Bankruptcy Laws and Procedures in Arkansas
When filing for bankruptcy in the state of Arkansas, specific local rules and regulations will apply to you. For most individuals, the biggest concern about bankruptcy proceedings is whether or not you will be able to keep your personal property.
Fortunately, the bankruptcy process was not created to leave individuals poor and destitute. It was created to help people suffering from debt troubles get back on sound financial feet again. For this reason, many personal items — especially possessions that are required for your daily life — are completely exempt from being liquidated through bankruptcy proceedings.
Federal and Akansas Bankruptcy Exemptions
In the state of Arkansas specific property will be exempt from creditors up to a certain dollar amount in value. After filing for bankruptcy, you will be able to keep any exempted property. However, property that is not covered under the exception is vulnerable to being seized, liquidated and used to pay off outstanding debts.
Any exemption limit will only apply to the equity that you own in the property. In other words, if you owe $3,000 on a motor vehicle with a value of $10,000, then your equity in the vehicle will be $7,000. If the property secured by a loan is covered under the exemption list, if you are current on payments, and all your equity in the property is covered by exemptions, you will likely get to keep the property through Arkansas bankruptcy proceedings.
In Arkansas, individuals have the right to proceed with their bankruptcy with federal exemption statutes rather than the Arkansas exemptions; therefore, you may wish to consult with a bankruptcy attorney to decide which statutes are more favorable to your specific situation.
Property exemptions under Federal statutes include:
- Up to $20,200 for residential homestead real property
- Up to $3,225 for an automobile
- Up to $1,075 worth of personal property items
- Up to $10,775 in household furnishing, appliances, clothing and goods
- Up to $1,350 worth of jewelry
- Up to $1,075 in miscellaneous wildcard exemptions
- Up to $2,025 worth of work tools
- Up to $10,775 in interest from un-matured life insurance
- Subsistence payments (Social security, VA benefits, unemployment, alimony, child support, annuity payments and other types of payments
- Any health aides
- Property from wrongful death or personal injury lawsuits
For individuals who can show proof of living in Arkansas for the past two years continuously, alternative property exemption under Arkansas statutes include:
- For married individuals or individuals with dependents: Homesteads up to 1/4 acre in size are exempt in urban areas with no value limitation. Homesteads up to 80 acres are exempt in rural areas with no value limitation
- For married individuals or individuals with dependents: $500 worth of personal property
- For single individuals without dependents: $200 worth of personal property
Getting Bankruptcy Help from an Attorney
Bankruptcy laws are complicated no matter how simple your bankruptcy appears to be. Indeed, everyone’s situation is different and that is why it is important to seek the assistance of an attorney before beginning the bankruptcy process. An attorney can evaluate your debt to asset ratio compared to your income and help decide if bankruptcy is right for you, and which type of bankruptcy and/or debt resolution strategy is most appropriate for your needs.