How Chapter 7 Bankruptcy Works
Under Chapter 7 bankruptcy, all of the debtor’s assets and liabilities are taken into account and sent to the Bankruptcy Court in the form of schedules. These schedules are then reviewed by the court and by the creditors named in the bankruptcy petition. The debtor and creditors then have a hearing, after which, if there are no problems, the court will issue a discharge of debts upon the liquidation of any remaining assets. In exchange for having debts forgiven under Chapter 7 bankruptcy, the debtor must give up certain types of property. Under Oklahoma law however, exemption statutes allow an individual filing Chapter 7 bankruptcy to keep or claim as “exempt” certain types of property, including the following:
- A mobile home that is the debtor’s principal residence
- A homestead not exceeding one acre, if located in a city, town or village; or not exceeding 160 acres, if located outside a city, town or village; that is the debtor’s principal residence
- A personal bodily injury claim or workers’ compensation claim of up to $50,000
- Cash value of a life insurance policy
- Certain retirement or pension plans
- Federal earned income tax credit
- Other items like household furniture, tools of the trade, personal wearing apparel, wedding and anniversary rings, and guns, all up to a certain value
Hire an Oklahoma Bankruptcy Attorney for Help
There are a number of laws established in Oklahoma that dictate a person’s eligibility for Chapter 7 bankruptcy and how bankruptcy should be filed. For example, in 2005, amendments made to the Bankruptcy Code imposed more strict requirements for a consumer to be able to file under Chapter 7. Today, the individual must pass a “means test,” which involves careful scrutiny of the debtor’s income, before he or she is deemed eligible for Chapter 7 bankruptcy. If you are planning to file Chapter 7 bankruptcy in Oklahoma, enlisting the help of a qualified Oklahoma City bankruptcy attorney can help you navigate the sometimes difficult process. With an experienced Oklahoma bankruptcy lawyer on your side, you can take all the appropriate steps in filing Chapter 7 bankruptcy and ensure that your legal rights are protected throughout.