At the Story Law Firm, PLLC our experienced Arkansas Bankruptcy Attorneys are here to help you. Same day appointments are available because we know you have questions and need to talk to someone quickly. Please call our office at (479) 443-3700 and start on the path to a new beginning with our Arkansas Bankruptcy Lawyers.
Chapter 7 Bankruptcy
A Chapter 7 Bankruptcy in Arkansas is a straight bankruptcy liquidation, meaning what you classically think about bankruptcy – you file and all your debts are relieved. As part of this, all your non-exempt assets are given to a Chapter 7 Trustee to be sold, and the resulting profits are distributed to your creditors. Do not worry, in Arkansas you have two forms of exemptions you can choose from: You can take the Arkansas exemptions, which will give you almost limitless value in your home. The other option is to take your federal exemptions, which for most people includes all or almost all of your personal property. Call us today, as experienced Arkansas Bankruptcy Attorneys, we can help you with your options for exemptions. We will sit down with you and discuss all the options you have.
Some debts in a Chapter 7 Bankruptcy are not dischargeable. These generally include taxes, support obligations, or student loans (although there is some movement about student loan discharges in Arkansas right now).
There are protections in an Arkansas Bankruptcy for things like qualified retirement funds such as IRA and 401(k) plans, but this is an area where you need an experienced Arkansas Chapter 7 Bankruptcy Attorney to assist you. These rules and amounts are complex – know your rights before you file.
The typical bankruptcy lasts about four (4) months. It generally only requires you to appear in court one time before a Chapter 7 Bankruptcy Trustee and not the Judge. Your 341 meeting of creditors, as it is called, does not generally last more than ten (10) minutes, and generally no creditors show up to ask any questions. We will be by your side during this meeting which we will prepare you for.
After you meet with the Trustee, we will assist you in any reaffirmation agreements you want to execute so that you can keep your house or your car. This process allows you to continue to pay on the debt, and the debt survives bankruptcy so you can keep your house or car(s). Generally after ninety (90) days, you will receive your discharge notice in the mail, and your bankruptcy is complete.
What happens when I file an Arkansas Chapter 7 Bankruptcy?
When filing a Chapter 7 Bankruptcy in Arkansas, there are six basic stages you will experience, and your Bankruptcy will generally be complete within four months of filing.
What is the process of a Chapter 7 Bankruptcy?
We sit down and discuss your options, including whether bankruptcy is right for you, and if it is, what chapter makes the most sense. If you decide to file, we will sign an engagement letter and start the representation – you will have all creditors call us at this point.
Once you are ready to file, you will bring us copies of all your outstanding bills, bank statements, pay stubs, your last two years of tax returns, and any other documents we discussed at the initial interview.
You are required to take a pre-filing credit counseling course, which you can do online or in person and costs between $10.00 and $50.00. This should take you about an hour and can be done anytime from home, work, or in person with Credit Counseling of Arkansas.
After we have all your information and you have taken the credit counseling course, our skilled attorneys will prepare your bankruptcy petition. You will then come to our office where we will go over every page of your petition. We will discuss what each and every entry means so that you understand what you are signing and you are sure that the information in these documents is correct.
Only when you have reviewed everything and you are confident everything is correct will we file these documents with the Court, get you a case number, and see to it that your creditors are informed of your filing. This is when all the phone calls stop!
This sounds scarier than it is. We give you a call beforehand and prepare you to answer all the questions that the trustee — who acts like the judge in these meetings — might ask.
When you arrive at the meeting, we will be there to greet you and take you through your meeting with that trustee. It normally takes five minutes, and typically no other creditors show up.
After your Meeting of Creditors and the Trustee, you are required to take a second credit counseling course, which also costs between $10.00 and $50.00. Once this is complete, make sure that the credit counselor emails your bankruptcy attorney a copy of your certificate for us to file. Generally in a Chapter 7, you will receive a discharge letter in the mail about sixty days afterwards.
Chapter 13 Bankruptcy
A Chapter 13 Bankruptcy is different than a Chapter 7 Bankruptcy in that rather than selling nonexempt assets to pay creditors, payments are made through a Chapter 13 Bankruptcy Plan. These Chapter 13 Bankruptcy Plan payments are typically withheld from your paycheck, and the Bankruptcy Trustee makes payments to your creditors for you. Depending on your income, these plans can last between three to five years. After successfully completing your plan, creditors will have received partial payment of what they are owed, and the remaining debt is discharged.
