The types of property that are exempt from bankruptcy in Arkansas include your home, vehicle, retirement, and some sources of income. These property exemptions allow you to keep specific assets so that you have the foundational tools and support you need to get a fresh financial restart.
There are particular limits associated with each exemption, which means that you should speak with a bankruptcy attorney to help you understand all applicable laws and rules.
How Arkansas Bankruptcy Exemptions Work
Bankruptcy exemptions permit you and your family to retain a certain amount of assets. These exemptions keep your property “safe” in bankruptcy. When you exempt an asset, you do not have to worry about creditors liquidating the items as part of your bankruptcy plan. Most exemptions protect certain types of property, such as cars and appliances, and correlate with a particular dollar amount.
Here are the different types of property exempt from bankruptcy in Arkansas under state rules:
- Arkansas homestead exemptions: You can take an exemption of infinite value on your home that you are using as your primary residence for up to ¼ of an acre in city limits or 80 acres anywhere else. If the property exceeds ¼ acre but is less than 1 acre, the additional limit is $2,500. Married or joint filers cannot double this amount.
- Arkansas motor vehicle exemptions: For motor vehicles, you can exempt up to $1,200 for 1 motor vehicle.
- Arkansas personal property exemptions: Personal property includes all personal items. Clothing is exempt without regard to its value. You can receive up to $500 in exemptions for all other personal property.
- Arkansas wages exemptions: You are given up to 60 days’ unpaid wages, with a minimum of $25 weekly.
- Arkansas pension/retirement exemptions: Retirement accounts are exempt. However, your IRA contributions are exempt for up to one year before filing your bankruptcy petition with a cap of $20,000.
Also, it is critical to keep in mind that you have a choice between Arkansas and federal bankruptcy rules, which carry different exemption amounts. Speak with a bankruptcy lawyer to help you determine which set of rules may benefit you the most.
Understand the Difference Between State and Federal Exemptions
Federal bankruptcy laws allow you to choose between federal and state exemptions. This enables state governments to develop their own set of bankruptcy rules and guidelines. Not every state offers this option to bankruptcy filers, but Arkansas is one of the 20 states that do.
At a glance, the federal filing exemptions are as follows:
- Federal homestead exemptions: You may exempt up to $23,675 of your home, regardless of its location and value. The only exception is that it must be your primary place of residence.
- Federal motor vehicle exemptions: You can exempt up to $3,775 in value for 1 motor vehicle under federal rules.
- Federal personal property exemptions: Bankruptcy codes allow specific exemptions for several types of personal property, including the option to apply a wildcard exemption of up to $1,250.
- Federal wages exemptions: Your wages are exempt from bankruptcy.
- Federal retirement exemptions: Retirement accounts are exempt. However, IRAs are capped at $1,362,800.
Be aware that when you choose state or federal bankruptcy, you must comply with those rules uniformly. You are not permitted to “mix and match” when it comes to this decision. You will need to compare and contrast the differences between the two options to decide which choice is better for your situation.
Learn More About Arkansas Bankruptcy Exemptions
Many other types of property are exempt from bankruptcy in Arkansas and are not limited to the descriptions in this article. After reviewing the rules and numbers, you may still have questions regarding how much you can keep or where you will benefit most when filing for Chapter 7 or Chapter 13 bankruptcy, especially when deciding whether to use state or federal laws.
You are given several options within the vast body of state and federal bankruptcy codes. When you have legal questions about your options and concerns, always reach out to a bankruptcy attorney as soon as possible. We can answer your questions promptly and directly so that you do not make any mistakes or waste any precious time.
Call for a Free Consultation
The legal team at Milligan Law Offices wants to help you move toward a brighter financial future. You have opportunities when it comes to filing for bankruptcy in Arkansas. Get in touch with us for your free case evaluation by submitting a message here or calling 479-783-2213 now.