Chapter 7 Bankruptcy in Oklahoma is the most popular form filed in our state. With record breaking employment brought on by Covid-19, Americans are having a harder time than ever before with making ends meet. Some individuals are accumulating potentially unmanageable debt loads, leaving little to no room for a resolution other than filing for bankruptcy.

In the United States, there are a few different types of bankruptcies, some of which may or may not apply to you. Chapter 7 bankruptcy is known as a straight or liquidation bankruptcy that could enable you to completely rid yourself of your unmanageable debts. Here’s more on how this works, and what you could do to determine what is best for your financial situation.

Chapter 7 Bankruptcy Is About Giving You A Fresh Start

Chapter 7 bankruptcy in Oklahoma is about giving you a fresh start through the discharge (elimination) of certain of your debts. Bankruptcy seeks to discharge all of your debt through the sale or liquidation of your assets. Individuals, partnerships, and corporations are all eligible for this type of bankruptcy.

Notably, a Chapter 7 bankruptcy case does not involve any repayment plan. Rather, the Bankruptcy Code calls for someone who is known as a bankruptcy trustee to gather and sell some or all of your assets and then pay the proceeds to those who you are indebted to (your creditors), with certain of your creditors having a greater priority than others for repayment.

With this type of bankruptcy, you get to keep certain property such as your clothing, a car and other household goods (your exempt property). Although the filing of a petition under Chapter 7 could result in the loss of some of your property that you hold near and dear, a good portion of people who file Chapter 7 keep almost all of their personal property and assets.

Eligible For Chapter 7?

Whether you have a small or large amount of debt, or whether you are solvent or insolvent, you could be entitled to Chapter 7 bankruptcy. However, eligibility for Chapter 7 is based on a few different factors. If your current monthly income is above the state median, the court applies a means test to determine if you are eligible. This test takes into account your income to determine if Chapter 7 would be improper (presumptively abusive).

More specifically, abuse is presumed if your current monthly income over the past 5 years (net of certain allowable expenses) exceeds either (a) $12,850 or (b) 25% of your nonpriority unsecured debt as long as the amount is no less than $7,700. Notably, you could overcome this presumption by showing that you have special circumstances which justify adjustments of currently monthly income or additional expenses. Unless you overcome the presumption of abuse, then your case will typically get dismissed or it might get converted to a Chapter 13 bankruptcy which involves a plan for you to repay all or a portion of your debts.

The Chapter 7 Process

First, you file a petition with the United States Bankruptcy Court either in the area where you live, where your business is organized, or where the principal place of business or assets is located. In Oklahoma, this could be the Eastern District of Oklahoma, the Western District of Oklahoma or the Northern District of Oklahoma. Be prepared to file:

• schedules of your assets and liabilities, including information about your property and your creditors
• schedules of your current income and expenses (food, clothing, shelter, taxes, utilities, transportation, etc.)
• a statement of your financial affairs along with your tax returns
• a schedule of your executory contracts and unexpired leases

Also, if you are filing for Chapter 7 bankruptcy in Oklahoma for yourself (not your business), and you mainly have consumer debts, then you have to provide additional documents including a certificate of credit counseling; a copy of any debt repayment plan; statement of net income and anticipated expenses after filing; evidence of any payments that you receive from your employer within 60 days prior to filing; and a record of anything that you own in a state or federally qualified education or tuition account.

As for court costs, you’ll be charged a $245.00 case filing fee, a $75.00 administrative fee, and a $15.00 trustee surcharge. However, it may be possible for you to avoid this fee if your income falls below 150% of the poverty level and it is not possible for you to pay in installments.

Once you file, the case is assigned to a bankruptcy trustee. The role of the trustee is to administer your case and to liquidate your nonexempt assets. The trustee accomplishes this by selling your property if it is free and clear of liens. Note that the majority of individual Chapter 7 cases involve little or no assets. In those situations, the trustee will normally file with the court a “no asset” report, and there will be no distribution to unsecured creditors.

Discharge In Bankruptcy

A discharge relieves individual debtors from personal liability for most debts. It also prohibits the creditors who are owed those debts from initiating legal actions to collect against you. Chapter 7 discharge has multiple exceptions, so it’s important for you to discuss your situation with an experienced bankruptcy attorney before filing to learn more about what debts may or may not be discharged.

In most cases, unless a party in interest files a complaint objecting to the discharge or a motion to extend the time to object, the bankruptcy court will issue a discharge approximately 60 to 90 days after the date set for the meeting of creditors. This mandatory meeting, which is where you are placed under oath and questioned by the trustee and your creditors, takes place approximately 21 to 40 days after filing your petition.

Although rare, situations in which you might be denied a discharge include the court finding that you did not produce adequate financial records or books; you did not sufficiently explain your loss of assets; you committed perjury; you failed to abide by a court order; you fraudulently concealed, transferred or destroyed property that would have been part of the bankruptcy estate; or you did not take your instructional course relating to financial management.

Tulsa Bankruptcy Attorneys

If you are dealing with an unmanageable debt situation and are contemplating bankruptcy, you should consult with a bankruptcy attorney. South Tulsa Bankruptcy Lawyers Law Office has helped countless clients with bankruptcy-related matters. Our goal is to obtain the best results for our clients and to provide quality services at a reasonable cost. Get in touch with South Tulsa Bankruptcy by calling (918) 739-8984 or by contacting us online.