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The U.S. Constitution allows Congress to make bankruptcy laws

In Arkansas and all other states, a consumer bankruptcy is one in which an individual or a married couple file to eliminate and/or reaffirm specified bills that are mainly considered to be consumer debts. This can include personal credit cards, personal loans, car loans, mortgages and medical debt. The debts owed by a business entity are considered business debts and are primarily dealt with in a business bankruptcy.

Bankruptcy law has a long history that dates back hundreds of years. The U.S. Constitution authorizes Congress to pass a uniform set of bankruptcy laws applicable throughout the United States. In that sense, state bankruptcy laws or procedures, if any exist, are generally ineffectual and subservient to the uniform federal law as established in the federal Bankruptcy Code.

The establishment of bankruptcy relief under federal law is indicative of a national public policy that disfavors the practice of putting persons in jail for owing money. So-called debtor prisons no longer exist in this country, although in certain very limited areas, such as overdue child support, individuals can be incarcerated for limited time periods to influence the payment of critical support for minor children. When an individual or a married couple find themselves facing overwhelming consumer debt, they may be qualified to eliminate the unsecured amounts of that debt through a bankruptcy proceeding.

Sometimes, it is possible to eliminate credit card and medical debt and yet retain one's home and cars by continuing to make timely payments on the loans that they secure. That kind of relief is normally provided by a Chapter 7, whether filed here in Arkansas or in another state, which gives the consumer the unusually powerful benefit of cleaning out quickly and forever all debt that is not tied to any particular collateral. That benefit can be an economic lifesaver to a family that needs budgetary relief in order to keep up with its house and car payments; a completed bankruptcy will put more cash into the filers' hands so that the secured transactions and the applicable collateral can be maintained in good standing.

Source: Huffington Post, "Some Bankruptcy Legal Facts and Suggestions", Brad Reid, Feb. 3, 2016

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