Arkansas Bankruptcy Lawyer
Are you losing sleep at night because of financial worries?
There are solutions that could help you regain your financial freedom and eliminate your debts. Individuals face bankruptcy for a variety of reasons: excessive medical bills, school loans, loss of jobs. No matter what the reason, there is likely a bankruptcy solution for you. Unfortunately, people often resist filing for bankruptcy over unfounded fears of losing their homes, their assets and destroying their credit. At Rainwater, Holt & Sexton, our bankruptcy attorneys have years of experience helping our clients obtain financial relief through bankruptcy and debt consolidation. We offer more than just assistance with bankruptcy filings — we offer you peace of mind and a future free of financial worry.
What is Bankruptcy?
Bankruptcy provides a solution for individuals to reduce or eliminate debt. Getting out from under crushing financial debt often feels like a fresh start and a chance to regain freedom from the weight of hefty interest payments. While everyone may qualify for bankruptcy protection under Chapter 7, Chapter 11, or Chapter 13, bankruptcy may not be the best path for your situation. An experienced bankruptcy lawyer can review your case and help you choose the financial pathway that is best for you.
Why Do I Need to File for Bankruptcy?
Bankruptcy is not a solution for everyone. However,if you are unable to pay your debts or you risk losing your home, bankruptcy can be a good solution to help you regain your financial independence. Our Arkansas bankruptcy attorneys can help stop foreclosures, prevent repossessions and stop harassing debt collectors.
It can be hard to admit that you need help and that you owe more than you can pay. Luckily, the law is on your side. Bankruptcy laws help protect individuals from harassing debt collectors. The Federal Fair Debt Collection Practices Act, The Arkansas Fair Debt Practices Act, the Arkansas Unfair and Deceptive Practices Act, and the Federal Trade Commission Credit Practices Rules were all established to protect consumers’ rights. When a debt collector violates these laws, your attorney can help protect your rights and take legal action if necessary.
Types of Bankruptcy
Federal law allows individuals to eliminate their debt through either liquidation or reorganization. Chapter 7 and Chapter 13 are the two most frequently used chapters of bankruptcy in the United States. Determining which bankruptcy chapter is best for you is the key to rebuilding your life and regaining your financial freedom.
Chapter 7 bankruptcy is essentially a liquidation and it eliminates unsecured debts, such as credit cards and medical debts. In order to wipe out your qualifying debt, some of your assets may be liquidated and sold to pay back the debt. You can, however, choose to keep some or all of your property protected under federal or state law. It is important to know that certain debts cannot be discharged under Arkansas law, such as alimony, child support and student loans.
Chapter 7 bankruptcy may be perfect for the individual who has large credit card debts and other unsecured bills and very little assets. When you file for Chapter 7 bankruptcy, you can keep certain secured debts, such as furniture, your house or your car. To keep these items, you must reaffirm the debt, be current on your payments and stay current through your bankruptcy. Once you agree to reaffirm the debt, the current bankruptcy case you are in does not eliminate that debt.
Chapter 13 bankruptcy is essentially a reorganization of your existing debt. With Chapter 13 bankruptcy, the debtor agrees to pay off some of the restructured debt within a three- to five-year repayment plan. Chapter 13 bankruptcy is perfect for individuals who want to keep their secured assets or when they have more equity in their assets than they can protect with state exemptions. It can help prevent foreclosure, stop repossession, and pay back taxes. The minimum amount you must pay back depends on how much you earn, how much you owe in debt and the value of your nonexempt property.
If you are no longer able to pay your business debts, bankruptcy can be a viable option. Incorporated businesses seeking debt relief may choose to file for Chapter 7 bankruptcy, while unincorporated businesses may choose to file either Chapter 7 or Chapter 13. Like individuals, businesses that file Chapter 13 bankruptcy will have an opportunity to reorganize their debts and even keep part of their business intact. An experienced Arkansas bankruptcy attorney at Rainwater, Holt & Sexton can help you determine which bankruptcy option is best for your company’s needs.
