Chapter 7 Can Provide Breathing Room
Video Transcribed: Oklahoma Bankruptcy Attorney Edward Kelley here, answering your bankruptcy questions with oklahomacitybankruptcyattorney.pro. Part two of our series on chapter seven. As always, we talked in the first video about who are good candidates. As I said, under the income cutoff, not a lot of assets other than home and car. If you do have home and car, they’re caught up, not behind.
And the majority of your debt is not student loans, child support, court fines, or other non-dischargeable debts. So what can it do for you? Well, as in all the chapters, automatics stay. As soon as you file, nobody can garnish you.
Nobody can proceed in court against you. Nobody can even call you. So you get that breathing room and you get them off your back. So garnishment is typically the big thing with an Oklahoma Chapter 7 person that enables them to now succeed.
So, they’re going to stop paying all these things, they’re going to discharge, and that big chunk up to 25% of the net of the check stops coming out. A lot of my clients like most bankruptcy attorneys are there because they’re being garnished.
The Oklahoma bankruptcy stops it immediately. Important thing to remember is you’ve got to get notice to the payroll person. You really are beating the clock with your payroll more than anyone else.
Usually they’re cutting a check a week before you get it. A lot of people don’t understand that. So always first thing is, talk to your payroll. When do they cut the check? Because that’s when they cut that separate check and send it to whoever’s garnishing you. Got to catch them then. Other powers, basically your creditors are out of luck unless they have collateral, which they can take from you.
And that’s if it’s a purchase money loan. Sometimes if somebody has a lien, but if it wasn’t used to purchase, that can be stripped in the bankruptcy. Make sure you ask your attorney about that. Second mortgages, sometimes if they’re not properly recorded or if again, they’re not purchased money liens on personal and real property, can often be stripped.
So another power that can help you succeed. So as you get out of the bankruptcy, you don’t have those remaining obligations still leftover. So, unlike the 13, 11, the 7 is pretty straightforward. So it’s mainly that automatic stay that’s going to help you.
One other thing I will mention is a redemption. So you do have one extraordinary power in a 7. Although typically if you’re in a 7, you can’t exercise it, but that’s redemption.
So you can pay off the value of collateral that you have outright. So let’s say that you owe $20,000 on your $10,000 car in the 7, and you very much want to keep it, but you don’t want to reaffirm it at that rate for that amount.
If you can somehow come up with $10,000, which basically is going to have to be a gift from someone, not a loan. Although, that’s debatable, there are lawyers out there who have finance companies that basically loan you the money to redeem your car.
It’s very questionable with trustees in my opinion, that’s just an opinion. And I know that it’s been looked at by trustees. So, it’s a bit dangerous as an attorney, again, in my opinion.
But you’re not barred from taking out loans after you filed. Is that a good idea or is it kosher when you are doing that sort of in anticipation before you file.
Anyway, I’ll leave those moral questions to you, but if you can come up with the money to pay off the fair market value of the vehicle, you can redeem it, meaning rest of the note gets discharged and you walk out with the car. So those are ways 7 can help you.