What Kind of Debt Is Considered in Chapter 13 Bankruptcy in Oklahoma?

Pay What You Can Afford, Not What You Owe

Video Transcribed: Hello everybody, OKC bankruptcy lawyer Edward Kelly here, with the third video in our series on Is Chapter 13 Right for Me? As you’ll recall, in the first video we talked about income. The first factor to look at, is whether am I above the IRS median? Statistics put out by the IRS for income and household size is a dividing line. If I’m above, I have to do a 13. If I’m below, I can do a 7. But I may still want to do a 13, even if I could do a 7 because I’m behind on my mortgage and I want to save my house or a vehicle or something like that. If you’re below the median, you can do a 3-year plan, as short as 3 years, up to 5 years. But if you’re over the median, you’ve got to do a 5-year plan. Again, you’re paying what you can, not what you owe. So usually you’re going to still discharge a bunch of debt.

The second factor, is how much and what kind of debt have I got? So, just like in a 7, student loans aren’t dischargeable, and child support isn’t dischargeable. So some of those may remain after the 13, or you may want to pay them in full on the 13. Student loans, unfortunately, can’t be placed ahead of the line of anyone else, which is crazy to me. But we’ll save that for another video. But you want to make sure, for example, that your IRS tax debt goes to the top of the line. At least that tax debt, which is 3 years or younger, was in the last 3 years, because that’s not dischargeable. And you want to make sure that what you have left over after you’ve made all your payments for 5 years or 3 years is dischargeable. Because again, the way it works in a 13, I determine, we determine together, how much money you have left over every month, and that’s what you pay. It has nothing to do with what you owe.

Now, if you’re trying to save your house and you have an arrearage to catch up, you’ve got to pay at least that much. But other than that, it’s only based on what you can pay. So you want to make sure that debt at the end is dischargeable, normal stuff. Signature loans, credit cards, medical bills, old utilities, old phone bills, you know, all that normal stuff. And the same things apply as far as secured notes. If you’ve got a debt but it’s got collateral tied to it, you’ve got to give up that collateral if you want to just make that a regular old unsecured debt. And if you want to keep that, you’ve got to pay it in full in the plan. Fortunately, you get to jump those ahead.

So, that’s a lot of information, but that’s what you pay me for. As always, you can reach me, an Oklahoma Chapter 13 attorney, directly if you want to follow up. EdwardKelleyLaw, K-E-L-L-E-Y, law at gmail.com or give me a call at 580-478-3130. Tomorrow we’re going to talk about the third and final factor in whether Chapter 13 is right for me, which is what’s my property situation. Look at that from a little different angle.