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FAQ: Will My Property Be Repossessed If I File for Bankruptcy?

Foreclosure signageThe rules surrounding Bankruptcy filings are varied and complex. Naturally, most of the questions that consumers have when deciding whether to file for Bankruptcy are related to their personal property. Depending upon the type of Bankruptcy you file, the available Bankruptcy exemptions, and the perceived value of the property, you may be able to save certain assets from repossession during the Bankruptcy process. If you have specific questions about your property and your rights surrounding a Bankruptcy filing in Arkansas, you need to consult with an experienced Bankruptcy attorney in Arkansas.


The fate of your assets will largely depend on whether you are filing for Chapter 7 vs. Chapter 13 Bankruptcy. With a Chapter 7 filing, all collection attempts are immediately halted and certain assets are collected and liquidated to cover a portion of the debt. A Chapter 13 filing involves agreeing to a Bankruptcy payment plan with the support of the court.

Once the Bankruptcy filing is registered in court, an automatic stay compels your creditors to immediately cease all collection activities, including repossession efforts. However, certain valuable assets may be liquidated to pay debts.


The purpose of Bankruptcy is offering a way out of a dire financial situation and giving you a chance for a fresh start. While this does not necessarily mean that life will continue uninterrupted, the government does understand that it is difficult to start anew if all of your property becomes liquidated in Bankruptcy.

To counter this, you can claim certain federal and state Bankruptcy exemptions for your personal assets. In Arkansas, it is required that you have been a resident of the state for two years in order to claim state exemptions. Then, you are allowed to select the set of exemptions that makes the most sense for your situation.

Each category of property has a different exemption limit that you are permitted to claim according to either federal or state law. If the value of the item exceeds the exemption limit, your property may still be liquidated in a Chapter 7 Bankruptcy proceeding. You may also be allowed to keep certain assets even without the help of a Bankruptcy exemption, depending upon the anticipated re-sale value of the item.


If you owe money on your house, it is likely in the form of a secured loan. Typically, Bankruptcy protections do not affect security interests, so it will be necessary to catch up with mortgage payments if you are falling behind. Otherwise, the bank is free to initiate foreclosure proceedings when they feel it is justified.

In order to protect the equity in your home from Bankruptcy liquidation, you can take advantage of the Arkansas homestead Bankruptcy exemption which protects unlimited equity in a home if it is located on under a ¼ acre in an urban area or under 80 acres in a rural area.


If a creditor has repossessed your vehicle (such as a car or boat), you may be able to recover it by filing Chapter 13 Bankruptcy if the vehicle has not already been sold to a third party. Chapter 13 Bankruptcy will give you more time to pay off the debt on a payment plan, but you will likely be responsible for the repossession fees.


Arkansas Bankruptcy law exempts personal possessions such as clothing from Bankruptcy proceedings without having to claim an exemption. Furniture can be covered under a personal property Bankruptcy exemption, but the status of such items is dependent upon the value of the property.

If you have questions about what will happen to your personal property in a Bankruptcy filing, contact the Arkansas Bankruptcy attorneys at Caddell and Reynolds at (800) 889-6944 to set up a consultation.