Chapter 7 bankruptcy in Arkansas and New Mexico.

Who Chapter 7 tends to fit

• Debt that is mostly unsecured: credit cards, medical bills, personal loans, payday loans, old utility bills, and the balance left after a repossession or foreclosure.
• Household income at or below the state median for your household size, or above it with allowed expenses that leave little to pay creditors.
• Property that fits within the exemptions available in your state, or property you are willing to give up.
• No Chapter 7 discharge in a case filed within the past eight years.

If you are behind on a mortgage or a car loan and want to keep the property, have income above the means-test limits, or own property Chapter 7 would not protect, Chapter 13 may fit better. Sometimes the right answer is not to file at all; the consultation is where that gets sorted out.

The means test

Income at or below the applicable state median usually means you do not need the second means-test calculation. It does not automatically establish Chapter 7 eligibility. Above-median income does not automatically rule Chapter 7 out.

The test starts with your average gross household income over the six calendar months before filing, compared with the median for a household your size in Arkansas or New Mexico. Above the median, a second calculation subtracts allowed living expenses, secured-debt payments, and priority debts; what is left decides whether a Chapter 7 filing is presumed abusive. Other requirements apply regardless of income: a credit-counseling course before filing, complete and accurate schedules, the timing of any prior case, and what you own.

What happens to your debts

A discharge releases you from personal liability for the debts it covers, and creditors may not try to collect them from you afterward. Credit cards, medical bills, personal loans, most payday loans, utility balances, and the deficiency left after a repossession or foreclosure are generally dischargeable.

Some debts generally survive a Chapter 7 case: domestic support obligations, most student loans, many recent income taxes, criminal fines and restitution, debts for injury or death caused by drunk driving, and debts a court finds were incurred by fraud. Debts left off the schedules can also be a problem, which is one reason the petition is reviewed with you line by line.

Secured debts, such as a mortgage or car loan, are handled separately. You can usually keep the property and keep paying, surrender it and discharge any remaining balance, or, for some personal property, redeem it by paying its current value. A reaffirmation agreement, if you choose to sign one, keeps you personally liable on the loan after the case ends.

What you keep

Exemptions decide what a Chapter 7 trustee can and cannot reach. Arkansas filers choose between the Arkansas exemption list and the federal list, whichever protects more of what they own. New Mexico has its own exemptions for a home, a vehicle, household goods, tools of a trade, and other property. Qualified retirement accounts such as a 401(k) or an IRA are protected in most cases in both states.

Equity above the exemption limit, or property with no exemption, can be sold by the trustee to pay creditors. Whether that applies to anything you own is worked out before you decide to file, not after. The Arkansas guide and the New Mexico guide go into the state rules.

Collection while the case is open

Filing bankruptcy generally creates an automatic stay that pauses many collection lawsuits, wage garnishments and collection efforts. Exceptions and repeat-filing rules apply; we review what protection is available in your situation.

How a Chapter 7 case moves

1. Consultation and decision. A free 30-minute call or video meeting with Asa. After the consultation you receive the written disclosures the Bankruptcy Code requires. If Chapter 7 fits and you decide to go forward, you also receive a written agreement that states the fee and what it covers.
2. Course and documents. You complete a credit-counseling course from an approved provider within the 180 days before filing, and our office tells you which documents to provide and how to send them.
3. Petition and review. Asa prepares the petition, schedules, and statements and reviews them with you. The case is filed once you authorize it and the fees are paid.
4. Meeting of creditors. About a month after filing, the trustee asks you questions under oath at a short meeting. Asa attends with you. The Arkansas and New Mexico bankruptcy courts currently hold most of these meetings by phone or video.
5. Debtor education. A second short course, completed after filing and before the discharge.
6. Discharge. If no objections are filed, the court typically enters the discharge about 60 days after the meeting of creditors. A Chapter 7 case typically runs three to five months from filing to discharge.

What it costs

The attorney fee for a standard consumer Chapter 7 case is $1,500, whether you file alone or jointly with a spouse. It is due in full before the case is filed and covers the petition, schedules and statements, the means test, the meeting of creditors, standard amendments, and reaffirmation agreements. The court filing fee is $338. The two required courses are arranged through an approved provider, and their fee is covered by the attorney fee. Adversary proceedings, contested motions, conversion to another chapter, appeals, and reopening a closed case are outside the standard scope and are quoted separately.

An individual Chapter 7 filer may ask the court to waive the filing fee if household income is below 150% of the applicable poverty guideline and the fee cannot be paid even in installments. The court decides whether to grant the waiver. The court may also allow the filing fee to be paid in installments after filing.

Every fee is confirmed in a written agreement before any work begins. See what is included and what costs extra.

Next step

Send your contact details through the form at the top of this page and our office will reach out, usually within one business day, to arrange a free 30-minute consultation with Asa by phone or video. If a court date, garnishment, or sale is close, call (870) 212-4700 instead of waiting for a callback.