Bankruptcy Exemptions in Arkansas

If you are considering filing bankruptcy because of debt you cannot support, the more you understand about Arkansas law concerning property exemptions, the better.  Especially when filing chapter 7, it can be a concern that a debtor may be required to liquidate the property they have worked all their lives to acquire. 

However, while chapter 7 allows debtors to erase some, and sometimes all, consumer debt, there are property exemption protections that may allow debtors to retain their property.  In fact, filers in Arkansas may be able to choose whether they wish to apply federal exemptions or those allowed by the state; however, they cannot combine the two.  It is important to understand the options before making a decision.

How to Keep Your Car

State and federal exemptions differ in this area:

• Federal exemption – $3,225
• Arkansas state exemption – $1,200

However, if the debtor still carries a loan that is secured by that vehicle, they must continue to make the agreed upon payments or face repossession by the lien holder.

How to Keep Your Home

• Federal homestead exemption - $20,200
• Arkansas state exemption – Debtor may choose A or B, but not both
  • Unlimited for head of family, on real or personal property used as a residence
    • Up to ¼ acres with limits of city, town, or village; up to 80 acres outside those limits
    • Up $2,500 limit for larger properties
    • No homestead may be more than 1 acre within a city or 160 acres outside those limits
  • Up to $800 on real or personal property used as a residence if single, up to $1,250 if married

In addition, homeowners that still have a mortgage secured by that homestead must continue making their scheduled payments or face foreclosure by the lien holder.

Arkansas allows exemptions for other forms of personal property:

• Wedding rings
• Burial plot – up to 5 acres, provided the homestead exemption is not used
• Clothing
• Prepaid funeral trusts
• Tools of the trade – up to $750
• Wild card – for married or head of household – up to $500 of any personal property; for singles – up to $200

Filing Schedule C of a Bankruptcy Petition

Arkansas residents must determine which exemptions they will apply, either state or federal.  Once that is determined, they must complete Schedule C of the bankruptcy petition to list all property exemption claims, including the following information:

• A listing of the property or properties being claimed
• The federal or state statutes that apply to each claim
• The exemption value of each  claim
• The current assessed value of each claim (not the market value)

When to Talk to a Bankruptcy Lawyer

Determining whether or not to file bankruptcy, which type to file, and which exemptions to claim make this a complex process for any consumer.  However, knowledgeable bankruptcy lawyers can provide the answers you need to make those decisions and begin building a more stable financial future.