What Are The Steps To Filing Chapter 7 Bankruptcy
We have discussed the do-it-your yourself steps. Nonetheless, the success of your Chapter 7 bankruptcy most likely will lie in finding an experienced bankruptcy attorney. Once you decide on an attorney, you can refer creditors to your lawyers office. Filing the petition will trigger an automatic stay, which means creditors cant pursue lawsuits, garnish your wages or contact you about your debts.
Dont take our word for it. I would counsel someone who is considering Chapter 7 bankruptcy to consult with an attorney to discuss the ramifications of filing for bankruptcy, Sinha says. Bankruptcy can have a long-term impact on a person’s credit score and ability to obtain credit in the future.
Here is a potential timetable:
Collect Your Arkansas Bankruptcy Documents
To prepare your bankruptcy petition for the bankruptcy court, youâll first need to gather documents with your financial information. These documents will help identify all of your debts and show the amount and sources of your income. To start the Chapter 7 bankruptcy process, youâll need to gather the following documents:
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Tax returns from the last two years.
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Paycheck stubs from the last 60 days.
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Recent bank statements. After you file your bankruptcy petition, youâll need to hang on to the bank statement that covers the filing date, as youâll need that for the trustee.
While not required, there are other documents thatâll make it easier to complete your bankruptcy petition. They can also help you make financial plans during the bankruptcy process. These documents include:
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Bank statements from the past 12 months. These will help you identify your expenses.
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A copy of your credit report. Youâre entitled to a free credit report every 12 months from each of the three consumer credit reporting agencies . Besides helping monitor your credit, these are useful when identifying all of your debts and creditors. If you use Upsolveâs filing tool to file bankruptcy, it will pull your credit reports for you.
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Copies of your bills from lenders and creditors.
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Any letters from debt collection agencies or third-party debt collectors.
What About Medical Debt
Not all debt can be discharged through bankruptcy. For example, the court wont erase your child support obligations, tax debt, student loans, or fines.
Fortunately, medical debt is one type of debt that bankruptcy often completely eliminates. Every filers situation is unique, however, and your attorneys can give you an accurate prediction of what bankruptcy may do for your financial future.
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Arkansas Chapter 7 Bankruptcy Information
In a Chapter 7 bankruptcy you wipe out your debts and get a Fresh Start. Chapter 7 bankruptcy is a liquidation where the trustee collects all of your assets and sells any assets which are not exempt. The trustee sells the assets and pays you, the debtor, any amount exempted. The net proceeds of the liquidation are then distributed to your creditors with a commission taken by the trustee overseeing the distribution.
Certain debts cannot be discharged in a Chapter 7 bankruptcy, such as alimony, child support, fraudulent debts, certain taxes, student loans, and certain items charged. In most Chapter 7 cases, the debtor has large credit card debt and other unsecured bills and very few assets. In the vast majority of cases a Chapter 7 bankruptcy is able to completely eliminate all of these debts.
Reaffirmation agreements can be set aside during the earlier of 60 days after the agreement is filed with the Court, or upon the Courts issuance of an Order of Discharge.
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Eligibility For Chapter 7 Bankruptcy
There are a few eligibility requirements you must meet in order to be approved for Chapter 7 bankruptcy. If you have gone through Chapter 7 bankruptcy before, you must wait at least eight years before you can file again.
If you went through a Chapter 13 bankruptcy before, you must wait six years before you can file for Chapter 7. However, you may be able to file earlier if you tried to go through a Chapter 13 payment plan in good faith, and you paid at least 70 percent of the unsecured claims.
The most important eligibility requirement is the means test. This test looks at your monthly income and compares it to the median income of same-sized households in Arkansas. If your monthly income is below the median, you are eligible for Chapter 7 bankruptcy.
If your income is over the median, you may or may not be eligible. In this situation, the test requires you to subtract certain necessary expenses from your monthly income to determine your monthly disposable income. If you have enough disposable income to pay 25 percent of your unsecured debt, then you are not eligible for Chapter 7. Instead, you may need to go through a Chapter 13 bankruptcy. However, if you have little to no disposable income, you may be eligible for Chapter 7.
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Arkansas Bankruptcy Lawyer Cost
Most Chapter 7 bankruptcy lawyers charge a flat fee for their services. And before they start charging clients, many Arkansas bankruptcy lawyers offer a free consultation to briefly assess the case, decide if itâs something they can handle, and if so, how much it will cost.
The attorney fee depends on how complicated the case is, but you can expect an Arkansas bankruptcy attorney to charge anywhere from $595 to $1,500. While this fee is a major factor in deciding who to hire, keep in mind that there are other things to consider when choosing a bankruptcy attorney.