While a Chapter 7 Bankruptcy is typically more desirable, a Chapter 13 does provide certain benefits. First, not everyone qualifies for a Chapter 7 Bankruptcy. In order to file in Chapter 13, you only need a steady income. While there is a limit on how much debt an individual may have, most individuals fall well below the debt limit. A Chapter 13 Bankruptcy is an option for those who do not qualify for a Chapter 7. Additionally, unlike Chapter 7 Bankruptcy, where Bankruptcy attorney fees are required to be paid up front, Chapter 13 Bankruptcy attorney fees may be paid out during the plan, potentially costing you less money up front. You also have greater flexibility in deciding what assets to retain, as your assets are not subject to liquidation as in a Chapter 7.
In a Chapter 13 Bankruptcy, you make monthly payments to the Trustee, who repays creditors all or part of what you owe them out of those payments over a duration of three to five years.
To qualify for a discharge in a Chapter 7 Bankruptcy, you have to meet what is called the Means Test, which is basically a calculation to determine how much money you have left over after expenses each month to pay creditors. If you have too much disposable income, you will not be able to file a Chapter 7 Bankruptcy. If this is the case, a Chapter 13 may be for you. In a Chapter 13 Bankruptcy, you make monthly payments to the Trustee, who repays creditors out of those payments. The amount of these payments is calculated similar to the Chapter 7 Means Test calculation by comparing your income and expenses. These payments are made each month for three or five years, depending on your income. After the completion of the plan, you receive a discharge for all unpaid debt. The amount of your debt and monthly income determine how much your creditors get paid.
The Chapter 13 Plan is created by your Chapter 13 Bankruptcy Attorney. The plan states how much you will pay each month and how much your creditors receive. It also states what you elect to do with property you own. For example, if you own a second property that is worth less than you owe, you can choose to surrender that property.
In Arkansas, there can be several advantages to filing a Chapter 13 Bankruptcy, as you get to keep your possessions that would otherwise be liquidated in a Chapter 7 Bankruptcy.
A Chapter 13 Bankruptcy may be a better option for you if your income compared to your debts is too high, if you have certain assets that you would not be able to keep in a Chapter 7 Bankruptcy, or if you have more of a certain type of debt than another.
If you do not qualify for a Chapter 7, your monthly disposable income can be paid to the Trustee in a Chapter 13. At the end of either a three or five-year plan, depending on your income, you receive a discharge for all unpaid debt. You still have the option to reject contracts you have entered, surrender property that is worth less than what is owed, and receive a discharge for unsecured debt upon completion of the plan.
Another benefit to a Chapter 13 is that you can catch up on payments for certain debts during the course of the Chapter 13 Plan. In a Chapter 7, certain debts, such as domestic support obligations (alimony or child support) and back taxes, are not dischargeable and the balance will remain even after a discharge in Chapter 7. Chapter 13 allows you to make payments on domestic support arrearages to catch up and pay back taxes over the course of the plan. Additionally, if you have been ordered by a Court in a divorce proceeding to sell or refinance property, your ex spouse will not be able to request Court intervention during the course of the plan. For more information, see our Law Topic on the issue of the automatic stay with regards to contempt actions.
Lastly, if you want to retain your assets, Chapter 13 provides greater flexibility. In a Chapter 7, you are allowed to keep a certain amount of property. The rest of your assets are sold and the proceeds are used to pay creditors. In a Chapter 13, creditors are paid through monthly plan payments, and your assets do not have to be liquidated. If you have a large amount of equity in your home, or if you have assets that are worth more than the exclusion amounts that you want to keep, a Chapter 13 may be an option.
Chapter 12 Bankruptcy
Chapter 12 should be called “Freedom for Farmers.” It allows a farmer to keep all his business assets, continue farming, and even apply for more credit if needed. But Chapter 12 is not just for farmers. It can apply to ranchers, fishermen, and several other types of agricultural operators. Chapter 12 is a powerful tool.
One great thing about a Chapter 12 is that you are allowed to keep total control of your business operations – that means the heavy equipment, the vehicles, the trailers, the tools, the mowers, the fertilizers, the seeds, … all of it! Nothing has to be sold. And it even stops annoying creditors from hounding you. What’s more, it has the protection backed by the federal law. That means you have the support of your government.
So why doesn’t everyone file a Chapter 12? Because, as with everything, you first have to qualify. Those who qualify have to be in a certain line of business: farming, fishing, and agriculture. But there is some wriggle room. So it may be able to apply to you. Additionally, there are some other requirements that have to be met, and that’s where we come in. The Story Law Firm can guide you through this process.
So while there are a few hurdles to get over for filing a Chapter 12, don’t let that discourage you. The benefits outweigh the burdens and the process is one of the smoothest available. Remember, in the end, the main idea of a Chapter 12 is to help keep you farming! Think of it as “Freedom for Farmers.”