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Number of Individual Bankruptcy Filings on the Decline

According to the American Bankruptcy Institute, 1.46 million individuals and 36,000 businesses filed for bankruptcy in 2011, and, although these numbers are historically high, they indicate that individual bankruptcy filings have actually dropped 8-10% over the past year. Bankruptcy is a federal court process designed to help individuals struggling with debt eliminate their debts altogether or repay them under the protection of the bankruptcy court. There are two main categories of bankruptcy in Oklahoma: Chapter 7 (liquidation) and Chapter 13 (reorganization). If you are considering filing for either Chapter 7 or Chapter 13 bankruptcy in Oklahoma, contact our experienced bankruptcy attorneys at Oklahoma Legal Center to discuss your best course of action.

Benefits of Chapter 7 Bankruptcy

Approximately 75% of individuals who file for bankruptcy in the United States do so under Chapter 7, which is considered “liquidation.” During this process, the individual, under the supervision of a bankruptcy attorney, completes all the necessary forms and submits a petition to the bankruptcy court. Upon approval of the bankruptcy, an “automatic stay” is imposed on all creditors, which means they are no longer permitted to collect debts owed to them until they are contacted by the court, at which point they are informed of the repayment terms, if any.

Certain property the individual owns is exempt in bankruptcy, which means they can keep it after filing, while other assets must be turned over to the bankruptcy court to be sold and used to pay some of the debt owed to creditors. Consumers should be aware that a major exempt asset is an individual’s account in an employer’s retirement plan. According to government regulations, assets in a 401(k) or another retirement plan or IRA are exempt from liquidation to pay creditors. This means that even if you file for bankruptcy in Oklahoma, your retirement account will not be affected, so you should avoid taking loans from these accounts.

Benefits of Chapter 13 Bankruptcy

Chapter 13 is another type of bankruptcy, and is also commonly known as “reorganization” bankruptcy. This form of bankruptcy differs from Chapter 7 in that it includes a repayment plan which dictates how the debts owed to creditors will be repaid over the next three to five years. After approval by the bankruptcy court, any debt left over after the terms of repayment are met is discharged. There are a number of reasons why individuals in Oklahoma file for bankruptcy, including loss of a job, divorce, and unexpected health problems. Although bankruptcy is typically associated with a negative stigma, those individuals who do opt for bankruptcy have the opportunity to eliminate or repay their overwhelming debt and can finally move forward financially. Contact our knowledgeable bankruptcy lawyers at Oklahoma Legal Center if you think bankruptcy might be the right choice for you.

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