Top 4 Ways a Chapter 13 Bankruptcy Can Immediately Protect Your Assets in Central Arkansas

For homeowners and families in Central Arkansas, especially those facing imminent property loss, a Chapter 13 bankruptcy is not about “losing everything”—it’s a powerful tool for protecting what you have. This reorganization bankruptcy offers immediate, court-mandated protection that no debt settlement agency can match.

Here are the top four ways a Chapter 13 bankruptcy filing immediately safeguards your most valuable assets.

1. Stopping Foreclosure and Saving Your Home

• Immediate Action: The filing of Chapter 13 instantly triggers the Automatic Stay, which immediately stops any scheduled foreclosure sale of your home.
• Long-Term Solution: It allows you to catch up on missed mortgage payments (the arrearage) over the course of your 3–5 year repayment plan, preventing the bank from repossessing your house.

2. Protecting Vehicles from Repossession

• Immediate Action: If your vehicle is scheduled for repossession, filing Chapter 13 immediately halts the action. The court may even order the creditor to return a recently repossessed vehicle.
• Long-Term Solution: Your car loan is included in the Chapter 13 plan, allowing you to pay the vehicle’s actual value (not the total loan balance) and potentially lower the interest rate through a “cramdown,” making it easier to keep.

3. Preventing Tax Levies and Liens on Property

• Immediate Action: Chapter 13 stops the IRS or state tax authorities from seizing your property or levying your bank accounts or wages.
• Long-Term Solution: Tax debts are included and prioritized within the repayment plan, ensuring you can satisfy tax obligations without the threat of seizure.

4. Eliminating or Reducing Second Mortgages (Lien Stripping)

• Immediate Action: In specific situations where the balance of your first mortgage is greater than the current market value of your home, Chapter 13 may allow for a lien strip.
• Long-Term Solution: This process reclassifies the second mortgage or HELOC as unsecured debt, meaning it can be discharged at the end of the plan, freeing the equity in your home.

Maximize Your Security: Chapter 13 Protects What Matters

Chapter 13 bankruptcy, when used strategically, is far more than just a debt payment plan; it is a powerful federal tool that maximizes your ability to retain and protect significant assets. For clients in Central Arkansas and beyond, the ability to immediately halt a foreclosure sale, stop a repossession, or eliminate a second mortgage provides immediate relief and long-term security. If your goal is to manage debt while protecting your home, vehicle, and financial future, contact Crawley Law Firm to discuss how a strategic Chapter 13 filing can be your most effective form of asset defense.