Arkansas Bankruptcy Information
The process of filing bankruptcy in Arkansas. Understand the differences between filing chapter 7 and chapter 13 in Arkansas.
Filing Chapter 7 Bankruptcy in Arkansas
Chapter 7 Bankruptcy is a liquidation bankruptcy where a debtor (individual, corporation, couple or partnership) can have most of their unsecured debt obligations discharged. Under Chapter 7 Bankruptcy, a trustee will be assigned to your bankruptcy case and the trustee will sell your non-exempt assets and distribute the proceeds to your creditors.
Filing Chapter 7 Bankruptcy is the most common, cheapest and easiest way to discharge debt. The main cost will be to hire a bankruptcy attorney and pay court costs. Under the new bankruptcy laws, however, there are new requirements which must be met to qualify to file Chapter 7 Bankruptcy in Arkansas. In addition to an income test, you also will have to complete a credit counseling course and a financial management course.
The Arkansas Means Test
The first step in the process is to determine if your annual income is below the current Arkansas state median income for a family of your size. If it is below the median income level, you will qualify to file Chapter 7 Bankruptcy. If your income is above the Arkansas state median income there is additional \"means test\", which an Arkansas Bankruptcy Lawyer can complete for you to determine if you are eligible to file Chapter 7 Bankruptcy. In general, the means test will analyze your net monthly income, which is your current monthly income minus deductions for mortgage payments, certain school costs, taxes, child support and car payments, after these deductions are made the test will determine if you are able to pay at least $6000 or $100 each month to your creditors over the next five years. If you are able to make these payments, you will most likely have to file Chapter 13 Bankruptcy.
Filing Chapter 13 Bankruptcy in Arkansas
If you do not pass the means test or if you have assets that you would like to keep, filing Chapter 13 Bankruptcy may be your best option. If you file Chapter 13 Bankruptcy, it does not immediately discharge debt but will require you to pay at least a part or all of your debt to your creditors over a three to five year repayment period. Certain assets are considered exempt from the bankruptcy process. Federal bankruptcy laws have outlined what assets are exempt, but some states have created their own list of exempt assets. Depending on the state where you live, you may be able to choose between the federal list and the state list or you may have to choose the state exemption list.
If you decide to file bankruptcy in Arkansas, you may choose either the Federal Exemption List or the Arkansas State Exemption list. There may be restrictions to this rule if you have not lived in Arkansas for the two year period prior to filing personal bankruptcy.