Chapter 7 Bankruptcy Arkansas: 3 Things You Need to Know

If you're grappling with financial difficulties, navigating the complexities of available options can be daunting without proper guidance. That's why we've crafted this article to assist individuals facing similar challenges. For those contemplating Chapter 7 bankruptcy, particularly within Arkansas, here are crucial aspects to consider before proceeding:
Information in this article does not constitute legal advice, it is for informational purposes only, and may not constitute the most up-to-date information. Readers should contact their attorney for advice on any particular legal matter.
  1. Qualification and Cost: Determine if you meet the criteria for Chapter 7 bankruptcy and understand the associated filing expenses in Arkansas.
  2. Exploring Alternatives: Consider alternative solutions that may align better with your financial circumstances.
  3. Specifics of Chapter 7 in Arkansas: Familiarize yourself with unique details concerning Chapter 7 bankruptcy specific to Arkansas, which we'll delve into further below to ensure you're well-informed.

For those who prefer visual aids, we offer the Arkansas Chapter 7 Calculator below to provide an estimate of eligibility and associated costs.

1) How Chapter 7 Bankruptcy Works in Arkansas

How Fast Do You Get Relief in A Chapter 7 Bankruptcy in Arkansas

Typically, a no-asset Chapter 7 case in Arkansas concludes within approximately 120 days from initiation to completion. In this context, "no-asset" denotes a bankruptcy scenario wherein you lack substantial assets, such as high-value properties, surpassing the applicable Arkansas bankruptcy exemptions. Therefore, if your asset portfolio falls within these exemption limits, your bankruptcy proceedings may proceed relatively swiftly, offering a prompt resolution to your financial challenges.

How Much Does It Cost To File Chapter 7 Bankruptcy in Arkansas

The cost of filing Chapter 7 bankruptcy usually ranges from $500 to $3000. However, the exact amount can vary depending on where you live. For example, filing in Little Rock may cost around $1,125, whereas in Fayetteville, the fee could escalate to $1,170.

There are also times when you might be able to lower the cost. One way is by getting a fee waiver. You can learn more about this option in the Arkansas filing fee waiver.

How Do I Qualify For Chapter 7 Bankruptcy in Arkansas?

When considering if you qualify for Chapter 7, it's essential to look at the Chapter 7 Bankruptcy Arkansas Income Limits. This test decides if you can get a bankruptcy discharge, meaning your debts are forgiven. If you pass the means test, Chapter 7 will take care of most of your unsecured debts. These are debts without any collateral, like medical bills, personal loans, certain old income tax debts, old utility bills, credit card debts, and most personal judgments.

What about secured debts in Chapter 7?

If you aim to eliminate secured debts like car loans and mortgages, Chapter 7 bankruptcy could be an option. However, you'll need to surrender the asset to the creditor, who will consider it as full payment for what you owe.

IMPORTANT: Chapter 7 Qualification via Arkansas Means Test

You can use the Bankruptcy Means Test to check if you qualify for Chapter 7 bankruptcy in Arkansas. This form calculates your average annual income using your gross income from the last six months. Then, it compares this figure to the median income of other households in Arkansas. If your median income is lower than the Arkansas median income, you may qualify for a Chapter 7 bankruptcy discharge.

Feel free to use the calculator below:

Help! My Income Exceeded The Chapter 7 Means Test Allowable in Arkansas

If your income surpasses the median income in your state, you may need to delve into part 2 of the means test or consider an alternative option. We recommend exploring this helpful resource: passing the Chapter 7 means test when income exceeds the median.

Chapter 7 Bankruptcy Arkansas Income Limits

If you're filing for bankruptcy in Arkansas on or after November 1, 2023, the income limitations based on household size are as follows:

# of PeopleAnnual Income
1$52,497
2$64,523
3$74,116
4$86,582
5$96,482
6$106,382
7$116,282
8$126,182
9$136,082
  • 10+: add $9,000 for each additional individual

Will I lose my belongings if I file Chapter 7 bankruptcy? Understand Arkansas bankruptcy exemptions

Bankruptcy exemptions shield your property during bankruptcy proceedings, ensuring it isn't sold off. In Arkansas, the homestead exemption is crucial for homeowners. If you're single or married, you get unlimited exemptions. However, if you're married or head of a family, there are limits based on acreage. For urban areas, it's 1/4 acre, with an additional $2,500 for properties between 1/4 and 1 acre. In rural areas, the limit is 80 acres, with the same additional $2,500. Remember, spouses can't double-dip on exemptions.

It's essential to explore all Arkansas exemptions wisely to protect your assets effectively. Additionally, federal exemptions outlined in the law provide another layer of protection. Fortunately, Arkansas allows the use of both state and federal exemptions, providing flexibility for individuals. Always verify the latest information for a well-informed decision.

Chapter 7 Bankruptcy Arkansas Pros and Cons

Pros

  • Discharge speed: In approximately 120 days, you can clear debts and start anew.
  • Property protection: Meeting exemption criteria under Chapter 7 may safeguard much of your belongings.
  • Lawsuit prevention: Filing triggers an automatic stay, shielding you from debt collectors' legal actions.
  • Loan deficit relief: Bankruptcy offers potential relief from debts surpassing collateral value.

