Oklahoma Bankruptcy Lawyers Answer Common Questions
Oklahoma Legal Center has helped countless clients see their way through extremely difficult financial situations. As a result of this extensive experience, we’ve come to identify several questions that are commonly asked by the people we help every day. Below are a few examples of these frequently asked questions that could provide you with some basic information before you contact us to begin the process of putting an end to your financial stress.
- How does a Chapter 7 liquidation work?
- Are all debtors automatically eligible for a Chapter 7 discharge?
- How does Chapter 13 bankruptcy work?
- How long will it take to file a Chapter 13 bankruptcy?
- Do I need to hire a lawyer to file for bankruptcy protection?
- If my spouse files for bankruptcy, will that affect me and my credit?
Commonly Asked Bankruptcy Questions:
NOTE: If you have a question regarding filing bankruptcy in Oklahoma and it is not listed here, email us your question and we will answer it for you and add it to our list.
Filing for bankruptcy protection under Chapter 7 of the United States Bankruptcy Code basically works by fulfilling the credit counseling requirements brought about by the new bankruptcy law enacted in 2005 and compiling a set of schedules and statements that are sent to the court and ultimately to the creditors involved in the case. Assuming these schedules are accurate, the liquidation works by having the debtor relinquish his or her assets in order to at least partially satisfy the existing debts. However, there are exemptions that apply for such holdings as property and tools of trade among others that are protected up to a certain value. When the liquidation is complete, the case is closed and the debts that remain are discharged, providing the debtor with a fresh financial start.
Largely based on the new bankruptcy law enacted in 2005, the short answer to this question is that no, all debtors are not automatically eligible. The Bankruptcy Abuse Prevention and Consumer Protection Act provides for a complicated ‘means test’ that sets out an equation that deals with the debtor’s income relative to the average income in that state, and if the debtor earns more than the average it’s possible that he or she could be required to file for protection under Chapter 13 of the Bankruptcy Code. Given the complicated nature of this test, you need help from an Oklahoma bankruptcy attorney to apply your situation to this test so you can understand what to expect.
Chapter 13 bankruptcy is different from a Chapter 7 bankruptcy filing in several ways. Instead of simply listing your assets and liabilities and then liquidating your assets up to the exemption amounts to satisfy your creditors, a Chapter 13 filing involves ongoing payments to creditors. This approach is much more appropriate for those with steady incomes, as the debtor puts forth a payment plan based on this income that slowly pays regular amounts to creditors throughout the life of the plan, which usually lasts anywhere between three and five years. When this plan is complete, the remaining debts are discharged and like with Chapter 7 filings, the debtor obtains a clean financial slate.
Filing for protection under Chapter 13 of the United States Bankruptcy Code will take more time to complete than a Chapter 7 filing, but the initial timeline for getting a case opened is essentially the same. After the credit counseling requirement has been met, the debtor files for protection and includes a payment plan for the existing creditors. The difference between the timelines involved with these two chapters arises while the payment plan is in existence, as these plans can last from three to five years. The case is considered closed and complete when the duration of the payment plan has run its course and the remaining debts are discharged.
Specifically, you are not required to hire an attorney to file for bankruptcy protection, but it’s highly advisable for several reasons. Not only has the process of filing for bankruptcy and obtaining a discharge of your debts become more complicated in the wake of the new bankruptcy law that was passed in 2005, but the intricacies involved with the petitions and payment plans all must be properly handled. Failure to meet any requirements or failing to include or properly position any debt or asset can result in a prolonging of your case or even an outright dismissal of your petition, which will only put you right back where you started. Rather than take that unnecessary risk, you need the help of a bankruptcy attorney to make sure that your case proceeds as it should so you can move on with the rest of your life.
Whether your spouse’s credit will be affected if you file for bankruptcy protection depends on the nature of your existing debts, and this can be a complicated issue to clarify. Basically, if you need bankruptcy protection and your debts are individual debts instead of jointly-held debts, your spouse’s credit should not be affected in the least when you file. However, if your debts are jointly held, meaning that both of you are responsible for the payment of them, the bankruptcy filing will appear on both of your credit ratings after the case is filed and ultimately completed. However, there are strategies available that can prevent this problem, but you’ll need the help of an Oklahoma bankruptcy attorney to find out if this avoidance is possible.
Overall, financial struggles are extremely difficult to deal with for many reasons. Emotions run high, confusion is rampant and doubt is pervasive. Many of these feelings are simply the result of the stress that comes with financial difficulties, but fortunately almost any financial situation can be resolved. If you’d like to find out how you can proceed to gain control of your finances and provide yourself with a fresh start, contact the Oklahoma bankruptcy attorneys at the law firm of Oklahoma Legal Center as soon as possible to schedule an initial consultation.