When you declare bankruptcy, you may be afraid of losing your assets. However, declaring bankruptcy is not supposed to strip you of all your belongings. Instead, it should provide a fresh start from the financial problems you may be facing by discharging most of your debts.
This is the reason bankruptcy exemptions exist. They enable you to protect most or all of your assets since – realistically – most people who file bankruptcy don’t have a lot of assets to protect in the first place.
What assets can you exempt?
You can protect a wide range of assets from bankruptcy with both federal and state exemptions. For example, you may be able to exempt your homestead, motor vehicle and jewelry, among other personal belongings you wish to keep. However, you can only exempt an asset up to a certain value.
In Arkansas, you can choose to go with federal or state exemptions when filing for bankruptcy. It is one of the few states with this option. The amounts in exemptions vary across both jurisdictions and are adjusted periodically, so make sure that you understand which route is better for your situation before you decide.
Learning more about how bankruptcy works
Bankruptcy is a veiled topic among many, and it’s little surprise many misconceptions are out there. The gap in information is likely why many are unaware and hesitant to file for bankruptcy even when it’s the best solution.
Don’t be afraid to consider bankruptcy as a solution to your financial woes. You can learn more about your options before you take the next steps.