When Congress passed the new bankruptcy law in 2005 the goal was to push more consumers into Chapter 13 reorganization plans, where a consumer is able to pay off some or all of their debt over a three to five year period. The preferred bankruptcy for most filers in Arkansas is Chapter 7. In this type of bankruptcy in most cases the debtor’s slate can be wiped completely clean of all unsecured debt obligations without paying for much except for court costs and attorney’s fees. With bankruptcy reform, however, a person must qualify in order to file Chapter 7. The process goes something like this: 1) you must determine whether your annual income is above or below the Arkansas state median income for your sized household; 2) if it is below, you can file Chapter 7 bankruptcy (assuming your debts are unsecured and qualify to begin with), and if it is above the state median, you must pass the means test. Listed below are the Arkansas median incomes as of 2006:

2-person families: 40,604
3-person families: 47,588
4-person families: 52,185
5-person families: 50,500
6-person families: 51,971
7-or-more-person families: 49,272

3) Assuming your income is above the median for your sized household and you do not pass the means test, you would be forced to declare Chapter 13 bankruptcy. The above figures of course should not be used to determine your eligibility for bankruptcy. Please consult with a debt attorney to learn more about your situation.

Given how harsh Chapter 13 can be, as well as how severe the credit effects of bankruptcy can be, many consumers in Arkansas have turned to debt relief companies for help instead.

PayingPaul.Com can help you avoid bankruptcy! All you have to do is fill out a form!

Or if you are interested in learning more about the different debt matters that pertain to Arkansas, feel free to browse these resources:

Arkansas Consumer Credit Counseling Services
Arkansas Bankruptcy Laws
Arkansas Debt Collection

Bankruptcy Stats in Arkansas

2004: 23,887
2005: 30,142
2006: 9,288

With the sweeping law changes in 2005 more Arkansas opted to seek other alternatives to bankruptcy instead of filing. There are a wide variety of reasons for this, chief among them is the fact that qualifying for Chapter 7 is much more difficult now. Another downside includes the significant increase in attorney fees to account for the fact that helping someone declare bankruptcy is a much more complicated and labor-intensive task. In all bankruptcy filing decreased by 69.1 percent between 2005 and 2006 in Arkansas state.