If you’re drowning under the weight of debt in Arkansas, filing for bankruptcy might provide you with much-needed relief. While you might worry that you will lose everything by filing for bankruptcy, most people get to keep everything by claiming the proper exemptions. Scroll down to learn what assets are exempt from bankruptcy in Arkansas.
What Assets Are Exempt from Bankruptcy?
When you file a Chapter 7 bankruptcy case, you are required to list all of your assets and you claim exemptions toward keeping as much as you can. Often people can exempt everything. If you have more assets than you can exempt, the trustee can liquidate the assets in your bankruptcy estate that you can’t exempt to repay your creditors a small portion of what you owe. Once your bankruptcy case is closed, your unsecured debts will be discharged, meaning you will not have to repay them, except for unsecured priority debts like child support. In Arkansas, you can choose either the state or federal exemptions.
Bankruptcy Exemptions in Arkansas
What assets are exempt from bankruptcy in Arkansas will depend on whether you choose the federal or state exemptions. You can’t choose both or pick and choose between them. The federal exemptions can be found at 11 USC 522, but the values are adjusted frequently. Most people benefit most by selecting the federal exemptions that give a broader range of categories of property that are exempt and include the following:
- Homestead equity exemption up to $27,90 for an individual or $55,800 per couple
- Motor vehicle equity in one vehicle per person up to $4,450
- Household appliances, furnishings, clothing, and other personal property up to an aggregate value of $14,875 for an individual or $29,750 per couple
- Jewelry up to $1,875 for an individual or $3,750 per couple
- Tools used in your trade up to $2,800 for an individual or $5,600 per couple
- Wildcard can be used on anything. It depends on how much homestead exemption you claim, but it can be as high as $15,425 for an individual and $30,850 per couple
For comparison, the Arkansas state bankruptcy exemptions can only be claimed by a “head of household” or married persons, but not single individuals with no kids in the home, and they include the following:
- Homestead exemption for a head of household (unlimited amount for rural households up to 80 acres)
- Homestead exemption for the head of household with an urban residence (unlimited for up to 1/4 acre)
- Clothing (unlimited exemption)
- Personal property ($500)
Understanding the Bankruptcy Exemptions
When you claim exemptions, the exempted property will be protected. This means that the trustee cannot seize and sell it. If you live in Arkansas, you can choose either the state or federal exemptions. The exempted value refers to the fair market value of your property instead of how much you paid at the time you purchased it. For example, if you purchased a designer coat five years ago for $500, you would not have to value it at $500. Instead, the value would be what you might expect to pay if you purchased the coat at a garage sale.
The good news for debtors that can’t exempt all their property and that don’t want to surrender it to the bankruptcy trustee is that they can file a chapter 13 instead of a chapter 7 in order to keep everything and pay the value of what they can’t exempt to the bankruptcy trustee over the course of five years.
Get Help from the Law Offices of Craig L. Cook
The skilled attorneys at the Law Offices of Craig L. Cook will evaluate all your property and exemptions and explain all your options before anything is filed so that you will know what will happen and you can control the outcome to get the best results. The bankruptcy exemptions can be confusing and are full of exceptions and caveats, but our skilled attorneys will navigate you through these troubled waters to protect your property and get you relief from your debts.
If you have questions about bankruptcy exemptions or bankruptcy in general, please contact the Law Offices of Craig L. Cook by calling 479-783-8000. We have offices in Fort Smith, Fayetteville, Alma, and Ozark and services all of Western Arkansas for Chapter 7 and Chapter 13 cases with free consultations. Give us a call or visit our website for more information.