Arkansas Bankruptcy Exemptions: What You Can Keep

Arkansas gives you a powerful choice. You can select state or federal bankruptcy exemptions to protect your property. Most Arkansas residents who have lived in the state for at least two years qualify for this option.

Exemptions determine what property you can keep when filing Chapter 7 bankruptcy. Choose wisely because you can only use one set of exemptions per case.

Protect Your Arkansas Property With the Right Exemptions

Choosing between state and federal exemptions impacts what you keep in bankruptcy. Speak with a bankruptcy attorney today to maximize your exemption protection and safeguard your assets.

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Why Exemptions Matter for Arkansas Bankruptcy Filers

Chapter 7 bankruptcy eliminates credit card and medical debt in just a few months. Exemptions protect your belongings from the bankruptcy trustee.

Without proper exemptions, the trustee can sell your property and distribute proceeds to creditors. Fortunately, this rarely happens in Chapter 7 cases.

Confused about exemptions? Speak with a bankruptcy attorney for free to understand your options.

Arkansas Allows Federal Bankruptcy Exemptions

Arkansas is one of only 17 states offering this choice. You can pick either state or federal exemptions for your case.

Compare both sets carefully before deciding. You must have lived in Arkansas for at least two years to choose. With state exemptions, you can also use federal non-bankruptcy exemptions for certain retirement accounts.

State vs. Federal Exemptions: Which Protects You Better?

Your situation determines the best choice. Homeowners often benefit from state exemptions because of Arkansas’s generous acreage-based homestead protection.

Non-homeowners typically find federal exemptions more protective. Federal exemptions offer higher limits for vehicles and personal property.

Compare these key exemptions:

Property Type	Arkansas Exemption	Federal Exemption
Homestead	Up to 80 rural acres or 0.25 urban acres (unlimited equity)	$31,757
Motor Vehicle	$1,200	$5,025
Wildcard	$200-$500	$1,675 plus $15,800 unused homestead

Arkansas State Bankruptcy Exemptions

Married couples filing jointly can double most exemption amounts. You cannot double exemptions for property owned individually.

Arkansas Homestead Exemption

Federal homestead exemption protects $31,575 of home equity for single filers.

Arkansas uses an acreage-based system instead. Your protection depends on property location:

Rural property: Protect up to 80 acres plus your house (unlimited equity)
Urban property: Protect up to 0.25 acres in cities or towns (unlimited equity)

Special rule: If your land is worth less than $2,500, you can protect 160 rural acres or 1 urban acre.

Personal Property Exemptions

Arkansas law protects limited personal property. These exemptions cover full value unless noted:

All clothing
Prescribed health aids
Motor vehicle equity up to $1,200
Tools of trade up to $750

Motor Vehicle Protection

Arkansas protects only $1,200 of car equity. Calculate equity by subtracting your loan balance from fair market value.

Use Kelley Blue Book to determine current vehicle value. Federal exemptions protect $5,025 of vehicle equity, often a better choice.

Wildcard Exemption

Arkansas wildcard exemptions are minimal. Unmarried filers who aren’t heads of household get $200. Married filers or heads of household receive $500.

Federal wildcard exemptions are substantially higher. You can claim $1,675 plus $15,800 if you skip the homestead exemption.

Money Benefits and Insurance

Arkansas fully exempts these benefits and payments:

Crime victims’ compensation
Disability benefits
Health insurance payments
Life insurance payments
Pension or retirement accounts up to $20,000
Public assistance
Tax-exempt retirement accounts (401(k)s, 403(b)s, IRAs, profit-sharing plans)
Unemployment compensation
Workers’ compensation

Federal Bankruptcy Exemptions

Federal exemptions often provide better protection than Arkansas state exemptions. Married couples filing jointly automatically double these amounts.

Common federal exemptions include:

Homestead: $31,575
Wildcard: $1,675 plus $15,800 unused homestead
Motor vehicle: $5,025
Jewelry: $2,128
Household goods: $800 per item, $16,850 aggregate
Tools of trade: $3,175
Life insurance policy interest: $16,850

Federal law fully exempts these categories:

Health aids and medical equipment
Alimony and spousal support
Child support payments
Crime victims’ compensation
Disability and unemployment benefits
Life insurance for dependents you need for support
Veterans’ benefits
Social Security benefits
Wrongful death recovery
Lost earnings payments
Public assistance

Federal exemption amounts update every three years. These amounts are current as of April 2025.

Get Help Filing Chapter 7 in Arkansas

Understanding exemptions is crucial for protecting your property. Choose between state and federal exemptions based on what you own.

Need guidance on your bankruptcy case? Speak with a bankruptcy attorney for free to discuss your exemption strategy and protect your assets.

Frequently Asked Questions

What is the Arkansas homestead exemption in bankruptcy?

Arkansas protects up to 80 acres of rural property or 0.25 acres of urban property with unlimited equity value. If your property is worth less than $2,500, you can protect up to 160 rural acres or 1 urban acre. The federal homestead exemption protects only $31,757 of equity but applies to any size property.

Can I use federal exemptions when filing bankruptcy in Arkansas?

Yes, Arkansas allows you to choose federal or state exemptions if you've lived in the state for at least two years. You can only use one set of exemptions per case. Compare both to determine which protects your property better based on what you own.

How much vehicle equity can I protect in Arkansas bankruptcy?

Arkansas state exemptions protect only $1,200 of vehicle equity. Federal exemptions protect $5,025 of vehicle equity. Calculate your equity by subtracting your loan balance from your car's fair market value. Most filers choose federal exemptions for better vehicle protection.

What is a wildcard exemption in Arkansas bankruptcy?

Arkansas wildcard exemptions are $200 for unmarried filers or $500 for married filers and heads of household. Federal wildcard exemptions are $1,675 plus an additional $15,800 if you don't use the homestead exemption. Wildcard exemptions protect any property not covered by other exemptions.

How do I choose between Arkansas and federal bankruptcy exemptions?

Compare what you own to both exemption sets. Choose state exemptions if you own significant acreage and want unlimited equity protection. Choose federal exemptions if you don't own a home or need higher limits for vehicles, household goods, and personal property.

Arkansas Bankruptcy Exemptions: Protect Your Property in Chapter 7