Personal Bankruptcy in Arkansas

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Bankruptcy is federal law. There are two types of personal bankruptcy:

  • Chapter 7 is a liquidation with no assets to satisfy debtor's debts, or few assets surrendered to trustee and liquidated to pay a portion of debtor's debts.
  • Chapter 13 is a reorganization where an individual or couple has a home or car and desires to repay debts on a longer, restructured repayment plan administered by a trustee and repays creditors pro rata shares of claims.

Where Do You File a Bankruptcy Case?

Arkansas' Bankruptcy Court has two districts: the Eastern District in Little Rock and the Western District in Fayetteville.

The Bankruptcy Code requires debtors to file in the court's district and local division of the court located closest to where they reside.

Are You Eligible to File for Chapter 7 Bankruptcy Relief?

The bankruptcy code determines your eligibility to file bankruptcy.

  • If your average monthly income is less than Arkansas' median income, you are eligible to file Chapter 7.
  • If your average monthly income is greater than or equal to Arkansas' median income, you are ineligible to file Chapter 7 unless you pass a stringent means test.

How Long Is a Chapter 13 Bankruptcy Plan?

  • If your average monthly income is less than Arkansas' median income, your Chapter 13 repayment plan cannot exceed 36 months, unless the court determines there is good cause to extend your plan for up to maximum of 60 months.

  • If your average monthly income is greater than or equal to Arkansas' median income, your Chapter 13 plan generally will be 60 months.

Available Exemptions in Bankruptcy

Exemptions are rules that permit specific property to be excluded from bankruptcy and the reach of debtor's creditors and the trustee. In Arkansas, debtors may choose either federal bankruptcy exemptions or state exemptions.

  • Federal exemptions include $20,200 for homestead real property used as residence, $3,225 for a motor vehicle, $1,075 for personal property, $10,775 for household furnishings, goods, clothes, and appliances, $1,350 for jewelry, $1,075 wildcard miscellaneous exemption, $2,025 in work tools, health aides, $10,775 interest in unmatured life insurance contract, subsistence payments like Social Security, unemployment, VA benefits, alimony, child support, pension, and annuity, and property traceable to crime victims, wrongful death, bodily injury.
  • Arkansas Constitutional Exemptions: This option is available to debtors as an alternative to federal exemptions. Debtors can exempt their homestead regardless of the amount of equity if they are married or have dependents, subject to acreage limits of ¼ acre for urban property and 80 acres for rural. Clothing and $500 of personal property if you are married or have dependents, $200 if single are exempt. Spouses can double personal property exemptions.
  • There are residency requirements for state exemptions. You usually have to live continuously in the state for the past two years before bankruptcy. If you have lived in multiple states, the “look back” period is longer. There are limits on homestead exemptions for property acquired less than four years before bankruptcy.

Using an Arkansas Bankruptcy Lawyer

Bankruptcy laws in Arkansas are complicated, and the facts of each case are unique. For more information specific to your situation, please contact an Arkansas bankruptcy lawyer.

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