Fayetteville Bankruptcy Lawyers
Fayetteville Bankruptcy Lawyers
Filing for bankruptcy can represent a new beginning for individuals and families overwhelmed by debt. At Wilmoth Law Firm, our Fayetteville bankruptcy lawyers provide guidance through the entire bankruptcy process, helping clients understand their options and make informed decisions about their financial future.
We recognize that financial hardship can happen to anyone — job loss, medical emergencies, divorce, or unexpected expenses can quickly lead to overwhelming debt despite careful planning.
What Is Bankruptcy, and How Does It Work?
Bankruptcy is a legal process that helps individuals and businesses eliminate or repay debt under the protection of the federal bankruptcy court. The two most common types of personal bankruptcy are:
- Chapter 7 bankruptcy involves the liquidation of non-exempt assets to pay creditors, after which most remaining debts are discharged. This option typically takes three to six months to complete.
- Chapter 13 bankruptcy allows you to keep your property while repaying debts through a structured payment plan over three to five years.
Our Fayetteville bankruptcy lawyers can help determine which choice makes the most sense for your particular circumstances. The process includes credit counseling, filing a petition with the bankruptcy court, submitting detailed financial information, meeting with creditors, and potentially appearing before a bankruptcy judge.
Throughout this process, an automatic stay prevents creditors from pursuing collection actions against you, providing immediate relief from harassing phone calls and threatening letters.
What Are the Differences Between Chapter 7 And Chapter 13 Bankruptcy?
Chapter 7 bankruptcy is often called “liquidation bankruptcy” because the bankruptcy trustee may sell certain non-exempt assets to pay creditors. However, many people who file Chapter 7 find that all of their property falls under exemption laws, meaning they do not lose any possessions. To qualify for Chapter 7, you must pass a “means test” that evaluates your income relative to the median income in Arkansas.
Chapter 13 bankruptcy, or “reorganization bankruptcy,” allows you to keep your property while repaying all or a portion of your debts through a court-approved repayment plan. Your income must be sufficient to make the required payments. Chapter 13 can be advantageous for homeowners facing foreclosure, as it provides an opportunity to catch up on mortgage arrears over time.
How Do I Know If Bankruptcy Is Right for Me?
Determining if bankruptcy is appropriate requires careful consideration of your financial circumstances, the types of debt you have, and your long-term goals. It might be a viable option if you are facing unmanageable debt, constant creditor harassment, wage garnishment, or the threat of foreclosure or repossession. It can be particularly helpful if your debts are primarily unsecured, such as credit card debt, medical bills, or personal loans.
However, not all debts can be eliminated through bankruptcy. Student loans, child support, alimony, most tax debts, and debts arising from fraud cannot typically be discharged. Additionally, bankruptcy will affect your credit score and remain on your credit report for up to 10 years.
Our Fayetteville bankruptcy lawyers can conduct a thorough analysis of your financial situation to help you determine if bankruptcy is the right choice or if alternative debt relief options might better serve your needs. He will examine the full scope of your financial picture and provide honest advice about the advantages and disadvantages of filing for bankruptcy in your specific case.
What Property Can I Keep When Filing Bankruptcy?
Bankruptcy law allows you to keep certain “exempt” property, which cannot be taken by the bankruptcy trustee to pay creditors. Arkansas residents can choose between two sets of exemptions: federal exemptions or state exemptions.
Under Arkansas state exemptions, you can protect:
- Your homestead up to certain value limits, depending on your acreage.
- Personal property items up to specific dollar amounts.
- Retirement accounts and certain benefits.
- Tools of your trade up to $750.
- A portion of your wages.
Federal exemptions offer different protections, including:
- A homestead exemption.
- Motor vehicle equity up to a certain amount.
- Household goods and furnishings up to specified limits.
- Jewelry, health aids, and other personal items.
- A wildcard exemption that can be applied to any property.
Our Fayetteville bankruptcy lawyers can analyze which exemption system would protect more of your assets and guide you through properly claiming these exemptions in your bankruptcy filing.
How Will Bankruptcy Affect My Credit Score?
Filing for bankruptcy will impact your credit score, but perhaps not as severely or permanently as many fear.
A bankruptcy filing can remain on your credit report for up to 10 years for Chapter 7 and up to seven years for Chapter 13. During this time, you may find it more difficult to obtain credit, and when credit is extended, interest rates may be higher.
However, many people see their credit scores begin to recover within one to two years after bankruptcy if they practice responsible financial habits. Some clients are able to obtain credit cards or auto loans soon after their bankruptcy discharge, though often with higher initial interest rates.
The impact of bankruptcy should be weighed against the alternative—continuing to struggle with overwhelming debt, missing payments, and facing collection actions, all of which also damage credit scores. For many clients, bankruptcy offers a path to rebuilding credit more quickly than would be possible while buried under unmanageable debt.
How Long Does the Bankruptcy Process Take?
Chapter 7 bankruptcy typically takes three to six months from filing to discharge. After submitting your petition and supporting documents, the court schedules a meeting of creditors about 30-45 days later. Assuming there are no complications, you can expect to receive your discharge about 60-90 days after this meeting.
Chapter 13 bankruptcy involves a repayment plan lasting three to five years. While the repayment plan takes several years to complete, the automatic stay that prevents creditor collection actions goes into effect immediately upon filing. You will receive your discharge after successfully completing all payments under your plan.
Factors that can extend these timeframes include objections from creditors, questions about the accuracy of your financial disclosures, or requests for additional information from the bankruptcy trustee. Our Fayetteville bankruptcy lawyers help minimize delays by making certain all documentation is complete and accurate from the beginning.
Our Experienced Fayetteville Bankruptcy Lawyers at Wilmoth Law Firm Can Pave Your Path to Financial Recovery
If you are struggling with overwhelming debt, you do not have to face these challenges alone. Our Fayetteville bankruptcy lawyers at Wilmoth Law Firm are ready to help you understand your options and develop a strategy for financial recovery. For a free consultation, submit our online form or call 479-443-8080. Located in Fayetteville, Arkansas, we serve clients in the surrounding areas.
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