Bankruptcy is something that no one wants to enter into initially, but this may be due to the myths that surround it. Many people think of bankruptcy as the final way to eliminate debt, but they also may believe that it will leave them destitute. This could not be further from the truth.
For example, did you know that there are many personal exemptions with bankruptcies? You may be able to keep many of the things you already own while eliminating unsecured debts. For instance, there are car or automobile exemptions that may help you protect your vehicle against a Chapter 7 bankruptcy. There is typically a cap on the value of the vehicle that is protected, but this varies by state. In some cases, the vehicle will be exempted if it’s your only means of transportation.
Another exemption can be found for the homestead. A homestead exemption, federally, is limited to around $20,000 but protects your home from repossession and foreclosure. In Arkansas, the maximum property that can be designated as a homestead is $2,500, and the maximum urban acreage allowed is up to one acre. In rural areas, up to 160 acres are protected, and the person’s acreage will not be reduced below 80 acres during the course of the bankruptcy.
Since every state has its own bankruptcy laws and regulations, it’s a good choice to speak with your attorney before deciding if you want to enter into bankruptcy. Good planning can help you protect more of your property against repossession and helps you start over fresh with as much of your property as possible.