Bankruptcy in Arkansas (2026): Exemptions & Means Test

Bankruptcy is a federal process, but what you can keep depends heavily on the exemption rules of your state, and Arkansas is unusual in two ways. It is one of the minority of states that lets a filer choose between the federal bankruptcy exemptions and the state exemptions, and its constitutional homestead protection is limited by acreage rather than by a dollar value, which can shield a home of significant value. This guide explains how Chapter 7 and Chapter 13 work for Arkansas residents, the key Arkansas exemptions, and the Chapter 7 means-test income figures, all dated to current primary sources.

This guide is part of our Bankruptcy by State series. It is general information, not legal advice, and exemption and income figures change, so confirm current amounts before relying on them.

Federal or state exemptions: Arkansas lets you choose

The first question in any bankruptcy is which set of exemptions applies, because exemptions decide what property you keep. Under 11 U.S.C. 522(b), each state either keeps the federal exemption menu available or opts out and forces filers onto state law. Arkansas is one of roughly 15 states that did not opt out, and Ark. Code 16-66-217, titled Election of bankruptcy exemptions, gives a resident the right to elect either the property exemptions provided by the Constitution and laws of Arkansas or the federal exemptions in 11 U.S.C. 522(d). The Arkansas exemptions are published by the Arkansas General Assembly in the Arkansas Code and the Arkansas Constitution. You generally pick one full system, not a mix of both. The choice matters: filers with significant home equity often prefer the Arkansas constitutional homestead, while filers who rent or have little home equity often do better with the federal wildcard.

The Arkansas homestead: limited by acreage, not dollars

Arkansas protects the homestead through its constitution, and the protection is defined by land area rather than a dollar ceiling. Under Arkansas Constitution article 9, section 4, a rural homestead outside a city, town, or village may consist of up to 160 acres, and section 5 sets the urban homestead at up to 1 acre. Each section adds a $2,500 value qualifier, but both contain the same critical clause: the homestead shall in no event be reduced below 80 acres (rural) or one-quarter acre (urban) 'without regard to value.' Arkansas courts read this as protecting the floor acreage no matter how valuable the home is, which is why commentators describe the Arkansas homestead as effectively unlimited in dollar terms for a qualifying parcel. One federal limit still applies to a recently bought home: under 11 U.S.C. 522(p), homestead equity acquired within 1,215 days (about 40 months) before filing is capped at $214,000 for cases filed on or after April 1, 2025, even where state law would protect more. In In re Kelley, No. 2:10-bk-17145 (Bankr. E.D. Ark. Aug. 16, 2011), the court confirmed that Arkansas homestead law is remedial and is liberally construed in favor of the debtor, with all presumptions made in favor of retaining the homestead, and that state statutory exemptions exceeding the constitutional limits are unconstitutional and disallowed.

There is a catch. To claim the Arkansas homestead, the person must be married or the head of a household, must occupy the property as a home, and must be an Arkansas resident. A single filer who is not the head of a household may not qualify, in which case the federal homestead of $31,575 (as of April 1, 2025) can be the better route.

Vehicle, personal property, and wage exemptions in Arkansas

The Arkansas state personal-property exemptions are small and trace to article 9, sections 1 and 2 of the constitution and Arkansas Code 16-66-218. A married person or head of a family may exempt personal property up to $500 in value, and a single person up to $200, in each case in addition to wearing apparel.

Read Arkansas Code 16-66-218(a) on its own and it appears to add more: a $1,200 motor-vehicle exemption, $750 for implements and tools of the trade, and $800 for an unmarried debtor or $1,250 for a married debtor in a residence or burial plot. Those statutory figures are not enforceable. Because they provide exemptions in excess of the amounts set by article 9, sections 1 and 2 of the Arkansas Constitution, federal courts have held them unconstitutional and disallowed, leaving an Arkansas filer who elects the state system with the $200 or $500 constitutional ceiling. See In re Kelley, No. 2:10-bk-17145 (Bankr. E.D. Ark. Aug. 16, 2011), following Federal Savings and Loan Insurance Corp. v. Holt (In re Holt), 894 F.2d 1005 (8th Cir. 1990). That is why Arkansas has no separate large state motor-vehicle exemption, and why a vehicle is generally squeezed into the small personal-property allowance unless the filer elects the federal system.

Wages come from a different statute. Arkansas Code 16-66-208(a)(1) exempts the wages of laborers and mechanics for up to 60 days from garnishment, subject to the constitutional limits and to filing a sworn claim of exemption with the court. Separately, section 16-66-208(b)(1) makes the first $25 per week of net wages absolutely exempt with no schedule of exemptions required. Net wages there means gross wages less the amounts the employer actually withheld for Arkansas income tax, federal income tax, social security, group retirement, and group hospitalization and group life insurance premiums. Arkansas Code 16-66-218(b)(6) lists that wage exemption among the pre-existing Arkansas exemptions it carries forward, but it cross-references section 16-66-208 rather than creating the exemption.

Because those amounts are low, many Arkansas filers compare them with the federal exemptions in 11 U.S.C. 522(d), summarized by Cornell Law School's Legal Information Institute. As of April 1, 2025 (these adjust every three years), the federal figures include a $31,575 homestead, a $5,025 motor-vehicle exemption, up to $16,850 in household goods (with an $800 per-item limit), $3,175 for tools of the trade, and a wildcard of $1,675 plus up to $15,800 of any unused homestead amount. The wildcard is the reason many filers with no home equity choose the federal system: it can protect cash, a vehicle, or anything else.

