Arkansas Bankruptcy Lawyer

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Bankruptcy is a legal procedure offered to people whose debts are overwhelming to the point where resolution without intervention from the legal system is impossible. Individuals and organizations that find themselves in financial distress and are unable to pay their creditors have the option to use bankruptcy to settle their debts. Creditors may file a bankruptcy petition against a debtor, also known as involuntary bankruptcy, in an effort to recoup a portion of what they are owed.

The primary purpose of bankruptcy is to relieve a debtor of most, or all, debts. If only most of the debt is excused, then a repayment plan is installed, catered around what the debtor is able to pay in order to ensure that the creditors receive what they are owed. It's a process far less cut-and-dry than it may seem, and proper representation and counsel is a crucial part of the filing.

A bankruptcy case is initiated by the filing of a petition, which contains the debtor's financial information. Bankruptcy cases are always filed in United States Bankruptcy Court, which is an adjunct to the U.S. District Courts. Each cases is dependent upon state law, particularly with respect to the validity of claims and exemptions.

The most common types of personal bankruptcy for individuals are Chapter 7 and Chapter 13. In Chapter 7, a debtor surrenders his or her non-exempt property to a bankruptcy trustee, who then liquidates the property and distributes the proceeds to the debtor's unsecured creditors. In exchange, the debtor is generally entitled to a discharge of debt, except when there is evidence of concealment or fraud. In Chapter 13, the debtor retains ownership and possession of all of his or her assets, but must devote some portion of their future income to repaying creditors, generally over a period of three to five years. The debtor is protected from most lawsuits, wage garnishments, or attempts to compel payment during the bankruptcy proceeding.

Federal bankruptcy laws were amended in 2005 to require a means test calculation to determine if a person can file Chapter 7 bankruptcy. If household income exceeds the state median income for a family of four, which, in Arkansas, is $52,217, a person can still file Chapter 7.

In Arkansas, there are certain bankruptcy exemptions, meaning there is a list of the kinds and values of property that creditors or bankruptcy trustees are legally unable to reach. The debtor is allowed to keep the property that is considered exempt, and what is exempt and the amount that is exempt varies from state to state. These exemptions include the homestead of real or personal property of up to $800, or $1,250 if married. Personal property, including a motor vehicle of up to $1,200, wedding rings, burial plots, clothing, and prepaid funeral trusts are all exempt. Wages and pensions, such as tax exempt retirement accounts, are exempt, as well as public benefits like workers' compensation, unemployment compensation, and crime victims' compensation. Tools of the trade, such as books and tools, are exempt up to $740. Health, life, accident and disability insurance are all exempt, too.

Bankruptcy is a complicated legal matter, and the use of an attorney is highly recommended. There are an estimated 118 bankruptcy attorneys in Arkansas, most of whom can be found through the Arkansas Bar Association at If you cannot afford an attorney, there are also resources through the website that can aid in an attempt at financial freedom.

In 2008, a cumulative 13,636 individuals filed for bankruptcy in the state of Arkansas, with 48 percent of filing for Chapter 13 and 52 percent filing for Chapter 7. This amount may continue to grow as financial situations worsen for many, and people will need help to get through the bankruptcy process, and on the road to recovery.


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