Debt Collections and Bankruptcy in Arkansas

                  Despite world events and the Covid-19 pandemic, lawsuits are continuing at very high levels in Arkansas after a drop for part of 2020 and many national sources indicate that consumer debt is hiking at dramatically high levels particularly in 2022 according to the Fed. You are not alone if you find yourself in a situation where you simply cannot make ends meet without borrowing from high interest credit cards and internet loans and the like. Debts are seldom ignored by lenders like they were decades ago because even if a lender doesn’t want to spend time and money suing you, they almost always sell the account to a collection agency happy to sue over any amount. Sometimes the lender ‘writes off’ or ‘charges off’ the debt on their taxes and sometimes even get lazy and report the debt as zero rather than being more specific and this can lull you into a false sense of safety. No matter what your credit report says, that account can be sold to a collection agency and a lawsuit can be filed by that agency.

                 There are many ways a lender with a lawsuit judgment can hammer a person in Arkansas. These include garnishing bank accounts, garnishing wages, putting liens on your house or other land that prevent the sale of property without those debts being paid (note that there is a special motion only available in a bankruptcy that can remove that lien without paying it usually), and even a form of debtor prison that is being used more and more often. If an Arkansan ignores a judgment for more than 45 days by not filing a detailed list of their property and other info like your employer to help the lender collect the debt, that lender can have the judge issue a bench arrest warrant and have you picked up by the police and held until you post a bond that is usually in the amount of the debt. What to do?     

                 Sometimes, the best solution is a Chapter 7 bankruptcy which is what I offer if you have not completed one within the last 8 years. This is cheapest and quickest form of bankruptcy ending after 4 months normally with most of that being a wait for notice deadlines to end. Debts that can be discharged are permanently forgiven and only a tiny percentage of cases have so much in property that they lose anything to a bankruptcy trustee. While this is a simplified summary, Chapter 7 will get rid of any debt unless it falls under limited exceptions. Credit cards to repo deficiencies to some taxes more than roughly 4 years old to even non-fraud benefit overpayments from governments like social security and unemployment are normally automatically discharged in a successful chapter 7. Typically, if you want to keep your house or car that is no problem as long as you are current on payments.

           Exceptions to discharge that you cannot erase with chapter 7 include taxes filed after the April 15^th deadline (or October 15 if extended) or which are less than roughly 4 years old, debts with fraud or criminal aspects, student loans, or (if the lender objects) debts that were charged right before filing a bankruptcy. There is a possible student loan discharge under 11 USC 523(a)(8), but I do not handle these at this time as I feel they are so seldom granted that the expense of filing a special Adversary Proceeding is not justified by the chances of victory-but I am open to starting to do these if that changes enough.

Chapter 13 bankruptcy is also an option. Those are necessary if you are NOT current on a house or car but have resumed regular income and can afford a reorganization. I do not handle these anymore, but I maintain a list of excellent referral attorneys to send you to if you need one, so contact me anyway. Unfortunately, the attorney fees are kept artificially low in Arkansas such that few firms can handle these cases with good customer service, and I do strongly suggest that you consider only the ones on my list as I do not get such complaints about those on my list.