Chapter 7 is commonly referred to as the “liquidation chapter,” even though for the vast majority of people filing bankruptcy no property is liquidated. This is because a person is entitled to exemptions. An exemption applies to a certain type of property and for an amount that can be retained by the person filing bankruptcy. In Arkansas, we are fortunate to have a choice between federal and state exemptions. The federal exemptions are fairly liberal and include exemptions for a personal residence, vehicle, household goods, tools of the trade, jewelry, retirement accounts, etc. In addition, there is a wildcard exemption for any property that does not have a designated exemption. The Arkansas exemption includes a substantial homestead exemption for those who have resided in a home while being married or serving as the head of the household. Most people with a qualified homestead exemption will be able to retain their home and all of the equity associated with it. Chapter 7 is generally the choice of those who pass the bankruptcy means test and have primarily unsecured debts such as credit cards and medical bills, and are not behind on mortgage and vehicle payments, if any. The process takes approximately 3 to 4 months from the time the case is filed until the debtor obtains a discharge. A person can rebuild their credit by making timely payments on future debts, whether it be a mortgage, vehicle or credit card debt that is paid in full every month. It offers the shortest path to a fresh start.
Contact Lickert Law Firm at 501-771-1817 for a Free Consultation with our North Little Rock Bankruptcy Attorneys.