What Do I Have to Lose by Filing Bankruptcy?

If you’re considering bankruptcy or are in need of debt relief, it’s understandable that you have a ton of questions about what this means for you, your family, and your life – your home, car, and possessions are important!

If you’re considering bankruptcy or are in need of debt relief, it’s understandable that you have a ton of questions about what this means for you, your family, and your life – your home, car, and possessions are important!

How does filing for bankruptcy in Arkansas impact what matters to you?

First and foremost, the ARlaw Partners bankruptcy team has one piece of advice before taking any action at all:

Take a deep breath.

It’s going be fine, and we’re truly here to help. Getting to the other side of bankruptcy isn’t as hard as you might think when you have a caring lawyer by your side. If we’re lucky enough to help you restructure your debt, we’ll work hard to get you the peace of mind you need and deserve.

Asking questions is important and encouraged. We have the experience (both professionally and personally), to explain the basics. Any question big or small matters.

Our Fayetteville and Little Rock bankruptcy attorneys can create a plan designed just for your unique situation. Every person’s bankruptcy needs are different.

Surprisingly, our team can almost always develop a custom bankruptcy plan that allows you to keep ALL of your possessions. Isn’t that a great deal of relief? Here are some top questions to help get you started on your Arkansas bankruptcy research:

Why should I file for Bankruptcy?

The purpose of filing for bankruptcy is to settle debts you can’t pay. It happens to us all. The debts can include credit card bills, medical expenses, and personal loans. There are two common types of bankruptcy: Chapter 13 and Chapter 7. To learn more about Chapter 7, click here. For more information on Chapter 13, click here. At ARlaw Partners, we work with each individual to determine what’s right for you and we will advise you every step of the way. We don’t want your creditors to keep calling you, either.

What do I lose after declaring bankruptcy?

Generally speaking, if you file a Chapter 13 plan, you won’t lose anything! Chapter 13 plans are stretched out over a period of time and are purely a debt reorganization, thus allowing you to keep all of your assets. In almost all cases, you can keep your property unless you decide it’s best to sell it or surrender it. If you file under Chapter 13, you don’t repay your creditors directly. Instead, you pay to a middleperson who takes care of the complications, and that person, called a “trustee,” then pays your creditors for you.

In Chapter 7 cases, there’s the chance that, if you file, you may lose property based on the different laws – it depends on the situation, and that’s something ARlaw staff reviews very carefully – and before anything is filed – since we want you to retain as many of your things are possible. This often leads to additional questions:

What property can I lose if I file for Chapter 7 bankruptcy?

At ARlaw Partners, we thoroughly evaluate all cases on the front end before anything is filed with the Court to make absolutely sure our clients are fully aware if there are risks to their assets before committing to a bankruptcy. Making sure that your valued property won’t be lost in a bankruptcy is one of our top goals.

Can I keep my car?

You can generally keep your car under a Chapter 7 if the equity in the vehicle is below the exemption amount. If the vehicle is subject to a lien, the payments will need to be maintained directly to the lienholder. Federal Bankruptcy laws and Arkansas Bankruptcy law allows for everyone that files Chapter 7 bankruptcy to keep a certain amount of property, based on the property’s fair market value. Married couples filing together are each entitled to the available exemptions, meaning they double.

If you are still making payments on a vehicle loan, there will be a lien that protects the lender, and if you want to keep your car, you will need to make regular contractual payments on the loan.

Will I lose my house?

In a Chapter 7 case, there are several variables that factor in this – the most significant are your home’s fair market value, how much you owe on the property, and what the payment is. There are several different angles ARlaw Partners bankruptcy lawyers use to protect homes in Chapter 7. The analysis is a case-by-case issue and can be handled by one of our bankruptcy attorneys in a free consultation.

What happens to my assets if I lose them in a Chapter 7?

The majority of Chapter 7 cases filed by ARlaw Partners are judged as “no asset” cases. That means that our clients’ debts are discharged without having to surrender any property. However, if the case is judged as an “asset” case, the bankruptcy trustee will sell the filer’s property that is worth more than they are allowed to keep under the Bankruptcy code and then the proceeds will be used to pay the filer’s debts. Any debts that are not paid in full will then be discharged, as long as the filer meets the other requirements. A “discharged” debt is one that the filer is no longer legally has to pay. Again, ARlaw Partners lawyers review all of a client’s property on the front end of a case, so you know if you may lose property in a Chapter 7 or not.

What things do I get to keep after filing?

If you file under Chapter 13, you are entitled to keep all of your property and assets as long as you keep up with your court-approved repayment plan. If you file under Chapter 7, you can keep any exempt assets under state and federal bankruptcy laws. You can read more about commonly used federal exemptions in an upcoming blog post.

Can I talk to you in person or over the phone about my concerns?

Please do! At ARlaw Partners, we have multiple attorneys with nearly twenty years of cumulative experience practicing bankruptcy law. Our bankruptcy attorneys in both Central Arkansas and Northwest Arkansas are prepared to answer every question under the sun – we’ve helped Arkansans with all kinds of different situations and treat every case with care so that our clients can have some peace of mind knowing what to expect when they file.

Our goal is to be as helpful and objective as possible – whether that means recommending you file for bankruptcy or not. Contact Jon Cigainero in Fayetteville or Vanessa Cash Adams in Little Rock today for a free initial consultation and begin your journey to debt relief all alongside a group of attorneys you can trust.