Bankruptcy
Washington County Bankruptcy Lawyer
Bankruptcy is a legal process that provides relief when you are overwhelmed by unmanageable debt. The process provides legal protection while allowing you to eliminate or repay your debts. Bankruptcy can offer a fresh start by wiping out unsecured debt or creating a repayment plan to manage outstanding obligations, depending on which type of bankruptcy best suits your needs.
Sammi Wilmoth, Esq. is an experienced and compassionate Washington County bankruptcy lawyer who understands the turmoil and stress that often accompanies bankruptcy decisions. With guidance from Wilmoth Law Firm, you can create a new beginning with better financial management and a brighter future.
What Are the Different Types of Bankruptcy in Arkansas?
The most common types of bankruptcy for individuals are Chapter 7 and Chapter 13. Chapter 7 involves liquidating assets to pay off creditors, while Chapter 13 involves creating a repayment plan to pay back debts over time. Specifically, each type of bankruptcy offers the following:
Chapter 7 Bankruptcy (Liquidation)
- Eligibility: To qualify, your income must be below the state’s means test, showing you cannot repay your unsecured debt.
- Assets: Your non-exempt assets may be sold to repay creditors, but Arkansas exemptions can often protect essential items such as your home and car.
- Debts: Most unsecured debt, such as credit cards and medical bills, are eliminated, usually within three to six months.
- Relief: Provides immediate discharge of debts and halt of foreclosure, giving you a fresh start.
- Impact: Bankruptcy will stay on your credit report for 10 years, which can affect future credit opportunities.
Chapter 13 Bankruptcy (Reorganization)
- Eligibility: This option is suitable for individuals with a regular income who can commit to a repayment plan over three to five years.
- Repayment: Debts are reorganized, allowing you to catch up on overdue payments for items such as your home or car.
- Assets: You get to keep your property while making manageable payments.
- Commitment: Requires consistent payments over several years.
- Impact: Bankruptcy will stay on your credit report for seven years, which is shorter than Chapter 7.
Understanding the nuances of Arkansas bankruptcy laws and exemptions is crucial. It is advisable to consult with a Washington County bankruptcy lawyer to assess your situation and determine the best path forward.
What Debts Are Discharged in Bankruptcy?
In Arkansas, certain debts are eligible to be discharged under bankruptcy law, meaning you are no longer legally required to pay them.
Common types of debts typically discharged during bankruptcy include:
- Business debts
- Credit card bills
- Certain older tax debt
- Judgments from lawsuits
- Medical bills
- Personal loans
- Repossessed vehicle deficiencies
- Unpaid rent
- Utility bills
What Debt Cannot Be Included in Bankruptcy?
While many debts can be discharged through bankruptcy, some obligations are excluded from this relief. It is important to understand which debts will remain after your bankruptcy case is concluded.
Here are the types of debts that typically cannot be discharged:
- Alimony
- Child support
- Debt incurred through fraud
- Fines and penalties owed to government agencies
- Personal injury debts arising from DUI accidents
- Recent tax debt
- Student loans
What Are the Consequences of Bankruptcy?
Filing for bankruptcy can have certain consequences affecting your financial, professional, and personal life, such as:
- Loss of Assets: Depending on the type of bankruptcy you file, you may have to surrender some of your assets to pay off your debts.
- Public Record: Bankruptcy filings are public records, which means anyone can access information about your financial situation.
- Difficulty Obtaining Credit: Lenders may perceive you as a higher risk, making it harder to secure favorable terms.
- Impact on Employment: Employers who run credit reports may take bankruptcy into consideration when evaluating job applicants, particularly for positions that involve handling finances or sensitive information.
- Difficulty Obtaining Housing: Bankruptcy can make it difficult to get approved for a mortgage or rent an apartment. Landlords and lenders often check credit history, and a bankruptcy filing may be seen as a red flag, impacting your ability to secure housing.
- Emotional effects: The process of bankruptcy can be stressful and emotionally taxing, potentially impacting your self-esteem and mental well-being.
How Will Bankruptcy Affect My Credit?
Filing for bankruptcy will undoubtedly leave a mark on your credit report, affecting your financial opportunities for years to come. A bankruptcy filing can remain on your credit report for seven to 10 years, depending on whether you filed for Chapter 7 or Chapter 13 bankruptcy. This negative mark can lower your credit score significantly, making it challenging to obtain new credit, secure loans, or even rent an apartment.
However, bankruptcy can also be a positive stepping stone toward financial recovery. By discharging unmanageable debt, you are given a fresh start to rebuild your credit. You can take this opportunity to develop better financial habits, make timely payments, and gradually improve your credit score. Over time, responsible financial behavior can help you overcome the negative effects of bankruptcy on your credit report.
How Do I File for Bankruptcy in Arkansas?
Filing for bankruptcy in Arkansas involves several important steps designed to ensure a smooth process and protect your financial future. Whether you are considering Chapter 7 or Chapter 13 bankruptcy, understanding the requirements and timeline can help you prepare.
The essential steps you need when filing for bankruptcy in Arkansas include:
- Gather Documents: Collect all relevant financial information, including income, expenses, debts, assets, and recent tax returns.
- Attend Credit Counseling: Before filing, you must complete credit counseling through an approved agency to help you evaluate your financial situation and consider alternatives to bankruptcy.
- File the Petition: Prepare and file your bankruptcy petition and supporting documents with the Arkansas Bankruptcy Court. This will include detailed information about your finances, along with the filing fee.
- Automatic Stay: Once you file, an automatic stay goes into effect, temporarily stopping most creditors from collecting debts and halting foreclosures and repossessions.
- Meeting of Creditors: You will attend a meeting of creditors where the bankruptcy trustee and creditors can ask you questions about your financial situation and bankruptcy filing.
- Financial Management Course: After the creditors’ meeting, you must complete a financial management course through an approved provider.
- Discharge: In Chapter 7 bankruptcy, if there are no objections from creditors, discharge of your qualifying debts will occur within a few months. In Chapter 13 bankruptcy, you must complete your three-to-five-year repayment plan before receiving a discharge.
How Can a Washington County Bankruptcy Lawyer Help Me?
Filing for bankruptcy can feel overwhelming, but you do not have to go through it alone. An experienced Washington County bankruptcy lawyer can guide you through the process, help you avoid mistakes, and work to protect your financial future. Wilmoth Law Firm can assist you in the following ways:
- Determine which type of bankruptcy is appropriate for your financial situation.
- Help you complete and file the necessary forms.
Identify exemptions to keep certain property, such as your home or vehicle. - Handle all communications with creditors.
- Represent you in court during any necessary hearings.
- Help you meet legal requirements, such as credit counseling and financial management courses.
- Develop a financial recovery plan to rebuild your credit and manage your finances moving forward.
Struggling with Debt? A Washington County Bankruptcy Lawyer at Wilmoth Law Firm Will Help You Take Control
Filing for bankruptcy allows you to discharge unsecured debt, stop home foreclosure, and eliminate harassing collection calls. If you are struggling with unmanageable debt, a Washington County bankruptcy lawyer at Wilmoth Law Firm can help you take control of your financial future. Call 479-443-8080 or submit our online form to schedule a free consultation. Located in Fayetteville, Arkansas, we serve clients in the surrounding areas.