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When should consumers file for bankruptcy relief?

There are many considerations that go into the decision of whether to file for bankruptcy relief in Arkansas. The best way to make a determination is to consult with an experienced consumer bankruptcy attorney. The attorney will review all of the pertinent bills, claims, judgments, lawsuits, if any, and will compare the debt load in the context of the current income. The attorney will also consider the nature of the assets owned and the type of debt that may apply specifically, as a lien or security interest, on any of those assets.

It is a valuable exercise and will give the debtor client(s) a broad perspective on where they stand in terms of debt relief remedies, including either a Chapter 7 or a Chapter 13 bankruptcy. An experienced consumer bankruptcy attorney will advise against a bankruptcy if there is relatively minimal debt and if that debt can be managed by the consumers based on their budget. Where there is crushing, unmanageable debt, the attorney will make some computations to see if the debtors are qualified to file bankruptcy.

If they qualify under the "means test" provisions, the attorney will explain the options and the impact of a filing. If there is a home on which the debtor is behind in payments and the debtors want to keep the property, the likely recommendation will be for a Chapter 13. That filing will stop collections against the home and will give the debtors a chance to get the mortgage back up-to-date within a 3 to 5-year payment plan approved by the court.

At the end of the Chapter 13 bankruptcy, the debtors will be current on their mortgage and will also receive a discharge of their unsecured debts. Each case, however, is extremely fact-specific and can only be evaluated properly by a thorough consultation with a bankruptcy practitioner. In most cases, the attorney will recommend a best course of action and other options based on the extensive review and discussions with the clients. This is the general initial process that will be followed for Arkansas residents and also for those who may reside in other jurisdictions.  

Source: nashville.com, "Should I File for Bankruptcy?", May 26, 2016

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