What Are the Arkansas Bankruptcy Exemptions?

Why Are Exemptions Important for Bankruptcy Filers in Arkansas?

Chapter 7 bankruptcy is a powerful tool that can help you get rid of credit card and medical debt for good in just a few months. Exemptions are a key part of filing bankruptcy. Claiming exemptions allows you to protect the things you own. If you don’t claim exemptions or the exemptions you use don’t cover the value of your property, the bankruptcy trustee can sell the property and give the proceeds to your creditors. However, this very rarely happens in Chapter 7 cases.

If you’re reading about exemptions and feel confused, you’re not alone! Bankruptcy is a legal process, and it can be technical and complicated. Luckily, help is available! Take Upsolve’s quick screener to see if you’re eligible to use our free bankruptcy filing tool.

Does Arkansas Allow Filers To Use Federal Bankruptcy Exemptions?

Yes. Arkansas is one of only 17 states that allow most residents to choose between state and federal bankruptcy exemptions.

You can only apply one set of exemptions to your case, so it’s important to compare the benefits and drawbacks of each before you commit. As long as you’ve lived in Arkansas for at least two years, you can choose whichever set gives you the best protection. Note that if you choose the state exemptions, you can also use the federal non-bankruptcy exemptions, which can help you protect certain retirement accounts.

Which Is Better: Arkansas Exemptions or Federal Exemptions?

This is ultimately a judgment call you’ll have to make as the bankruptcy filer. But generally speaking, if your most important asset is your home and you want to ensure you can keep it when you file bankruptcy, state exemptions may provide more protection. If you don’t own a home and you’re most worried about hanging on to your vehicle and other personal property, federal exemptions tend to be more generous in these areas. 

Here’s a quick comparison of three of the most important bankruptcy exemptions:

Read on to learn about specific exemptions for different types of property.

What Are the Arkansas Bankruptcy Exemptions?

If you're married and filing jointly with your spouse, it's important to note that you can generally double the exemption amounts listed below, as the values in this guide (unless otherwise noted) are available to single filers. But you can’t double exemptions for property that's not jointly owned.

Real Property: The Arkansas Homestead Exemption

If you're a landowner or homeowner, you’ll want to pay particular attention to this exemption. 

The federal homestead exemption allows a single filer to safeguard up to $27,900 of equity in their primary residence.

Arkansas is unique in that it allows for an acreage-based exemption. The acreage depends on whether your property is rural or urban as follows:

• Rural property: Arkansas allows you to protect up to 80 acres of rural land and the house on it, regardless of the equity value.

• Urban property: You can protect up to one-quarter of an acre of land in a city, town, or village, also regardless of the equity value.

However, if your land is worth less than $2,500 (in total value), you can protect up to 160 acres of rural property or up to 1 acre of urban property (still up to a $2,500 value limit).

Source: 11 USC § 522(d)(1), Ark. Const. Art. 9 §§ 3, 4, 5, 6; Ark. Code Ann. §§ 16-66-210, 212, 218

Personal Property Exemptions in Arkansas

Arkansas law allows filers to exempt only a minimal amount of personal property. Unless otherwise noted, filers can exempt the full value of these types of personal property:

• Clothing

• Health aids prescribed by a medical professional

• Up to $1,200 in equity in a single motor vehicle

• Up to $750 in value for tools of trade required for your profession

Read about federal exemptions for personal property in the section “What Are the Federal Bankruptcy Exemptions?” below.

Motor Vehicle Exemption

Many bankruptcy filers are worried about losing their car when they file Chapter 7. The motor vehicle exemption can help you protect your car.

In Arkansas, the motor vehicle exemption helps you protect up to $1,200 of equity in your car. To figure out how much equity you have in your car, take the current fair market value and subtract what you still owe on the car (if you’re financing the car). If you own the car outright, your equity is equal to the fair market value of the car. Sites like Kelley Blue Book can help you determine the current fair market value of your vehicle.

The federal motor vehicle exemption is more generous. It allows filers to protect up to $4,450 of equity in a motor vehicle.

Source: Ark. Code Ann. § 16-66-218 and 11 USC § 522(d)(2)

Wildcard Exemption

Arkansas has a $200 or $500 wildcard exemption, depending on your circumstances. If you’re unmarried and not the head of household, you can claim a $200 wildcard exemption. If you’re married or the head of household, this increases to $500. The wildcard exemption allows filers to exempt personal property that's not otherwise exempt.

Like the motor vehicle exemption, the federal wildcard exemption may be more advantageous to you at $1,475 plus $13,950 if you don’t use the homestead exemption.

Source: Ark. Code Ann. § 16-66-218

Money Benefits

Arkansas law does allow for the exemption of some benefits, insurance proceeds, and other monetary assets. Unless otherwise noted, filers can exempt the full value of these types of money benefits:

• Crime victims’ compensation

• Disability benefits

• Health insurance payments

• Life insurance payments

• Pension or retirement account – up to $20,000 in value

• Public assistance

• Tax-exempt retirement accounts, including 401(k)s, 403(b)s, profit-sharing and money purchase plans, SEP and SIMPLE IRAs, and defined-benefit plans 

• Unemployment compensation

• Workers’ compensation

Source: 11 USC § 522(b)(3)(C)

What Are the Federal Bankruptcy Exemptions?

Many filers find that Arkansas' state exemptions are very limited compared to the federal exemptions. You'll need to compare the two sets of exemptions and consider which property you want to protect as you decide which set to use. Here we'll dive into the federal exemptions more. The amounts listed below are for a single filer. The amounts are automatically doubled for married couples filing jointly.

Here are some of the most common federal exemptions:

• $27,900: Homestead exemption

• $1,475: Wildcard exemption — if you don’t use the homestead exemption, you get an additional $13,950 to use for the wildcard

• $4,450: Motor vehicle

• $1,875: Jewelry

• $700 per individual item with a $14,875 aggregate value: Household goods, furnishings, appliances, clothes, books, animals, crops, musical instruments

• $2,800: Tools of the trade, including implements and books

• Fully exempt: Health aids

• $14,875: Loan value, accrued dividends, or a life insurance policy interest

The following is fully exempt under federal law:

• Alimony or spousal support 

• Child support 

• Crime victims’ compensation 

• Disability, illness, or unemployment insurance benefits 

• Health aids and other health equipment

• Life insurance policy for a lost loved one you depended on, which you currently need for support

• Veterans’ benefits

• Social Security benefits

• Wrongful death recovery for loss of an individual you depended on for financial reasons

• Unmatured life insurance policy except credit insurance

• Lost earnings payments

• Public assistance and other public benefits

Federal exemption amounts are updated every three years. The following amounts are current as of April 1, 2022. Updates will be made April 1, 2025.

Source: 11 USC §§ 522(d)(1), 522(d)(5), 522(d)(2), 522(d)(4), 522(d)(3), 522(d)(6), 522(d)(8)

Need Help Filing Chapter 7 Bankruptcy in Arkansas?

Filing bankruptcy has been life-changing for our thousands of app users. But starting the process and understanding concepts like exemptions can be challenging. If you want some help on your journey, take our quick screener to see if you’re eligible to use our free app, which walks you through the process step by step. We’ve helped people get rid of over $700 million of debt by filing Chapter 7 bankruptcy. Our services are 100% free, and we’ve got great user reviews.

If you’re worried about losing particular property you own or you’d prefer to speak to someone in person, you can also schedule a free consultation with an experienced bankruptcy lawyer near you.