Did you know that one in three American households has less than $5,000 saved for emergencies? It can be tough to make ends meet when something unexpected happens—like a job loss, major car repair, or medical bill. If you find yourself struggling to pay your bills, bankruptcy may be an option worth considering.
In this post, we’ll outline the bankruptcy process in Arkansas and its pros and cons so you can determine if this is the right solution for you.
What is Bankruptcy?
Bankruptcy is a legal process that allows individuals or businesses to restructure their debts. This can involve liquidating assets to repay creditors or creating a repayment plan to make monthly payments on the debt.
How do You Know if You Need to File for Bankruptcy?
If you’re struggling to make ends meet, you may need to consider filing for bankruptcy. Here are some signs that you may need to file:
- You’re using credit cards to pay for basic living expenses like food or rent.
- You’re behind on your mortgage or car payments.
- You’re facing foreclosure or repossession.
- You’re getting calls from creditors or debt collectors.
- You’re considering using your retirement savings to pay off debt.
- You’ve been served with a lawsuit.
What are the Pros and Cons of Filing for Bankruptcy?
Filing for bankruptcy can ease your financial struggles, but it’s not without drawbacks. Here are some things to consider:
- Bankruptcy can give you a fresh start by wiping out your debt.
- It can stop creditors from hounding you for payments.
- It can protect your assets, like your home or car, from repossession.
- Bankruptcy can be costly and time-consuming.
- It can damage your credit score.
- It may not wipe out all of your debt, like student loans or back taxes.
How to Avoid Bankruptcy
Bankruptcy should be a last resort, so it’s essential to explore other options first. Here are some things you can do to avoid bankruptcy:
- Negotiate with your creditors: Creditors may be willing to work with you to lower your payments or interest rates.
- Create a budget: A budget can help you see where your money is going and make adjustments accordingly.
- Use a debt management plan: A debt management plan can help you get your debt under control and make payments to creditors.
- Use a debt consolidation loan: A debt consolidation loan can help you pay off your debts with a single monthly payment.
Bankruptcy can be a difficult decision, but it may be the best option if you’re struggling to manage your debt and none of the above are viable options for you.
What Are the Types of Bankruptcy Available?
In the United States, there are two types of bankruptcy filings: Chapter 7 and Chapter 13. Chapter 7 bankruptcy, also known as liquidation bankruptcy, involves the sale of your assets to repay creditors. Chapter 13 bankruptcy, on the other hand, establishes a repayment plan so you can make monthly payments on your debt.
How to File for Bankruptcy in Arkansas
If you’re considering filing for bankruptcy, it’s important to understand the process. Here’s a brief overview of how to file for bankruptcy in Arkansas:
- Decide which type of bankruptcy you need to file. If you have a regular income and can repay your debts within three to five years, Chapter 13 may be right for you. Otherwise, Chapter 7 may be a better option.
- Complete the necessary paperwork. This includes completing a means test to see if you qualify for bankruptcy and submitting a petition, schedules of assets and liabilities, and a statement of financial affairs.
- Attend mandatory credit counseling. You must complete this within six months of filing your petition.
- File your paperwork & pay the fee. Once your paperwork is filed and you’ve paid your fee or requested a fee waiver, you’ll receive a notice of your hearing date.
- Attend your hearing. This is where you’ll meet with your creditors and the bankruptcy trustee to discuss your case.
What to Expect After Filing for Bankruptcy
After you file for bankruptcy, your creditors will be notified, and the collection process will stop. You’ll also receive a discharge of your debts, which means you won’t be responsible for repaying them. However, some debts cannot be discharged in bankruptcy, like child support or alimony payments.
How Can You Rebuild Your Credit After Filing for Bankruptcy?
Filing for bankruptcy can stay on your credit report for up to 10 years, but that doesn’t mean you can’t rebuild your credit.
Here are some tips to get started:
- Get a secured credit card: This type of credit card requires a deposit, which acts as collateral in case you default on the payments.
- Apply for a small loan: You may be able to get a small loan from a credit union or online lender.
- Use a credit builder loan: This type of loan is designed to help you build credit. You make payments on the loan, and the lender reports your payments to the credit bureaus.
Avoid Bankruptcy and Save Your Credit by Selling Your House for Cash Now
Bankruptcy can be a very complicated and devastating process, both emotionally and financially. If you are considering bankruptcy as an option to get back on your feet, we urge you to contact us first.
We can provide you with a cash offer that can help take the burden off of you and put money in your pocket. No hassles, no commissions, and 100% Free! We understand what you are going through and want to help however we can. Please don’t hesitate to reach out to us today for more information.