What Are The Effects Of Bankruptcy
The effects of bankruptcy proceedings depend on the type of bankruptcy the debtor files for. The debtor may file for a Chapter 7 bankruptcy, a Chapter 11 bankruptcy, or a Chapter 13 bankruptcy. A Chapter 7 bankruptcy requires the liquidation of the debtors non-exempt assets to repay the debts. A Chapter 11 and Chapter 13 bankruptcy both require the debtor to make monthly payments towards a repayment plan filed with the court. However, while a Chapter 11 bankruptcy is available to individuals and corporations, only individuals may file Chapter 13 bankruptcies. Debtors interested in filing for bankruptcy in Arkansas can do so in any of the following locations serving their residential area or where they carry out business.
Little Rock
35 E. Mountain Street, Room 316Fayetteville, AR 72701Phone: 582-9800
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Which Chapter Do I Need And Do I Need An Attorney To File
Although the laws offer different options that may be available to you, the decision to file, or under which chapter to file, depends on your situation.
Those who qualify for either Chapter 7 or Chapter 13 have an advantage in that they are able to choose the type of bankruptcy that makes the most sense for their particular circumstances.
If a person can choose between Chapter 7 and Chapter 13, most people who file for bankruptcy choose to use Chapter 7 because Chapter 7 does not you require you to pay back your debts. But Chapter 13 may be a more attractive alternative for those who may have missed house payments and want to safely make up those missed payments over time, instead of losing their home in foreclosure.
Considering your personal facts, comparing them to each chapters requirements, and deciding which chapter to select, is considered legal advice. While it is possible to file bankruptcy pro se, or without legal representation, the decision of whether to file a bankruptcy and under what chapter is an extremely important decision and should be made only with competent legal advice from an experienced bankruptcy attorney after a review of all the relevant facts. Moreover, if you do file bankruptcy pro se, you must know that the Court is not permitted to give legal advice, assist with the preparation of forms, or assist you during various meetings and proceedings that may be scheduled in your case.
What Chapter 7 Bankruptcy Doesnt Do
Chapter 7 will not relieve debt from obligations such as alimony and child support, student loans, back taxes, court fees and penalties, homeowner association fees, and judgments against you for certain personal injury claims. It also wonât take care of any unsecured debt you didnât have discharged in your bankruptcy case.
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Rebuild Your Credit After Filing Bankruptcy
Unfortunately, Chapter 7 bankruptcy can negatively impact your credit and Chapter 13 can negatively impact your credit. That said, you have an opportunity to rebuild your credit shortly after bankruptcy. To assist, you can use our free credit rebuilding portal designed to help you increase your credit score by 100 points in less than 6 months.
Chapter 7 Bankruptcy: How Does It Work
Chapter 7 bankruptcy is known as a liquidation bankruptcy, in which a bankruptcy trustee gathers and sells e.g., liquidates the debtors non-exempt property. The trustee then applies the proceeds from those sales to the debtors outstanding debts. When the bankruptcy case is over, the Court will discharge the debtor from further liability on most of his or her existing unsecured debts.
The trustees authority to sell property in a Chapter 7 bankruptcy is limited to non-exempt assets, not necessarily to all the debtors assets. The Bankruptcy Code contains a list of federal exemptions, but permits each state to enact its own list of exemptions and decide which list its residents may use. Some states have opted out of the federal exemptions, requiring debtors to use that states exemption list. Other states permit the debtor to choose either the federal or state exemptions.
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Understand Alternatives To File Bankruptcy
There are many bankruptcy alternatives to consider. We will cover the two most common alternatives, but you can find more in our bankruptcy alternatives article. As a reference, filing Chapter 7 bankruptcy is often the least expensive and the shortest.
Debt Settlement
Debt settlement is also known as debt negotiation, debt relief, or a debt consolidation program . In debt settlement, a company or you will negotiate with your creditors for a lower amount. You can save money and avoid filing bankruptcy. You may also be exposed to lawsuits, so its important to understand which creditors are likely to sue. A debt settlement programs often last 2 – 5 years.
Debt Management
Debt management is also known as credit counseling. In debt management, a company will negotiate with your creditors for a lower percentage interest rate. You can save money on interest and avoid filing bankruptcy. Debt management can be more expensive than debt settlement and Chapter 13. Debt management programs often last 5 years.
How Chapter 11 Bankruptcy Works
The following is an outline of what to expect from Chapter 11 bankruptcy. The biggest difference between Chapter 7 and 11 bankruptcy is the repayment plan, which youll see in the fourth step.
If you fall short in executing your plan of reorganization and responsibly paying off debts, you may have to file for Chapter 7 bankruptcy.
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How Do I File For Bankruptcy In Arkansas
Filing for bankruptcy in Arkansas has a few general requirements. First, you must compile your financial documents. Next, you must complete a credit counseling course. Then, you can submit your petition and materials to the bankruptcy court.
