Chapter 13 Arkansas Law

The U.S. Bankruptcy Code provide the means for debtors to deal with their outstanding financial obligations. Personal bankruptcy cases typically fall under Chapter 7 or Chapter 13, depending on your circumstances. A Chapter 13 case is typically used to restructure debts so they can be repaid over time. If you're filing Chapter 13 as a resident of Arkansas, it's important to understand what state laws may apply to your particular case.

Eligibility

• To file Chapter 13 in Arkansas, you must have a verifiable source of steady income. According to the U.S. Courts, filers are allowed to have a maximum unsecured debt of $360,475 and secured debt of $1,081,400 as of 2010. In Arkansas, you can include back taxes, child support, unpaid alimony, mortgage debt, vehicle debt, medical bills and credit card debts in a Chapter 13 petition.

Filing

• Depending on where you live, you will file your Chapter 13 petition in the Eastern or Western district court. The court requires you to submit the $274 filing fee along with your petition as well as a list of your assets, liabilities, statement of income and expenses, a copy of your repayment plan and a statement of your financial affairs. You must also submit a document certifying your completion of approved credit counseling at least 180 days prior to filing.

Repayment Plan

• Your repayment plan is a detailed account of how you plan to repay your creditors. In Arkansas, you are required to begin making payments under your plan within 30 days of filing, regardless of whether the court has approved it yet. The length of your repayment plan is based on your median income and household size. For example, in Arkansas, a single filer is allowed a median income of $33,412, according to the U.S. Trustee Program. If your income is equal to or less than the median, your plan will last three years. If it's higher, you will have to pay for five years.

Benefits

• Filing Chapter 13 in Arkansas enacts an automatic stay against your creditors, which prevents them from pursuing collection actions against you. This can be particularly helpful if you are potentially facing foreclosure and need time to get caught up on your mortgage payments. The automatic stay also blocks creditors from suing you in civil court.

Considerations

• There are several things to consider before filing Chapter 13 in Arkansas. If you decide to sell your home while in Chapter 13, you must obtain the consent of the bankruptcy court before doing so. You also cannot generally obtain new credit without a written document from the bankruptcy court. If you receive any federal or state tax refunds while in Chapter 13, these must be turned over to your trustee. Finally, a Chapter 13 filing can remain on your credit for up to seven years after discharge.