Oklahoma Bankruptcy HelpThese Oklahoma Laws Spell Out Bankruptcy Options
Bankruptcy laws are meant to give a debtor a fresh start when debts spiral out of control. There are bankruptcy options in Oklahoma that everyone should know about when weighing your options and charting a course forward.
Bankruptcy Options: Liquidation or Reorganization
Whether your bankruptcy options are as an individual seeking relief, or of a business, bankruptcy divides relief into two basic components: liquidation and reorganization.
Liquidation is what it sounds like. In liquidation, the court liquidates assets, pays off creditors with those assets, and discharges the remaining debt.
In most liquidation cases, there are little to no assets to liquidate. For the most part, the debts are just discharged. These are cases filed under Chapter 7 of the Bankruptcy Code. Both individuals and small businesses may file for liquidation under Chapter 7 as part of their bankruptcy options.
In reorganization, the bankruptcy court develops a repayment plan. Individuals can file for reorganization under Chapter 13 of the Bankruptcy Code while businesses have bankruptcy options to file for reorganization under Chapter 11.
In reorganization, the court determines what can be paid back to creditors from assets belonging to the person or business — including future income — over a period of time. A reorganization plan may take three to five years to complete. At the end of the payment plan, any remaining debt will be discharged.
In order to use either Chapter 11 or 13, the person or business must have some disposable income. If there is none, liquidation may be a better option.
Reorganization is often used by a debtor who seeks bankruptcy protection while keeping some of their assets. For an individual, this may mean keeping the family debt. In a reorganization, you may reaffirm some debt in order to keep the assets secured by the debt.
The Means Test Requirement for Chapter 7 Individual Filers
In order to file for Chapter 7 relief, an individual filer must pass what is called a “Bankruptcy Means Test.” This looks at your income, expenses and family size in order to see whether you have enough “disposable” income to pay your debts under a Chapter 13 reorganization plan instead of a Chapter 7 discharge. If you do have enough disposable income to pay your debts, the court will deny you the right to file for Chapter 7 relief.
The test looks to see whether your median income is below that for your state. In Oklahoma in 2018, you can earn as much as $43,109 annually single and still qualify to file Chapter 7. A family of two can bring in as much as $54,922 per year and not need to take special steps to file Chapter 7, while a family of three could earn up to $58,260 annually and qualify for bankruptcy relief.
If you earn too much money to file Chapter 7, you have three options.
- Complete a federal means testing worksheet which looks at “allowable” expenses in addition to income in making its determination regarding disposable income. If a court trustee approves, Chapter 7 will be available to you.
- File for Chapter 13 reorganization. It typically takes three to five years to finish this type of repayment plan.
- Wait and file at a later point in time after your income and expenses change enabling you to qualify for Chapter 7 relief. Reputable credit counseling companies can often work with you to create a partial debt repayment plan that is similar to Chapter 13.
Whichever bankruptcy option you choose, make sure to consult with an experienced Tulsa bankruptcy attorney in order to understand the implications of all the options available.
Low-cost Bankruptcy Planning: Tulsa Bankruptcy Lawyer
To get the best possible outcome in your bankruptcy case, you will need to set expectations for yourself and also understand your attorney’s expectations of you.
If you’re ready to file, contact a Tulsa bankruptcy attorney at the Freedom Financial Bankruptcy Lawyers of Tulsa as soon as possible.
To receive your low-cost initial bankruptcy analysis, call the Freedom Financial Bankruptcy Lawyers of Tulsa today at (918) 786-9600.
Tags: bankruptcy options in Oklahoma, chapter differences between 7 and 13 bankruptcy in Oklahoma, means test for Oklahoma bankruptcy, Tulsa Oklahoma bankruptcy attorneys
