How to File for Chapter 13 Bankruptcy in Arkansas
Filing for Chapter 13 bankruptcy in Arkansas can be a complicated process, but it can also be a lifeline for those struggling with debt.
Unlike Chapter 7 bankruptcy, which wipes out most debts, Chapter 13 allows someone to create a repayment plan to pay off their debts over three to five years. If you're considering this option, knowing the process is essential.
As a Harrison, AK bankruptcy attorney at Watson Law Firm, I'm dedicated to helping my clients feel confident when it comes to their financial wellbeing.
What Is Chapter 13 Bankruptcy?
Chapter 13 bankruptcy is also known as a wage earner’s plan. It’s designed for individuals with a regular income who can repay their debts in a structured way. The main advantage of Chapter 13 over Chapter 7 is that it allows you to keep your assets, like your home and car while making payments to your creditors over time.
In Arkansas, the process follows federal bankruptcy laws but also incorporates local rules and requirements. Before filing, it’s crucial to understand how the process works, the eligibility criteria, and what to expect during repayment.
Determine Your Eligibility
Before filing for Chapter 13, you need to check if you qualify. The eligibility requirements include the following:
You must have a regular source of income.
Your secured debts (like mortgages and car loans) must be below a certain limit.
Your unsecured debts (like credit cards and medical bills) must also be below a set limit.
You can’t have filed for bankruptcy recently (Chapter 7 in the past four years or Chapter 13 in the past two years).
If your debts exceed the limit or you don’t have enough income to sustain a repayment plan, Chapter 13 may not be the right option. Consider speaking with your bankruptcy attorney to determine what may be the right option for you.
Complete Credit Counseling
Secondly, before filing, you must complete a credit counseling course from an approved provider. This step is required by law and makes sure that you understand your financial situation and possible alternatives to bankruptcy, according to the U.S. Department of Justice.
The course typically takes about 90 minutes and can be completed online, over the phone, or in person. After completing the course, you’ll receive a certificate that must be included with your bankruptcy petition.
Gather Your Financial Documents
Next, you should gather important financial documents. To file for Chapter 13 bankruptcy, you’ll need to provide detailed financial information, including:
Proof of income (pay stubs, tax returns, etc.)
A list of all debts (secured and unsecured)
A list of assets and liabilities
A monthly budget detailing your income and expenses
Recent bank statements
Having these documents ready will help streamline the filing process and make sure that you meet all the necessary legal requirements for your case.
File Your Bankruptcy Petition
The next step is filing a bankruptcy petition with the U.S. Bankruptcy Court for the Eastern or Western District of Arkansas, depending on where you live. Your petition will include several forms, such as:
The bankruptcy petition itself
Schedules detailing your income, debts, assets, and expenses
A proposed repayment plan
Filing fees for Chapter 13 bankruptcy are currently $313, but if you can’t afford it, you might be able to pay in installments. A lawyer experienced with bankruptcy law in Harrison, Arkansas can help you with this process.
The Automatic Stay Goes Into Effect
Once you file, an automatic stay takes effect. This means creditors must stop all collection efforts, including phone calls, wage garnishments, foreclosures, and repossessions. The automatic stay provides immediate relief and gives you time to work out your repayment plan.
Develop and Submit a Repayment Plan
Additionally, your repayment plan must outline how you’ll pay off your debts over three to five years. The plan prioritizes secured debts (like mortgages and car loans) while allowing you to pay off unsecured debts at a reduced rate.
A bankruptcy trustee will review your plan to make sure it’s fair and feasible. If approved, you’ll start making payments according to the plan.
Attend the 341 Meeting of Creditors
About a month after filing, you’ll need to attend a meeting of creditors, also known as the 341 meeting. During this meeting, the trustee and creditors can ask questions about your finances and repayment plan. Your lawyer will be there to guide you and help answer any questions.
Follow Through With the Repayment Plan
Furthermore, once the court approves your plan, you’ll start making monthly payments to the bankruptcy trustee, who will distribute them to creditors. Sticking to the plan is crucial. If you miss payments, the court may dismiss your case, putting you back at risk of collection efforts.
Complete a Debtor Education Course
Before receiving a discharge, you must complete a debtor education course. This course teaches financial management skills to help you avoid future financial problems. Once completed, you’ll receive a certificate that must be filed with the court.
Receive Your Bankruptcy Discharge
If you successfully complete your repayment plan, the court will grant you a discharge, meaning any remaining eligible debts are wiped out. This marks the end of your bankruptcy case, and you can begin rebuilding your financial future.
How a Bankruptcy Attorney Can Help
While you can file for Chapter 13 bankruptcy on your own, hiring an experienced bankruptcy attorney makes the process much easier and increases your chances of success. Here’s how an attorney like myself can assist you:
Assessing your financial situation: A lawyer can evaluate your financial situation and determine if Chapter 13 is your best option or if another debt relief solution might work better.
Preparing and filing paperwork: Bankruptcy involves a lot of paperwork, and mistakes can delay your case or lead to dismissal. A lawyer makes sure all forms are completed correctly and submitted on time.
Developing a feasible repayment plan: Your repayment plan must comply with bankruptcy laws and satisfy creditors. A lawyer can help create a plan that works for you while meeting legal requirements.
Representing you in court: Your attorney will represent you at the 341 meeting and any other court hearings, making sure your rights are protected and addressing any concerns from creditors or the trustee.
Assuring compliance with bankruptcy rules: Each bankruptcy district has specific rules and procedures. An experienced lawyer knows Arkansas’ bankruptcy laws and will make sure you stay in compliance throughout the process.
Helping you avoid mistakes: Common mistakes—like failing to list all debts or missing payments—can jeopardize your case. A lawyer helps you avoid these pitfalls and keeps your case on track.
Providing ongoing support: Bankruptcy is a long process, and having a lawyer means you have someone to turn to with questions or concerns along the way.
These are only a few of the ways a bankruptcy attorney can help you through this difficult time. If you're in need of help, don't hesitate to contact Watson Law Firm today.
Reach Out to a Bankruptcy Attorney
With the right guidance, you can work through the Chapter 13 bankruptcy process with confidence and work toward a debt-free future. At Watson Law Firm, I serve clients in Harrison, Boone County, Newton County, Marion County, and Baxter County. Contact my firm today to schedule a consultation.
