Oklahoma City Lawyer Assisting Clients With Chapter 7 Bankruptcy Filings
Many people who are unable to repay their debts choose to file for Chapter 7 bankruptcy. This type of bankruptcy is often referred to as “liquidation bankruptcy” since certain assets belonging to the debtor are liquidated to repay creditors.
If you file for Chapter 7 bankruptcy, most of your debts will be discharged, which means you will finally get a fresh financial start. But you should not take the decision to file for chapter 7 lightly. Discuss your options with the skilled Oklahoma City bankruptcy attorneys at Mitchell & Hammond today.
Who Qualifies For Chapter 7 Bankruptcy in Oklahoma?
To qualify for Chapter 7 bankruptcy, you must pass the “means test.” This test is used to determine if your monthly disposable income is low enough for you to qualify for chapter 7.
The first step is comparing your gross income to the median family income in Oklahoma. If your income is lower than the median family income in Oklahoma, you pass the test and qualify for Chapter 7 bankruptcy.
If your income is greater than the median family income in Oklahoma, you will move onto the next step, which involves calculating your disposable income. To calculate your monthly disposable income, certain monthly expenses are subtracted from your average monthly income. Examples of expenses that are deducted include:
If you have little to no disposable income left after deducting these expenses, you may pass the means test and qualify for chapter 7.
Exceptions to the Means Test in Oklahoma
Certain individuals will not need to pass the means test in order to qualify for Chapter 7 bankruptcy. You may qualify for Chapter 7 bankruptcy without passing the means test if you meet one of the following conditions:
- You are a disabled veteran who incurred at least 50% of your debt while on active duty, or
- The majority of your debts are business debts rather than consumer debts.
If you meet one of these conditions, you may be able to file for chapter 7 without proving that you have passed the means test.
What Debts Are Discharged Through Chapter 7 Bankruptcy?
Most unsecured debts are discharged in Chapter 7 bankruptcy. Examples of these debts include:
- Credit card balances
- Medical bills
- Utility bills
- Unpaid rent
- Personal loans
- Vehicle loans
- Debts in collection
However, certain types of debt will not be discharged. Examples of these debts include:
- Unpaid taxes
- Student loans
- Child support
- Loans secured by your house, car, or other personal property used as collateral
Despite these exceptions, most debtors find that filing for Chapter 7 bankruptcy allows them to clear the majority of their debts so they can have a fresh start.
What Assets Are Liquidated During A Chapter 7 Bankruptcy in Oklahoma City?
If you file for chapter 7, the court will appoint a trustee to oversee your case. One of the trustee’s main roles is selling your assets and distributing the funds to your creditors to repay your debts. But contrary to popular belief, this does not mean that you will lose everything you own if you file for chapter 7.
There are laws in Oklahoma that outline which assets can and cannot be sold during a Chapter 7 bankruptcy. Some of the assets that are exempted—which means they cannot be liquidated—include:
- Equity in your primary residence
- Social Security benefits
- Unemployment benefits
- Workers’ compensation benefits
- Up to $7,500 equity in your vehicle
- Up to $4,000 in clothing
- Furniture, health aides, and food to last up to one year
- Up to $3,000 equity in wedding rings
- Certain livestock
- 75% of the wages earned in the 90 days before filing for bankruptcy
- Books, portraits, and pictures
- Up to $2,000 equity in guns
- Personal computer
These are some of the many Chapter 7 bankruptcy exemptions in Oklahoma. Since these assets are protected, they will not be sold to repay your creditors. This means you will still own these assets after your debts have been discharged and your chapter 7 case has been closed.
Schedule A Free Consultation With A Chapter 7 Bankruptcy Lawyer in Oklahoma City
Don’t file for Chapter 7 bankruptcy before discussing your situation with a skilled attorney. The experienced attorneys at Mitchell & Hammond will review your finances and determine whether or not Chapter 7 bankruptcy is right for you. If it is, we will guide you through the entire process and aggressively protect your rights from the start to the finish. To schedule a free consultation, call our law office at 405-216-0007 or submit your information via the form on this website.