is eligible to apply for debt forgiveness through a Chapter 7 Bankruptcy. It takes into account your:
- income and expenses
- household size and composition
- debt-to-income ratio
If you do not qualify for Chapter 7 bankruptcy, you will be able to file for Chapter 13, as above-described.
What Are Bankruptcy Exemptions?
The federal bankruptcy exemptions are a list of exclusions by Congress that are available to filers in specific states. These exemptions will determine what you are able to retain throughout and after Chapter 7. In a Chapter 13 situation, the exemptions will determine what amount you will have to pay certain financial institutions in your repayment plan.
Homestead (Choose A or B, Not Both)
- A. Married person or head of family may claim: Real or personal property used as a residence; unlimited exemption up to 1/4 acre in a city, town, or village; or up to 80 acres elsewhere. If between 1/4 and 1 acre in city, town, or village, or 80 to 160 acres elsewhere, additional exemption up to $2,500. No homestead may exceed 1 acre in city, town, or village, or 160 acres elsewhere. Spouses may not double.
- B. Real or personal property used as a residence, up to $800 if single or $1,250 if married.
- You can keep all of your clothing under Arkansas law.
Other Personal Property
- While Arkansas does have a bankruptcy exemption statute on the books, which delineates various exemption amounts for certain types of personal property in 1990 the Eight Circuit Court of Appeals declared this statute unconstitutional as it relates to personal property. The court reasoned that because Arkansas has a constitutional provision which allows debtors to exempt up to $200 of all of their personal property ($500 if married), this provision acted as a cap. The bankruptcy exemption statute (which allows for more generous exemption amounts) conflicts with the Constitution and is therefore unconstitutional.
- These caps apply to all of your personal property. So, for example, if you are single and use $200 to exempt car equity, you’ll have nothing left for your piano.
- Workers’ compensation.
- Unemployment compensation.
- Crime victims’ compensation.
Want to know if you can include Student Loans in Bankruptcy or Medical Bills in Bankruptcy? Check out our Bankruptcy FAQ’s section.
Filing Bankruptcy Alone vs. Filing With An Attorney
Current laws do not require filers to hire a lawyer to declare bankruptcy relief. People are permitted to represent him or herself as a pro se debtor. You will simply contact the local bankruptcy court and obtain all forms and requirements directly through them. Filing alone is not for the faint of heart.
Filing Bankruptcy without an Attorney
A basic Chapter 7 Bankruptcy that doesn’t have a lot of debtors or assets may be easy to manage on your own.
A basic bankruptcy that may not require an attorney might look like:.
- Your income is below the state median;
- You have no property;
- Your debts will be considered dis-chargeable.
Working With An Attorney
For most people, it is usually in one’s best interest to work with a bankruptcy attorney. A bankruptcy lawyer is there to represent you and not the creditors.
An attorney is also keenly familiar with exemption laws. In addition, they can come up with creative strategies to keep your assets through practical repayment strategies that are fair to everyone involved.
While you may have the fight and ability to manage a Bankruptcy on your own, it tends to make things a lot easier on an already stressful situation, especially when there is so much at stake.
What Does Bankruptcy Include?
Once you file for bankruptcy in AR, the courts put in place an order called an Automatic Stay. This order will stop debt collection calls, wage garnishments, and additional claims. Keep in mind that payments regarding child support and criminal cases will still need to be made during this time.
In any event, Bankruptcy will be able to include:
- credit card debt
- protection from eviction
- avoidance of foreclosure
- utility bills
- medical expenses
Again, unless you are filing a complex Chapter 13 case, you will lose all assets associated with a Chapter 7 Bankruptcy protection. You will, however, be able to prevent any and all collections from occurring as long as they were incurred before the date of filing and discharge.
Final Thoughts And Considerations On Filing For Bankruptcy In Arkansas
As you can see, there a lot of information associated with successfully filing for bankruptcy and then exiting it unscathed or satisfied. Only a licensed bankruptcy attorney can guide you through this arduous process, particularly when it comes to complex cases. Be sure to hire someone you respect and trust.
Bankruptcy Courts In ArkansasOld United States Post Office and Courthouse
300 West Second Street
Little Rock,AR 72201
Arkansas Eastern & Western Bankruptcy Court
John Paul Hammerschmidt Federal Building
35 East Mountain Street
Arkansas Eastern & Western Bankruptcy Court
Additional Arkansas Resources
Foreclosure Help Program
Disability SSDI Benefits