Who's a Good Candidate for a Chapter 7?

There’s Income Requirements for Chapter 7

Video Transcribed: Oklahoma Bankruptcy Attorney Edward Kelley here, answering your bankruptcy questions with oklahomacitybankruptcyattorney.pro. Starting our little three part series on Chapter 7. As usual, the first thing we’ll tackle is who’s a good candidate.

So there’s income requirements for an Oklahoma Chapter 7. If you make too much money, you can’t do it. For example, in Oklahoma now, it’s in the forties. It’s not a hard line, if you have expenses. If you make too much, but you have expenses valid that pull you down, you can still make it.

Social security, for example, generally isn’t considered for purposes of qualifying, although you still have to account for the use of that money on the back end, so to speak, of the bankruptcy.

So that’s a consideration. The other good candidate, somebody with lots of unsecured debt, meaning somebody who, if most of your debt is secured to things you want to keep, Chapter 7 won’t do much for you. You have to reaffirm all that.

The personal property, you’d have to reaffirm it all to keep it. And the real property, meaning your house or land, you’re only going to be exempt for your homestead. And if you want to keep it, you’re going to need to be current on it or they’re going to do a motion to lift the stay and they can still foreclose on you.

So another thing, if most of your debt is child support, non-dischargeable debt, meaning child support, court fines, student loans, Chapter 7 may not do much for you. Although if you have a lot of that debt and a lot of other unsecured debt, it can create the room to allow you to do that.

You can also use that debt as an expense to qualify for a 7. But if all your debts’ non-dischargeable, it’s not going to help you pretty much for obvious reasons. Also a good candidate, again, if you’ve got a car, house that you’re paying notes on, it needs to be current.

If you’re trying not to lose that, catch it up before the 7. The 13 is the one that lets you catch it up or makes them let you catch it up. So those are good Chapter 7 candidates in the income requirements. Oh, and last thing, not a lot of nonexempt assets.

You’ve got lots of boats, motor homes, motorcycles, extra land, inheritance, big lawsuit coming, and you want to keep those things, you better not file, and you definitely want to talk about it with your attorney before you file.

Because once you pull the trigger, those are up for grabs, at least up to the value of the amount that you owe. So that’s who’s good for a 7. Next, we’ll talk about how a 7 can get it done for you.