However, there are eligibility requirements for filing for bankruptcy in Arkansas, and you must also establish the chapter under which you will file your bankruptcy. If you have specific questions, you should speak with a bankruptcy lawyer in Arkansas for legal advice.
Do I Qualify For A Chapter 13 Bankruptcy In Arkansas
Individuals or married couples with secured debts, not more than $1,184,200 and unsecured debts not more than $394,725 are eligible for a Chapter 13 bankruptcy in Arkansas. The debtor is required to have passed through credit counseling in an approved credit counseling institution within six months of filing for bankruptcy. No debtor can file for bankruptcy if they had a bankruptcy case dismissed within six months of filing for disobedience of a court order or willful failure to appear before the court.
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Serving Clients Across Arkansas
Chapter 7 Bankruptcy is commonly referred to as straight bankruptcy, but that does not mean you have to lose everything. In Bankruptcy, the law says the Trustee can take and sell property that is not exempt to pay your creditors. The Good News is Arkansans are allowed certain exemptions to cover most if not all of your property. This is why it is important to hire an experienced Bankruptcy firm to go over your exemptions.
Secured Property
To keep secured property in a Chapter 7, such as a home mortgage or vehicle note, you must be current on your payments, and enter into a re-affirmation agreement with the secured creditor while continuing to make your payments the creditor.
At the end of your case, which is usually around six months in Arkansas, you will receive a discharge of your dischargeable debts, and have the fresh start you were looking for.
Are You Eligible For Chapter 7 Bankruptcy In Arkansas Take The Bankruptcy Means Test To Find Out
TheChapter 7 bankruptcy means test can determine if a Arkansas petitioners income level and expenses are eligible to file for a Chapter 7 bankruptcy. The formula is designed to prevent individuals from Chapter 7 bankruptcy if they make enough money to pay down unsecured debts. If an individual does not qualify for Chapter 7 as determined by the Means Test of Arkansas, he or she may be able to file for a Chapter 13 bankruptcy to repay a fraction of the accrued debt.
Taking the Chapter 7 means test does not necessarily entail that an individual has to be impoverished to be able to file for a Chapter 7 bankruptcy. An individual who qualifies for a Chapter 7 bankruptcy in Arkansas may still have a high income if he or she has high car and/or mortgage payments, high taxes, and/or other expenses.
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What Are Arkansas Bankruptcy Exemptions
Arkansas bankruptcy exemptions are assets that an individual may keep after going through a Chapter 7 bankruptcy. Arkansas allows debtors to choose between the state and federal exemption lists. However, the debtor cannot cherry-pick items from each list. Only one can be used. The state exemptions provided by Arkansas include:
Get The Answers You Need
Still have questions about how bankruptcy will affect your financial situation? Were here to help. Download our free Bankruptcy FAQ PDF to find the answers to other common questions about filing bankruptcy. We can review your records and help you determine if bankruptcy is the right solution for you.
*We are a debt relief agency. We help people file for bankruptcy relief under the bankruptcy code.*The No Fee Guarantee® does not apply to bankruptcy cases.
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Wipe Out Debt With An Honest Bankruptcy Attorney In Conway Arkansas
Designed to protect individuals and married couples unable to cover their monthly expenses. Anyone, even hard-working, honest people can encounter a reverse of fortune, unforeseen circumstances or adversity placing them in a bad financial situation. Filing for Chapter 7 bankruptcy protection may help you wipe out your debt and give you a roadmap to financial recovery. If we identify that Chapter 7 is your best option, I will guide you through the filing process, court hearings, and dealing directly with your creditors to reduce their harassment and your stress. Unlike large attorney offices with a cookie-cutter Chapter 7 bankruptcy approach, I believe in good old-fashioned, personal care and hard work moving your case through the bankruptcy court in the quickest, most cost-effective way possible. Request a consultation with James O. Wyre II in Conway, Arkansas today by clicking the button below.
Trust In A Firm Backed By 20+ Years’ Experience
There are many possible benefits of declaringChapter 7 bankruptcy. Also known as liquidation bankruptcy, Chapter 7 allows individuals who are overwhelmed by significant debt to obtain an economic clean slate. Most debt is discharged and wiped away, providing a much-needed relief from your financial obligations. Since Chapter 7 erases most of your debt, the bankruptcy code reserves this form of monetary reprieve for individuals who are in dire financial need.
To file for Chapter 7, you must first past the means test. The means test is a federal formula that determines if you meet the requirements to receive protection under Chapter 7. The means test applies for individuals who are filing for Chapter 7 and have a higher income which means If your income falls below the Arkansas median for your household size, you will pass and may file for Chapter 7 bankruptcy.
If you are unsure whether or not you may pass the means test and declare Chapter 7 bankruptcy,DeLoache Law Office can help! Our experienced Jonesboro bankruptcy attorneys offer the insightful and astute guidance you need.
Call us at 233-7016 to speak with abankruptcy attorney in Jonesboro!
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