Step-by-Step: How to File for Bankruptcy in Oklahoma

If you're thinking about filing for bankruptcy, you're certainly not alone. Over 40 retail businesses have filed for bankruptcy because of the pandemic. The Administrative Offices of the US Courts reported that there were 659,881 non-business bankruptcy filings between June 2019 and June 2020. The report also states that while filing for bankruptcy dropped 11.8% over the last year for consumers, bankruptcy filings do increase after an economic downturn. According to Marketwatch, only 42% of the jobs lost in the United States have been recovered.

With jobs lost, increasing medical expenses, evictions and foreclosures, credit card debt, and other personal debt, it's no wonder why people are considering a fresh start using the protection offered by the bankruptcy code. 

Section 1

Before Filing for Bankruptcy

Before you file your bankruptcy case, there are two considerations:

  1. Consider finding alternatives to filing for bankruptcy
  2. If the alternatives aren't right for you, choose which bankruptcy chapter is best for your circumstances
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When considering alternatives to filing a bankruptcy case, you must really evaluate whether you're able to repay the debt. If you are, then you may be eligible for bankruptcy alternatives. The most common alternative to bankruptcy is using a private or public credit counseling agency that can help you reorganize your debts and pay them off in full.

If you cannot pay your debts, filing for bankruptcy could be an option for you. The question then becomes: should you choose chapter 7 bankruptcy or chapter 13 bankruptcy?  The answer to this question depends on several factors, including your ability to repay your debts. You will learn more about how to file for bankruptcy soon. First, let's look at the basic differences between chapter 7 bankruptcy and chapter 13 bankruptcy. 

parents standing over their children with their hands togetherChapter 7 bankruptcy is a liquidation bankruptcy. You are allowed to keep certain assets according to federal or state exemptions (in Oklahoma, filing for bankruptcy requires that your assets are claimed under state exemptions; some states allow debtors to choose between state or federal exemptions). Any assets that you have that aren't exempted are liquidated by the trustee. The funds are then used to pay the creditors some of what they are owed. Your home and your vehicle are generally exempt, or you can reaffirm these debts with your lenders if you file for Chapter 7 bankruptcy. 

Chapter 13 bankruptcy is a reorganization bankruptcy. You are allowed to keep your assets. With a Chapter 13 bankruptcy, you propose a repayment plan and, after it is approved, you use your disposable income for the next three to five years to repay your outstanding debts. 

Section 2

Filing for Bankruptcy in Oklahoma: Step by Step

Filing for bankruptcy can be overwhelming. To help you better understand what happens during the process of filing a bankruptcy case, we are providing this step-by-step guide to filing for bankruptcy.

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While anyone can technically file for bankruptcy on their own through the federal courts, there are many bankruptcy forms to handle, and the process can become complex and stressful. The Law Offices of B. David Sisson offers free consultations to help anyone considering bankruptcy learn more about how it could provide them with a fresh start.  

DOWNLOAD THIS STEP-BY-STEP GUIDE AS A FREE PDF

Section 3

Decide Whether You Should Hire a Bankruptcy Attorney

Although there’s nothing to stop you from filing for bankruptcy on your own, it’s not recommended:

U.S. bankruptcy laws can be difficult to navigate without qualified legal assistance.

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Your attorney will go over your financial situation, help you determine which bankruptcy type is appropriate, prepare your bankruptcy forms, attend your 341 meeting with you, and they can help you if any problems arise during the bankruptcy process.

Without hiring a bankruptcy attorney, you must navigate the entire process on your own. The bankruptcy court (including the judge and court clerk) cannot give you legal advice. The trustee's job is not to represent you or to give you legal advice. The only way to get legal advice and guidance about your bankruptcy case is to hire a bankruptcy attorney. Their guidance will help you plan for your fresh start for your financial future! 

Section 4

Gather Your Financial Data

When you are filing for bankruptcy, you need to be able to verify your financial information. Collect all documents that confirm your income, debts, assets, and monthly household expenses. You will need this information regardless of whether you're interested in filing chapter 7 or chapter 13.

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For assets, you will need to know their value. The schedules concerning assets require that you list the value of each asset. For chapter 7 bankruptcy, state exemptions determine how much of your real property and personal property you are allowed to keep and how much must be liquidated (if there is any excess) to pay your creditors. 

Real Property

Real property is valued according to fair market value. The current market data is what is used to value your home and other real estate assets. Websites such as Zillow provide an approximate value for your home, and a licensed appraiser can provide a more accurate value.