Cons

  • Eligibility criteria: Specific income thresholds must be met to qualify for Chapter 7 bankruptcy.
  • Asset risk: Exceeding exemption limits could result in relinquishing property.
  • Credit report repercussions: Chapter 7 filing can adversely affect credit records for up to ten years, complicating future loan approvals.
  • Non-eliminable debt: Certain debts like student loans and child support payments are generally not dischargeable in Chapter 7 bankruptcy.

2) Alternatives to Chapter 7 Bankruptcy in Arkansas

a) Chapter 13 Bankruptcy in Arkansas

If your income surpasses Chapter 7's limit, then it may be good to consider Chapter 13 bankruptcy over Chapter 7. In Arkansas, it lets you reorganize debts into a manageable monthly plan. This restructuring safeguards your home, and vehicles, and stops foreclosure or repossession. Plus, it could lower unpaid child support, alimony, and car loan payments.

Can you afford Chapter 13 bankruptcy?

If you're thinking about Chapter 13 bankruptcy, the calculator embedded below can assist in estimating your ability to handle the monthly payment.

b) Debt Settlement/Relief

Another alternative to Chapter 7 and Chapter 13 bankruptcy is debt settlement. With debt settlement, a company negotiates a reduced amount on your total debt, potentially saving you money in the long term. However, it's crucial to weigh its impact on your credit score and conduct thorough research to select a reputable and transparent debt settlement company.

c) Debt Management

Another avenue to explore is debt management. Unlike debt settlement, which aims to reduce the total debt amount, debt management focuses on lowering your interest rates. These programs typically run for 3 to 5 years and may come at a slightly higher cost than debt settlement. It's worth noting that not all creditors may cooperate with debt management companies.

However, if you're grappling with high-interest credit card debt, opting for debt management could slash your interest rates by around 10-20%. This reduction could lead to substantial savings of 30-50% on your current debt, facilitating a more efficient debt repayment process. Assessing your financial situation and determining the most suitable option is crucial for making informed decisions.

d) Debt Payoff Planning

Another option worth considering is debt payoff planning. While this approach demands effort and discipline, it involves cutting expenses and allocating extra income toward debt repayment. By adhering to a suitable debt payoff plan, you can steadily make headway each month. Additionally, as you chip away at your debts, you can leverage the momentum by compounding payments towards the remaining balances, accelerating the payoff process over time.

3) Specific Arkansas Chapter 7 Bankruptcy Information:

Arkansas Chapter 7 Bankruptcy Credit Counseling and Debtor Education Courses

During the Chapter 7 bankruptcy process, completing mandatory courses is essential to obtain a bankruptcy discharge. These courses offer insights into your financial situation and alternatives to bankruptcy. Following your case filing, you must also undertake a debtor education course, equipping you with tools for better financial management in the future.

Approved companies in Arkansas providing these courses are listed on the UST website, ensuring compliance with regulatory standards.

Arkansas Chapter 7 Bankruptcy Court Locations

It's important to note the 341 meeting(s) of creditors, are often conducted over the phone or Zoom due to the pandemic. However, familiarity with the nearest courthouse is crucial if in-person attendance is required. To assist, we'll provide a list of court locations based on Arkansas' bankruptcy districts.

Western

  • United States Courthouse: 101 South Jackson Avenue, El Dorado, Arkansas
  • John Paul Hammerschmidt Federal Building: 35 East Mountain Street, Fayetteville, Arkansas 72701-5354
  • Judge Isaac C. Parker Federal Building: 30 South 6th Street, Fort Smith, Arkansas 72901-2437
  • J. Smith Henley Federal Building: 402 North Walnut Street, Harrison, Arkansas 72601-3630
  • United States Courthouse: 100 Reserve Street, Hot Springs, Arkansas 71901-4143

Eastern

  • 500 West Capitol Avenue, Little Rock, AR 72201
  • 617 Walnut, Helena, AR 72342
  • 615 South Main Street, Room 312, Jonesboro, AR 72401

Chapter 7 Bankruptcy Trustees Arkansas

If you need a list of Chapter 7 bankruptcy trustees in Arkansas, we've got you covered! Below, you'll find the list, and you can also click on the link provided to see it online.

DistrictNamePhone
EasternRichard L. Cox(501) 623-1759
EasternJames F. Dowden(501) 324-4700
EasternHamilton Moses Mitchell(501) 425-3431
EasternWilliam L. Owens(870) 336-6505
EasternM. Randy Rice(501) 374-1019
WesternRichard L. Cox(501) 623-1759
WesternJames F. Dowden(501) 324-4700
WesternR. Ray Fulmer, II(479) 806-6007
WesternHamilton Moses Mitchell(501) 425-3431
WesternBianca M. Rucker(479) 445-6340
WesternFrederick S. Wetzel, III(501) 663-0535
WesternRenee S. Williams(501) 624-4330

Conclusion

Now that you've learned about Chapter 7 bankruptcy in Arkansas, you're likely feeling more informed about the requirements and available alternatives. If you want a quick estimate of your eligibility and potential costs, you can try using the Chapter 7 bankruptcy means test calculator provided below.

If you're interested in delving deeper into the Chapter 7 bankruptcy filing process, you can explore our comprehensive guide on the subject.

Additionally, if you're looking to reduce attorney fees and are open to handling some tasks on your own, we offer an article on filing bankruptcy without an attorney. You can find it here: [link].

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