Since 2005, it has been clear in Arkansas and elsewhere that a person filing a personal bankruptcy would be able to keep his government qualified retirement funds, including personal IRAs, despite the bankruptcy. Some plans had been protected from bankruptcy liquidation even before that through a number of court cases, but it remained unclear which types of funds would be exempt. Additionally, as a general rule personal IRAs were given no protection. The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) clarified the matter by statute, making virtually all government-recognized plans and personal IRAs exempt.
As layoffs continue in different industries nationwide, including in Arkansas, the need for assistance and practical resolutions for consumer debtors continues. There are two consumer bankruptcy solutions available to those who were laid off or otherwise suffered a drop in income or an increase in unanticipated expenses. They are the Chapter 7 bankruptcy and the Chapter 13 bankruptcy.
The Chapter 7, or straight bankruptcy, is used by consumers in Arkansas to eliminate credit cards, medical bills, and other unsecured debts. As previously discussed, it’s possible for an individual filer, or husband-and-wife joint filers, to retain their residence in a Chapter 7. In some circumstances, the debtor can keep paying on a current house loan and reaffirm the loan, while discharging unsecured debt. The mortgage and the debtor’s ownership of the home, will pass through the Chapter 7 basically untouched. However, if the home loan is in arrears or default, or even if a foreclosure sale was pending at the time of filing, the debtors can file a Chapter 13 bankruptcy to try and bring the loan current and keep the house.
After filing for bankruptcy six times in a four-year span, a woman has been sentenced to federal prison for just over a year after she pleaded guilty to providing false statements in her bankruptcy attempts. Apparently all of her bankruptcy attempts were Chapter 13 filings, and all were dismissed as a result of missing information or documentation.
Some Arkansas residents may not know that there are different types of bankruptcy that an individual can go through. The two most common, though, are Chapter 7 and Chapter 13. These bankruptcies allow the filer the chance to get out of debt, but the way in which that may be achieved depends on the bankruptcy.