Protecting Your Rights And Your Future

What you should know about filing for bankruptcy in Arkansas

On Behalf of | Dec 6, 2023 | Personal Bankruptcy

Navigating financial challenges is often challenging. Many people consider bankruptcy as a viable option to overcome their financial problems.

Understanding bankruptcy law in Arkansas helps those facing economic hardships decide if this option is the best choice.

The basics of bankruptcy in Arkansas

Bankruptcy is a legal process designed to help individuals or businesses overwhelmed by debt find relief. In Arkansas, like in other states, bankruptcy laws provide a framework for managing financial crises.

Chapter 7 bankruptcy. This involves liquidating certain assets to pay off debts. Certain essential items are typically exempt, ensuring individuals can maintain a basic standard of living.

Chapter 13 bankruptcy. This option allows individuals to reorganize their debts. This involves creating a repayment plan that usually spans three to five years, allowing the individual to catch up on missed payments and regain financial stability.

Not everyone qualifies for bankruptcy in Arkansas. Factors such as income, expenses and the type of debt determine eligibility.

In 2022, 5,454 people filed for either Chapter 7 or Chapter 13 bankruptcy in Arkansas. This figure is above the national average.

Bankruptcy pros and cons

When someone files for bankruptcy, it triggers an automatic stay. This prevents creditors from pursuing collection activities. Debtors gain breathing space to assess their financial situation without constant pressure from creditors.

While bankruptcy offers a fresh start, it does impact an individual’s credit score. However, the adverse effects are not permanent. With responsible financial behavior, individuals can rebuild their credit over time.

Bankruptcy and assets

Many people wonder about the fate of their assets during bankruptcy. The type of bankruptcy you pursue can determine whether you can keep some or all your possessions. Individuals filing for bankruptcy can usually keep some exempt assets.

Bankruptcy offers a fresh start

The financial struggles leading to bankruptcy may evoke feelings of failure and shame. Individuals may question their ability to manage finances and fulfill responsibilities.

However, bankruptcy is a legal and financial tool designed to provide a fresh start. Seeking support, understanding the process and focusing on rebuilding can help restore confidence and self-respect over time.