Every year, many people face the difficult decision of filing for bankruptcy in Arkansas. The ramifications of going bankrupt can be severe and long-lasting. To say the least, it is not a decision that should be taken lightly or made rashly.
The average consumer is usually faced with the choice between Chapters 7 and 13 bankruptcies. But many people don’t understand the key differences between the two. The chapter 7 bankruptcy lawyers at Nolan Caddell Reynolds are here to provide guidance on your options, and help you make the best choice for your family and future.
Chapter 7: How Much Do You Repay?
When applying for chapter 13 bankruptcy, the debtor is placed on a repayment plan that lasts between three and five years. This allows companies, collection agencies and government offices to get some restitution for the debts incurred. However, after that payment plan ends, the remaining debts are often dissolved.
However, with Chapter 7 bankruptcy, the debts are resolved up front. There is no repayment plan. If the court decides you are unable to even partially pay back the debts you have incurred, then you may be granted Chapter 7 bankruptcy.
However this doesn’t mean that you are “free and clear.”
What are the Consequences of Filling Chapter 7 Bankruptcy in Arkansas?
Bankruptcy is the worst mark to appear on an individual’s credit report. Negative marks like defaulted accounts or Chapter 13 bankruptcy are often removed from a credit report after seven years of responsible spending. This is not the case with Chapter 7 bankruptcy.
While Chapter 7 bankruptcy does dissolve most debts with little to no repayment necessary, the action will remain on an individual’s credit report for no less than ten years. Making it a more difficult burden to get out from under. With Chapter 7 bankruptcy on your report things like buying a house or financing a car become much more difficult.
Chapter 7 Bankruptcy: What Debts are Forgiven?
When filing Chapter 13 bankruptcy, almost all debts are forgiven (if the repayment plan is met). However filing Chapter 7 bankruptcy doesn’t dissolve all of your debt quite as easily. Debts like student loans, back taxes or child support will remain unpaid if a debtor is granted Chapter 7 bankruptcy.
Clearly Chapter 7 bankruptcy could be the right solution for many Arkansans. However with it’s lasting implications and limited debt forgiveness it shouldn’t be considered a simple, financial “reset.”
If you or someone you know is considering filing for bankruptcy in Arkansas contact the Chapter 7 bankruptcy attorneys at Nolan Caddell Reynolds or call us at 866-242-0452, today!