Personal Property

Personal property includes items such as vehicles, appliances, furniture, and other similar items. Valuing these items is done via liquidation value. In short, it is what you would get for the item if you sold it at a garage sale. For intangible property, such as intellectual property or stock, the value is whatever you could get for it. While this valuation may feel unfair (knowing what you paid for some of your belongings,) you might find that this helps you retain more of your belongings if you file a chapter 7 bankruptcy case.

Section 5

Obtain Credit Counseling

Before filing your bankruptcy forms with the federal court, you must complete credit counseling, also known as debtor education.

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The bankruptcy code states that this must happen within 180 days before filing your bankruptcy case.

The procedure typically lasts no more than two hours and can be done over the phone or online. Generally, you can complete your credit counseling right before you complete your bankruptcy forms. Afterward, you will receive a certificate of completion that must be filed with the bankruptcy petition.

Section 6

Chapter 7 Bankruptcy: Take the Means Test

If you plan to file for chapter 7, you must take the Means Test to compare your average monthly income to the median income for an equally-sized household in Oklahoma. If you make less, you automatically qualify to file for chapter 7. If you make more, you may still qualify, but only after a series of calculations are done to determine whether you have the financial means to repay some of your debts in a chapter 13 repayment plan.

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Remember, with a chapter 7 bankruptcy, the assets you have will most likely be exempt under state exemptions. Any assets that are not included under the state's exemptions will be liquidated by the trustee to pay the creditors in a certain order. 

Section 7

Chapter 13 Bankruptcy: Propose a Debt Repayment Plan

If you are filing for Chapter 13, you must propose a plan to repay some or all of your debts.

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Your bankruptcy attorney will work with you to put together a plan based on how much debt you have and how much money you have left over after basic living expenses are met.

Over the course of three to five years, your disposable income is used to make payments to your creditors to repay some or all of your debts.

Section 8

Filing Bankruptcy Forms

You or your bankruptcy attorney must submit your bankruptcy forms, including the bankruptcy petition and required schedules, to the local bankruptcy court. You must also pay a filing fee unless you filed a motion to waive the fee or applied to pay it in installments. Once the filing is paid, your bankruptcy estate is created and you receive a case number.

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Once your fee is paid and your case bankruptcy case officially begins, you receive an automatic stay. An automatic stay prevents creditors from collecting on outstanding debt and contacting you regarding that debt. Examples of how an automatic stay works include:

  • Stopping wage garnishment
  • Stopping foreclosure
  • Stopping repossession of a vehicle
  • Stopping collection phone calls

If you filed for Chapter 13 you must begin making payments to the bankruptcy trustee within 30 days of submitting your proposed plan. The trustee will hold the funds in trust for the creditors until the plan is approved by the bankruptcy court.

Section 9

Attend the Meeting of Creditors (341 Meeting)

Your creditors will be notified that you have filed for bankruptcy and invited to attend a 341 meeting, also known as the meeting of creditors.

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While creditors are invited to attend, they don't always do so. However, even if they do not attend, you must provide information about your finances under oath and answer any questions the bankruptcy trustee or creditors may have. Your bankruptcy attorney attends this meeting with you. 

Section 10

Confirmation of Admissibility

If you filed for Chapter 7, a bankruptcy court will review your petition and all of your financial information and decide whether you are eligible.

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If it approves, you relinquish control of your property to the bankruptcy court, and a trustee is then assigned to administer your case. Their responsibilities include liquidating your non-exempt assets and distributing the proceeds to your creditors. If you do not have assets that can be liquidated, your case is considered a no-asset case.

Image-color-familyIf you filed for Chapter 13 and your repayment plan is confirmed at a post-341 hearing, the trustee will start dispersing your monthly payments to your creditors. Those payments continue for 3-5 years.

In general, a Chapter 7 bankruptcy lasts from three to six months while Chapter 13 has a three- to five-year timeline. Before you can be discharged, you must take a financial counseling program within 45 days of the 341 hearing.  If everything goes well, you are discharged after fulfilling the terms of your bankruptcy and are free to rebuild financially.

Section 11

Does Filing for Bankruptcy Affect Your Credit?

Yes, filing for bankruptcy and obtaining a discharge will affect your credit.

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While it stays on your credit report and can lower your credit score, many people who file for bankruptcy already had credit problems because of their inability to pay their bills.

This is why filing for bankruptcy is often viewed as a fresh start. You'll be given an opportunity to get your finances back on track and rebuild your credit.

Section 12

Learn More About Filing for Bankruptcy in Oklahoma

If you have questions about filing for bankruptcy in Oklahoma, contact the Law Offices of B. David Sisson for the experienced and compassionate legal guidance you need to put your financial difficulties behind you and move forward. 

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We offer free consultations for chapter 7 and chapter 13 bankruptcies.