stevenrdavislaw.com Blog

Don’t worry if you’re not sure whether you need to file Chapter 7 Bankruptcy or Chapter 13.  That is a decision you should only make after you have discussed your case with a qualified lawyer.  Chapter 7 is sometimes called a liquidation, although that is not nearly as bad as it sounds.  If your debts are primarily credit card debts or medical expenses, Chapter 7 may be right for you.  You don’t have to make monthly payments to a Trustee in Chapter 7, and the attorney fee is usually lower than in a Chapter 13.  The downside of Chapter 7 is that it won’t enable you to pay back due amounts (arrearages) you owe on a mortgage or a vehicle.  Most individuals will qualify to file Chapter 7.  However, if your income exceeds a certain amount, you might not.

Chapter 13 is for persons who have a regular income and can set aside some of that income to pay at least something to their creditors.  Chapter 13 is sometimes called a wage earner’s plan.  If someone has a steady job but has fallen behind on a house payment or car payment, Chapter 13 can help that person avoid foreclosure or repossession.  If you can make monthly payments to continue paying the monthly mortgage payments or car payments, and if you can pay something more to catch upon what you owe the mortgage company or finance company, then Chapter 13 may be what you need.

It doesn’t matter how you receive money.  It could be from wages, Social Security benefits, a pension, or whatever.  If you receive regular monthly benefits and you have debts you cannot pay immediately, you may qualify to file Chapter 13.  You will have to make monthly payments to the Chapter 13 Trustee during the course of your bankruptcy to pay your secured creditors such as your mortgage company and finance compamy, to pay an extra amount to catch upon on your payments (cure your arrearages), to pay something to your unsecured creditors, and to pay the Trustee’s administrative fees and your attorney’s fees.  If you have a question about bankruptcy, please feel free to call me at 501-604-4525.  I will be glad to discuss your situation with you at no obligation.

Under the Bankruptcy Code, every debtor is allowed to keep a certain amount of property, no matter how much he or she owes.  The property which a person may keep is called “exempt,” and the provisions which allow a person to keep certain property are called “exemptions.”  (However, please note that even if your house and car are “exempt,” your mortgage company can still foreclose and your finance company can still repossess if you don’t pay for your car or house.)  In Arkansas, a debtor filing bankruptcy may choose between the exemptions allowed by Arkansas law or those permitted by Federal law.   For many debtors the Federal exemptions will allow them to protect a good bit of their “stuff.”

For example, under current federal exemptions, a debtor may keep:

Your equity in your home of up to $22,975.00.

Your interest in a vehicle of up to $3,675.00.

Your total household furnishings of up to $11,525.00, with no more than $550.00 in any one item.

Your jewelry worth up to $1,550.00

$1,225.00 in any property, plus up to $11,500.00 in the unused part of the equity in one’s home.  (This means you could possibly exempt the sum of $3,675.00 + $11,500.00, or $15,175.00, in your interest in a vehicle).

The vast majority of people who file Chapter 7 bankruptcy do not have to give up any property in order to do so.  If you have any questions about whether Chapter 7 Bankruptcy is right for you (or Chapter 13, for that matter), please call me to discuss your situation at 501-604-4525.  There is no obligation, and the call is free.