The Chapter 7 means test and Arkansas median income

Chapter 7 erases most unsecured debt, but you generally must complete the means test, which starts by comparing your household income to the median family income for your state and household size. The U.S. Trustee Program publishes those medians from Census Bureau data and updates them periodically. For cases filed on or after April 1, 2026, the Arkansas median family income figures are $58,421 for one earner, $73,630 for a household of two, $82,329 for three, and $97,054 for four, adding $11,100 for each additional person. If your income is at or below the figure for your household size, there is no presumption of abuse (the rule that presumes a Chapter 7 case is an abuse when income left after allowed expenses reaches set thresholds) and you do not need to complete Form 122A-2, the second means-test form, but that alone does not make you eligible for Chapter 7. If it is above, you complete the longer means-test calculation that subtracts allowed expenses to see whether a presumption of abuse arises or whether Chapter 13 is the path. These figures change roughly twice a year, so check the current table at filing.

Chapter 7 versus Chapter 13 in Arkansas

Chapter 7 is a liquidation: a trustee can sell non-exempt property to pay creditors, and most remaining unsecured debt is discharged in a few months. With Arkansas's exemptions, many filers keep everything they own, but a high-value non-exempt asset can be at risk. Chapter 13 is a repayment plan that runs three to five years; you keep your property and catch up on missed mortgage or car payments over time, which is why Chapter 13 is common for people trying to stop a foreclosure or cure an arrearage. The moment either case is filed, the automatic stay under 11 U.S.C. 362 stops most collection efforts, including foreclosure sales, repossessions, lawsuits, and wage garnishment. Before filing, federal law requires a credit-counseling course from an approved provider, and a debtor-education course is required before discharge.

Where you file: the Arkansas bankruptcy courts

Arkansas is served by two federal judicial districts, the Eastern District and the Western District of Arkansas, which share a single bankruptcy court administration. The U.S. Bankruptcy Court for the Eastern and Western Districts of Arkansas maintains divisional offices across the state, including Little Rock, Fayetteville, and Fort Smith, and posts local rules, forms, and self-help resources for people filing without a lawyer.

What bankruptcy can and cannot do

Bankruptcy discharges most unsecured debts such as credit cards, medical bills, and personal loans, but several categories survive a discharge. Most student loans remain unless you prove undue hardship in a separate proceeding, and recent income taxes, domestic-support obligations like child support and alimony, and most court fines are not dischargeable. Giving away or selling property before filing can create problems, so ask an Arkansas lawyer for a free bankruptcy evaluation on timing and your choice between federal and Arkansas exemptions (attorney advertising). Nothing here predicts how a particular case will turn out; the result depends on your income, your property, your debts, and which exemption system you elect.

Frequently Asked Questions

Does Arkansas use state or federal bankruptcy exemptions?

Arkansas lets you choose. Because Arkansas did not opt out under 11 U.S.C. 522(b), a filer may elect either the federal exemptions in 11 U.S.C. 522(d) or the Arkansas state exemptions, but generally not a mix of both. Filers with home equity often choose the Arkansas constitutional homestead, while renters often prefer the federal wildcard.

What is the homestead exemption in Arkansas?

Arkansas protects the homestead by acreage rather than by a dollar amount. Under Arkansas Constitution article 9, sections 4 and 5, a rural homestead can reach 160 acres and an urban homestead 1 acre, and it can never be reduced below 80 rural acres or one-quarter urban acre regardless of value. To qualify, the filer must be married or head of a household and occupy the home. Filers who do not qualify can use the federal homestead of $31,575 (April 1, 2025).

What is the Arkansas median income for the means test?

For Chapter 7 cases filed on or after April 1, 2026, the U.S. Trustee Program lists Arkansas median family income as $58,421 for one person, $73,630 for two, $82,329 for three, and $97,054 for four, adding $11,100 for each additional person. The figures update periodically, so confirm the current table when you file.

Will I lose my house or car in an Arkansas bankruptcy?

Often not. A filer who meets the requirements for the Arkansas constitutional homestead can usually keep the home, and a Chapter 13 plan can stop a foreclosure by curing missed payments. A vehicle is protected by the small Arkansas personal-property exemption ($500 for a head of family, $200 for a single filer) or by the larger $5,025 federal motor-vehicle exemption if you elect the federal system. The separate $1,200 vehicle exemption printed in Ark. Code 16-66-218(a)(2) has been held unconstitutional and disallowed because it exceeds the constitutional personal-property caps. Whether any asset is at risk depends on your equity and which exemptions you use.

How much does the federal exemption protect compared with Arkansas?

As of April 1, 2025 the federal system in 11 U.S.C. 522(d) includes a $31,575 homestead, a $5,025 motor-vehicle exemption, up to $16,850 in household goods, $3,175 for tools of trade, and a wildcard of $1,675 plus up to $15,800 of unused homestead. Arkansas state personal property is limited to $500 for a head of family or $200 for a single person, so the federal system protects far more personal property.

Where do I file bankruptcy in Arkansas?

In the U.S. Bankruptcy Court for the Eastern or Western District of Arkansas, which are administered together. The court has divisional offices including Little Rock, Fayetteville, and Fort Smith, and posts forms and local rules online.

What is the difference between Chapter 7 and Chapter 13 in Arkansas?

Chapter 7 is a liquidation that discharges most unsecured debt in a few months, subject to the means test. Chapter 13 is a three-to-five-year repayment plan that lets you keep property and cure missed mortgage or car payments, which is why it is used to stop foreclosure. Both trigger the automatic stay that halts most collection.

What debts cannot be erased in bankruptcy?

Most student loans (absent proven undue hardship), recent income taxes, child support and alimony, and most court fines generally survive a bankruptcy discharge. Credit cards, medical bills, and most personal loans are typically dischargeable.