Tulsa Chapter 7 Bankruptcy

Tulsa Chapter 7 bankruptcy is one of the most attractive forms of bankruptcy because it allows for the complete discharge of most unsecured debts. Many liken a Tulsa Chapter 7 bankruptcy to starting fresh with a clean slate. However, in order to be eligible for a Chapter 7 bankruptcy, you must have an Tulsa Chapter 7 Bankruptcy - Tulsa bankruptcy lawyers -income below the federal mandated threshold. In order to calculate eligibility, the bankruptcy judge will use the means test. If you fail the means test, you will not be permitted to proceed with your Chapter 7 petition. Instead, you should explore other options, such as a Chapter 13 bankruptcy, which is targeted more towards debtors who have high incomes but struggle to pay their bills.

You Must Pass The Means Test:

The means test uses a special formula that considers a number of factors, including income, assets, expenses, and debts. It is not a simple income level threshold. As such, by using the skills and expertise of a bankruptcy attorney, you may be able to structure your assets to not only become eligible for Chapter 7 but also protect the property that is most valuable to you from your creditors.

The means test does not weed out people who are poor. Rather, the means test weeds out people who are able to pay their debts. If you are wealthy but have astronomical expenses, you may be unable to pay your debts. If your monthly income is below your state median income level for the state of Oklahoma and your specific household size, you have established prima facie eligibility. You can file for Chapter 7 without any further calculations in the means test.

Calculating Means Test Income:

If your monthly income is over the median, you may still qualify. The means test will first calculate your monthly income. This is known as your current monthly income (CMI). To calculate your CMI, the means test will take the average of your monthly income for the past 6 months. Your monthly income includes all of the following: 

  • Wages, tips, overtime pay, commissions, bonuses
  • Investment income such as interest or dividends
  • Rental property income
  • Retirement income
  • Pension income
  • Net income from your personal business
  • Child support
  • Alimony
  • Worker’s compensation
  • Unemployment
  • Social Security payments
  • Disability payments
  • Annuities

The means test will then calculate your monthly expenses. The means test will subtract your average monthly expenses from your average monthly income. The result is your disposable income. Disposable income can pay your debts. If your disposable income is too high, you will likely be able to pay some or all of your debts. Thus you won’t be eligible for Chapter 7.

An online means calculator can help you do a quick means test. However, it is best to consult with a bankruptcy attorney to ensure you are including all eligible income and expenses.

Tulsa Chapter 7 Bankruptcy Consultation:

If you are eligible for Tulsa Chapter 7 bankruptcy according to the means test, you may proceed with your filing. You must undergo credit counseling prior to filing.  If your credit counselor drafts a debt management plan, you must include that as part of your filing. However, just because you are eligible does not mean that Chapter 7 bankruptcy is the right course of action for you. The Oklahoma bankruptcy court in a Chapter 7 proceeding may demand that you liquidate your assets to satisfy creditors before receiving the benefit of a discharge. In addition, Chapter 7 bankruptcy will remain on your credit report for 8 years. Only a bankruptcy attorney can properly counsel you on your options and advise you on your best course of action.