When you file for bankruptcy, the court will assign an official called a trustee, who will be responsible for managing your bankruptcy estate and determining how you will satisfy your creditors. In each chapter of bankruptcy – except Chapter 11 – the bankruptcy trustee will determine the value of your assets, liquidate your assets (if necessary), arrange the meeting of creditors, and distribute funds to your creditors. The trustee will also be responsible for ensuring that there is no fraud involved in your bankruptcy case, so it’s important that you cooperate fully with the official to avoid having your case dismissed.
“Automatic stay” is one of the most important terms to understand when it comes to filing bankruptcy in Oklahoma. As soon as you file for bankruptcy protection from the court, an automatic stay goes into effect, which means all collection activity against you is automatically suspended. This includes foreclosures, wage garnishment and even phone calls from creditors. An automatic stay also ensures that creditors cannot seize your assets until the bankruptcy court has the opportunity to review your financial situation.
Once you have filed for bankruptcy, the court will have “avoidance powers” to void any transaction you may have made prior to filing. This action prevents filers from making transactions to protect their assets or making payments to creditors that could compromise the satisfaction of other debts that take priority.
During bankruptcy proceedings, all of your properties and assets are kept in a virtual trust called your “bankruptcy estate,” which is managed by your bankruptcy trustee. For the most part, the bankruptcy estate includes everything that you own or that you are entitled to at the time of your bankruptcy filing. In Chapter 13 bankruptcy cases, which last for three to five years, your bankruptcy estate includes everything you have acquired before filing and anything you acquire during the course of your bankruptcy. In Chapter 7 bankruptcy cases, only assets that you have acquired prior to filing are included in your bankruptcy estate.
Secured and Unsecured Debt
In most bankruptcy cases, an individual’s debt can be broken down into two different categories: secured debt and unsecured debt. A debt is considered “secured” when it is guaranteed by some form of collateral, such as the individual’s house in a home loan. If you fail to repay the debt, the creditor may come to repossess the items. “Unsecured debt,” however, is debt that is not secured by collateral of any kind, such as student loans, medical bills, utility bills, etc. It is important to know when filing for bankruptcy in Oklahoma that secured debt is not dischargeable in bankruptcy and has priority over unsecured debt, which means no unsecured debt will be satisfied until all secured debt has been repaid.