Arkansas’s unlimited homestead exemption keeps the liquidation test floor at zero for most homeowners in Chapter 13 — but the state’s unusually small vehicle and wildcard allowances can push that floor up for filers with a paid-off car and modest savings. Which exemption system you choose, state or federal, often determines whether your plan payment reflects only your actual disposable income or includes extra amounts for unprotected property.
How Chapter 13 Works in Arkansas
You file a petition and propose a repayment plan lasting three to five years. A standing Chapter 13 trustee collects your monthly payment and distributes it — secured debts first, then priority claims, then whatever’s left goes to unsecured creditors. You keep all your property throughout, and remaining qualifying unsecured debt is discharged when the plan completes.
The exemptions you claim set your plan’s liquidation test floor — the minimum unsecured creditors must receive.
Should You Use Arkansas or Federal Exemptions in Chapter 13?
Arkansas lets filers choose between its own exemption list and the federal exemptions, whichever protects more - you can't combine the two. Given Arkansas's very low vehicle and wildcard amounts, renters and filers without significant home equity often do better under the federal system. Arkansas’s homestead exemption is Unlimited in value for married filers or heads of family, limited only by size: a quarter-acre if in a city, town, or village, or 80 acres elsewhere. Homeowners with meaningful equity almost always do better under Arkansas’s own unlimited homestead. Renters or filers with modest home equity often do better under the federal system, since Arkansas’s own vehicle exemption ($1,200 in equity in one vehicle, or $20,000 if the vehicle is specially equipped for a filer with a disability - one of the lowest standard vehicle exemptions in the country.) and wildcard ($200 for unmarried filers who aren't head of household, or $500 for married filers or heads of household.) are both quite small.
Why Arkansas Filers End Up in Chapter 13
Mortgage arrears are the most common driver — catching up on missed payments without losing the house, especially valuable given Arkansas’s unlimited homestead protection. Income above the means test threshold is the second major factor.
Do You Qualify for Chapter 7 Instead? The Means Test
Arkansas’s current median income figures:
- 1 person: $58,421
- 2 people: $73,630
- 3 people: $82,329
- 4 people: $97,054
- Each additional person: add $11,100
Filers above the median for their household size generally must commit to a five-year plan; those below can propose three years.
Mortgage Cure in Arkansas
Filing Chapter 13 triggers the automatic stay, halting foreclosure immediately. The plan spreads mortgage arrears across its three-to-five-year duration while you resume regular payments going forward.
Vehicle Treatment and Cramdown
If your car loan was originated far enough before filing and the vehicle is worth less than the remaining balance, Chapter 13 can cram the loan down to the vehicle’s current market value at a court-approved interest rate — a particularly useful tool in Arkansas given how small the state’s own vehicle exemption is.
Which Federal District Do You File In?
Arkansas has two federal bankruptcy districts. Eastern District of Arkansas - Little Rock, Jonesboro, Pine Bluff
Western District of Arkansas - Fayetteville, Fort Smith, Harrison, Hot Springs, Texarkana, El Dorado
How Much Does a Chapter 13 Attorney Cost in Arkansas?
Chapter 13 attorney fees in Arkansas typically run $2,500 to $4,000, on top of the 313 federal filing fee. Most of the fee is built into the plan itself.
Common Mistakes Arkansas Filers Make
Not comparing state versus federal exemptions. Given how small Arkansas’s own vehicle and wildcard amounts are, skipping this comparison can mean a meaningfully higher plan payment than necessary.
Missing required tax filings during the plan, which can trigger a motion to dismiss.
Overlooking a non-filing spouse’s income in the means test.
Not confirming head-of-family status, which affects the wildcard exemption amount.
A Realistic Example
Consider a filer we’ll call Bobby, living in Fort Smith. He works in warehouse logistics and fell behind on his mortgage after a period of reduced hours. He owns his home on a half-acre lot with substantial equity, and drives a truck worth $9,000 with a small loan remaining.
Because his property falls within Arkansas’s size limits for the homestead exemption, his equity is fully protected regardless of value. His truck, however, exceeds Arkansas’s tiny $1,200 vehicle exemption significantly — his attorney compares whether the federal exemptions (with a $5,025 vehicle allowance) would leave less exposed overall, weighing that against his substantial, fully-protected home equity under the state system.
His income lands above Arkansas’s median for a household of two, so he commits to a five-year plan. The mortgage arrears are spread across the plan while he resumes regular payments. Five years later, the mortgage is current and the remaining unsecured debt is discharged.
Frequently Asked Questions About Chapter 13 Bankruptcy in Arkansas
Can Chapter 13 stop foreclosure in Arkansas?
Yes. Filing triggers the automatic stay, which halts foreclosure immediately. Your plan then spreads the mortgage arrears across three to five years while you resume regular payments.
Should I use Arkansas or federal exemptions in Chapter 13?
It depends on what you own. Homeowners with meaningful equity almost always do better under Arkansas’s unlimited homestead exemption. Renters or filers with a vehicle and modest savings often do better under the federal system, since Arkansas’s own vehicle and wildcard amounts are quite small.
How long does a Chapter 13 plan last in Arkansas?
Three to five years. Filers with household income above Arkansas’s median for their household size generally must propose a five-year plan; those below can propose three years.
Can I keep my car in an Arkansas Chapter 13?
Yes — Chapter 13 doesn’t require giving up property. If your car loan is old enough and the vehicle is worth less than the loan balance, the plan may also cram down the loan to the vehicle’s current value.
What is the Arkansas bankruptcy means test income limit?
It depends on household size and updates periodically. Current thresholds are roughly $58,421 for one person, $73,630 for two, $82,329 for three, and $97,054 for four, with $11,100 added per additional person.
Which bankruptcy district do I file in if I live in Little Rock or Fayetteville?
Little Rock falls under the Eastern District of Arkansas. Fayetteville falls under the Western District.
Where to Verify the Details
Arkansas’s exemption statutes are published in Ark. Code § 16-66-210 et seq. For current means test figures, check the U.S. Trustee Program website.
Alternatives to Chapter 13 in Arkansas
If you pass the means test and don’t need to cure a mortgage, our Chapter 7 guide for Arkansas explains how straight liquidation might discharge your debt faster.
Last reviewed by American Debt Guide Editorial Team. Figures on this page reflect Arkansas bankruptcy exemption amounts and federal filing data as of July 2026.