Bankruptcy in Arkansas
Financial stress can build quickly, and knowing what to do next isn’t always clear.
Bankruptcy may be the reset you need. Whether caused by job loss, medical bills, or credit card debt, bankruptcy can stop collection efforts and help you take control of your finances. For many Arkansans, it’s a chance to step out from under crushing financial pressure and begin again.
But Arkansas has its own set of laws that affect how bankruptcy works. From available exemptions to local filing requirements, state-specific rules can impact what property you can keep and which chapter is right for you.
A local bankruptcy attorney can help you evaluate your options, explain how Arkansas law applies to your case, and guide you through the process with confidence. Take the first step toward relief with us today.
Types of Bankruptcy in Arkansas
When debt begins to outweigh your ability to keep up, bankruptcy may offer a legal way to move forward. In , filing for bankruptcy can result in partial or full relief from what you owe—but only if you can show that your financial hardship makes repayment impossible.
Depending on your circumstances, you might pursue Chapter 7, Chapter 11, or Chapter 13. Each chapter comes with different rules and advantages.
Understanding which path fits your financial goals takes more than guesswork. A bankruptcy attorney can help you weigh your options, protect your assets, and avoid costly missteps.
In Arkansas, bankruptcy cases are handled by the United States Bankruptcy Courts for the Eastern and Western Districts of Arkansas. These courts serve residents and businesses throughout the state, with primary locations in Little Rock, Fayetteville, Fort Smith, and other regional offices.
Chapter 7 Bankruptcy
For many people in , Chapter 7 bankruptcy offers a clear path toward financial relief. It’s often a good fit for those who can’t realistically repay what they owe and need a clean break. But before moving forward, it’s important to take a close look at your income, assets, and financial goals.
Chapter 7 is generally reserved for individuals with limited income or a recent financial setback that makes repayment impossible. While it can wipe out many types of debt, there’s a tradeoff—you may have to give up property like your car, home equity, or other valuables.
Once your petition is filed, an automatic stay kicks in to temporarily stop most collection efforts, including foreclosures and wage garnishments. However, this protection doesn’t apply to every debt. You’ll still be responsible for obligations like child support, criminal fines, or restitution payments.
Chapter 7 isn’t the best fit for everyone, especially if you have a steady income, own significant assets you want to protect, or need to catch up on missed mortgage or car payments. In those cases, filing under Chapter 13 may be more effective, as it allows you to restructure your debt and keep your property while making payments over time. Business owners or individuals with complex financial situations may benefit more from Chapter 11, which offers greater flexibility for reorganizing debt.
Chapter 11 Bankruptcy
Chapter 11 bankruptcy is a more involved process, typically used by businesses or individuals with complex finances or high-value assets. It allows you to reorganize your debt through a court-approved repayment plan, usually lasting between four and 18 months.
Unlike Chapter 7, it doesn’t require you to sell off your property to satisfy creditors. Instead, it allows you to negotiate terms with creditors, restructure what you owe, and stay current on your payments while maintaining ownership of your assets.
Filing for Chapter 11 bankruptcy requires careful preparation and detailed financial documentation. You’ll need to submit a voluntary petition, along with a comprehensive set of forms that outline your financial position. These documents give the court and your creditors a clear view of your obligations and assets. Here’s what you’ll need to include:
- Voluntary Petition (Form 101)
- Schedules A/B through J, listing all assets, liabilities, income, and expenses
- Statement of Financial Affairs (Form 107)
- Creditor Matrix with full names and addresses of all creditors
- Recent balance sheet, cash flow statement, and statement of operations (for businesses)
- Disclosure of attorney compensation
- Proposed reorganization plan (required later in the process)
Chapter 13 Bankruptcy
Chapter 13 bankruptcy, often called a wage earner’s plan, gives individuals in the chance to reorganize their debt without giving up valuable property.
After filing, the court appoints a trustee to review your income, expenses, assets, and overall ability to repay. Instead of liquidating what you own, you’ll follow a structured repayment plan—usually lasting three to five years—based on your income and what you need to keep. If you complete the plan successfully, some or all remaining eligible debts may be discharged, offering long-term financial relief.
Chapter 13 bankruptcy stands apart from other types because it focuses on repayment rather than liquidation. Instead of wiping out debt through asset sales like in Chapter 7, Chapter 13 allows you to keep your property and catch up on what you owe through a court-approved repayment plan. That plan typically lasts three to five years and is based on your income, living expenses, and the types of debt you carry.
The filing process also differs in key ways. To move forward with Chapter 13, you must submit a detailed repayment proposal for the court to review and approve. The court assigns a trustee to oversee your case, collect monthly payments, and distribute funds to creditors. Throughout the process, you’ll need to stay current on both your ongoing bills and your plan payments.
The Bankruptcy Process in Arkansas
There’s no perfect moment to file for bankruptcy, but waiting too long can make things worse. If it’s unlikely you can repay your debts within five years, bankruptcy may give you a structured way to stop the financial decline and start fresh.
To begin the process in , you’ll need to gather your full financial records. That includes your monthly expenses, outstanding debts, total assets, and annual income. The court uses this information to assess your eligibility and determine the best path forward. If anything is missing or incomplete, your case could be delayed or denied altogether.
In Arkansas, the bankruptcy process follows federal guidelines but applies state-specific exemptions that determine what property you’re allowed to keep. When you file, these exemptions help protect essential assets from liquidation, especially in Chapter 7 cases. Here’s a breakdown of what Arkansas law allows you to exempt:
- Up to $800 in equity in any personal property, or up to $2,500 for the head of household
- Clothing for yourself and your family
- Tools of the trade are necessary for your profession
- Public benefits, including unemployment and Social Security
- Qualified retirement accounts and pensions
- Life insurance proceeds under certain conditions
- Homestead exemption is available only if specific statutory requirements are met
Work With an Experienced Arkansas Lawyer
Bankruptcy is a complex legal process, but you don’t have to go through it alone. A qualified Alabama bankruptcy attorney can help you choose the right chapter, prepare your paperwork, and guide you every step of the way. If you’re ready to take control of your finances, request a referral today and connect with a trusted legal professional in your area.
Submit a request online or call us today at (866) 345-6784 to get in touch with an experienced lawyer in your area!
About the Author
Aaron is a professional legal writer with a B.S. in English Education from Southern Illinois University – Carbondale. He has written, published, and edited thousands of legal articles for RequestLegalHelp, which has connected over 5 million people to legal help in the United States.
With over five years of experience writing thousands of legal articles for law firms across the U.S. and Canada, Aaron specializes in covering federal, state, and city-level legal issues ranging from auto accidents to wrongful terminations.
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