Bankruptcy is a legal procedure that allows an individual or business to have some or all of their debts discharged. It is normally considered as an option of last resort, because while it can stave off financial disaster, it has some considerable long-term consequences warranting careful consideration of the costs and benefits. Bankruptcy is governed by federal law, and proceeds in federal courts. So, the procedure for filing for bankruptcy in Arkansas will be very similar to the procedure anywhere else in the U.S. However, individual bankruptcy courts have different rules for exemptions, so it might be a good idea to consult with a local attorney in Newport, Arkansas before filing.
Chapter 7 Bankruptcy in Newport, Arkansas
There are 2 main types of bankruptcy in Newport, Arkansas. They are known as Chapter 7 and Chapter 13 Bankruptcy. Chapter 7 bankruptcy involves liquidation of some of the debtor's assets. It requires some percentage of the debtor's property to be sold in order to pay off as much of his or her debt as possible. However, the majority of property that most people own is exempt. This normally includes homes, vehicles, insurance policies, and retirement accounts. These do not need to be sold.
Once eligible assets are sold, and the proceeds turned over to the creditors, most remaining debt is cleared. However, some types of debt cannot be discharged in bankruptcy, including student loans, taxes, child support, personal injury awards, and fines. If most of your debt in Newport, Arkansas is not dischargeable, you might want to consider other options besides bankruptcy.
Chapter 13 Bankruptcy in Newport, Arkansas
In Newport, Arkansas, chapter 13 is very different from Chapter 7, and may or may not be the best option for you, depending on your situation. Chapter 13 bankruptcy does not excuse debt, it restructures it. This involves a court coming up with an altered repayment plan designed to be manageable for the debtor. This new plan sets aside the terms of the original contracts that created the debt in the first place. This creates a new payment structure, normally involving a single monthly payment, that the debtor should find manageable.
Which Type of Consumer Bankruptcy Should I File in Newport, Arkansas
The answer to this question depends heavily on your particular situation. If you have enough steady income to manage a payment plan, and a lot of non-exempt property that you are unwilling to part with, Chapter 13 might be a good option. If you don't have much steady income, and most of your property is exempt, Chapter 7 might be better.
In any case, you should talk with a local Newport, Arkansas bankruptcy attorney. Your attorney can advise you of your options and inform you of their likely outcome. This will make it much easier for your to make an informed choice.