How to File Bankruptcy in Arkansas
The 2005 Bankruptcy Act requires that all individuals seeking bankruptcy undergo credit counseling within six months before filing for bankruptcy relief. After the bankruptcy is filed, those same debtors must complete a financial management course to complete their case. The process of filing for bankruptcy can be difficult and arduous without an experienced lawyer on your side. Your bankruptcy attorney can walk you through each step in the bankruptcy process.
Step 1: The Arkansas Means Test
The first step in the bankruptcy process is taking the Means Test. The Arkansas Means Test is a way to help determine if you are eligible to file for Chapter 7 bankruptcy or Chapter 13 bankruptcy. If your income is below the Arkansas median for your household size, then you may file for Chapter 7 bankruptcy without being required to pass the Arkansas Means Test. If your income is higher than the Arkansas median, you will need to complete the Means Test to determine if you can file Chapter 7 bankruptcy. The median incomes (per household) for filing a Chapter 7 bankruptcy are:
- 1 Member Household – $42,041.00
- 2 Member Household – $51,572.00
- 3 Member Household – $58,649.00
- 4 Member Household – $71,294.00
- 5 Member Household – $79,694.00
- 6 Member Household – $88,094.00
- 7 Member Household – $96,494.00
- 8 Member Household – $104,894.00
- 9 Member Household – $113,294.00
- 10 Member Household – $121,694.00
Step 2: The Bankruptcy Paperwork
The next step in the bankruptcy process involves paperwork. You must gather the necessary paperwork before you can file for bankruptcy. Some of the documents you will need include:
- Current income sources
- Financial transactions for major purchases from the last two years
- Monthly living expenses report
- Secured debt list
- Unsecured debt list
- List of property
- List of assets
- Tax returns for the last two years
- Deeds to any real estate purchases
- Titles to cars
- Loan documents
Once you have gathered the necessary paperwork, you and your attorney will review the Arkansas exemptions list to determine which property will be exempt from seizure or liquidation.
Step 3: Filing for Bankruptcy in Arkansas
The next step in the bankruptcy process is to file for bankruptcy. Your bankruptcy lawyer will need to file the two-page petition and other forms that are needed at your Arkansas district bankruptcy court. If you are filing Chapter 13 bankruptcy, then you will also need to submit a proposed repayment plan. It is important that you represent your financial picture accurately. If the judge feels that your bankruptcy filing is not accurate or truthful, the outcome of your filing could be jeopardized.
Once your paperwork has been filed with the bankruptcy court in Arkansas, an automatic stay goes into effect. This prohibits creditors from contacting you or making any claims on your property. An automatic stay is extremely important, as it can prevent foreclosure or repossession from moving forward.
Step 4: Rebuilding Your Credit After Bankruptcy
After you have filed for bankruptcy, it is natural to worry that you will never have good credit again. It is important to remember, however, that bankruptcy did not ruin your credit. Your credit was already damaged before you filed for bankruptcy. Now that you’ve stopped the damage from escalating, you can begin rebuilding your financial future — and restore your credit.
A bankruptcy will remain on your credit report for 7-10 years. Over time, the impact of filing for bankruptcy will fade. Since you won’t be eligible to file for bankruptcy again for another two-eight years, lenders won’t need to worry that you’ll file for bankruptcy. That being said, you will need to establish that you have more income than debt and that you’re able to take on a loan. Staying on top of your finances is key.
You will need to rebuild your credit score. Start by making sure that all the information in your credit report is up to date and valid. Correct any inaccurate negative information. Once you’ve examined and corrected your credit report, you will need to find a secured loan or credit card. Lenders will lend you money, but only if it is secured against money you already have or released to you only after you’ve made the payments. A secured credit card is backed by the deposit that you pay and is typically only issued for the amount you have on deposit. It is a great way to begin rebuilding your credit score. Try to apply for a secured credit card at a credit union or local bank. They’re more likely to work with you to help rebuild your credit after a bankruptcy.
Once you’ve secured a loan or a credit card, be vigilant about paying this card on time. Keep your credit card balances low — less than 30 percent of the limit. If you begin to get into financial difficulties again, be proactive and seek help from a credit counseling agency. These agencies often operate free for consumers and they offer budgeting advice.