In Oklahoma, you’re in the 40s for one person and you can add close to 10,000 onto that for more. Two people, 50, 3… Somewhere in that neighborhood, even if you’re over, if you’re not too far over and you have some expenses, high mortgage, high car payment, you can probably still qualify. So what’s exempt in the seven, your home. Now that exemption varies by state or federal exemptions. In Oklahoma, we’ve got one of the best. If you’re in the city limits and on less than an acre, it’s basically unlimited. If you’re out in the country, 160 acres. And your vehicle, we have a decent exemption for that too. 7,500 in value, meaning if it’s paid off, if it’s worth 7,500 or less, or if you owe, if you sold it, would you have 7,500 or less leftover? What do you owe minus what it’s worth, for example? Your normal personal property, your TVs and your furniture, all that’s going to generally be exempt. Oklahomans, we’re lucky in that we have pretty good exemption laws.
What are your options as a consumer or small business? You had the option of a chapter 7 liquidation, which is basically be done with it and move on. Great if you can do it, you have to meet certain income guidelines and you don’t want to lose assets. So things to be aware of, whether that’s a good fit for you. Chapter 13s, where you pay what you can, not what you owe for five years and you have ways to save your home or car if you’re behind on those. So if you make too much money to do a seven or even if you don’t, but you need to save a home or your vehicle or some other property that you’re behind on, that may be the fit for you. And then chapter 11, particularly given the small business reorganization act of last year, that has made it a quantum leap easier for the small business than before. This may be for you. It’s generally going to be for a business LLC corporation that wants to get back on its feet.
What Happens Right After Bankruptcy? Generally, you don’t necessarily want to reaffirm your home because it doesn’t help you and you don’t lose it just because you don’t. However, personal property, the bankruptcy code does give creditors the right to reclaim that collateral. Even if your current, if you don’t reaffirm the note during the bankruptcy. So when can you do that? That’s from, your deadline is going to be your date of discharge. So generally you’re going to start getting those right after you file and they need to be filed before that discharge, which is about 90 days out.
Can I Sell Personal Property Before Bankruptcy? For example, people ask me this all the time. Well, if I sell my car to cousin Joe for 50 bucks … They don’t say this, but I know what they’re thinking is I’ll just get it back from them after the bankruptcy. That’s a fraudulent transfer. Big no no. A court can go get that car back from cousin Joe. So don’t even bother doing that, and you can get in trouble for being fraudulent potentially. However, if you sell that car on the open market, fair price, to a stranger, I’d say just don’t even sell it to a friend or relative. You’re going to have to disclose that anyway. And if you do, be sure it’s close to Blue Book value, or it’s going to get looked at as fraudulent.
What you and your lawyer need to know about you before you file bankruptcy. And what should you ask your lawyer before you file for bankruptcy? Well, first thing is whether you qualify. Know this before going in. For one person, upper forties, 40,000 a year in Oklahoma, add about 10,000 onto that for each additional family member. Have an idea before you go in, but does your income qualify you? How many is in your household? Make sure your lawyer finds out who all earns in the household. I’ve had many cases where people don’t understand that a non-filing spouse’s income has to be considered, or whether somebody needs to be paid rent, or somebody has a roommate that it doesn’t need to be considered.
Do I really need a lawyer? Why can’t I just do this myself? Well, you do need one. That’s one I feel pretty confident in answering. Unless you have done them before, there is a very steep learning curve. My average case has 70 to over 100 pages of documents filed. You have to run a statutory means test, got to do many schedules, you’ve got to understand the statement of financial affairs. You’ve got to gather up the correct period of paystubs, and run all that through math calculations to determine what’s left over and what can be taken out and what can’t. In other words, it’s almost impossible, even on a simple bankruptcy, for you to get it right. And even if so, your paperwork will probably be missing statutory language. So, there’s that.
Let’s review all debt, starting with unsecured debt, your credit cards or medical bills, your signature loans, things that have no property tied to them to secure them. We talked about secure debts, for example your home mortgage, your car note. Not typically those signature loans where you wrote down your TV without even specifying it, or your stereo and your bed, but perfected security interest, or proper security interests.
Student loans are completely non-dischargeable. You’re just straight out of luck, and we’ve talked in other series and I’ll talk again about though how you can use a bankruptcy to help take care of those as well. But for now, we’ll just say they’re dischargeable. Criminal penalties, fines, restitution, child support, these are all things you can’t get rid of, kind of no-brainers. If you have a debt that’s been created fraudulently, that can be considered non-dischargeable. What I mentioned so far are things that are just per se on their face non-dischargeable
Secured debts can be bifurcated, talked about that last time. If you bought your car, for example, less than 310 days prior to the filing of the bankruptcy, you can bifurcate your note into secured and unsecured portion.
Unsecured means that there is no collateral securing the debt, hence unsecured. As opposed to a secured loan, which, for example, a car note. If you default on the loan, got to give the car back. Or mortgage, default on the loan, got to give the property back. That property, whether it’s personal or real is security for the lender that they’re going to get at least some of their loan paid back. So, what are unsecured debts? Well, number one, credit card, medical bills. Probably 75% of the debt that I see discharged in bankruptcies or paid a portion thereof, in chapter 13s and then ultimately discharged, is unsecured debt. It’s the easy one. It’s the one you want when you’re in a bankruptcy.
You’ve got your unsecureds, that’s got no collateral tied to it, your secureds, those are debts with collateral, and we’ve got your non-dischargeable debts, certain things you cannot get rid of in bankruptcy.
Everybody should have a chance to start over even two or three chances. As long as you come in with the intent. Now, the only thing I’d say is wrong is if somebody is intentionally psycho pathologically entering into debts, knowing that they can use a bankruptcy to get out of them. But, you know, I don’t know that I’ve ever met somebody like that. I certainly wouldn’t represent someone if I knew that was their motive. The 99.9% of people, whether they’ve done it three or four times, whether they can’t seem to turn their life around are doing their best. So I say, there’s nothing wrong with it and what’s right about it.
There is nothing wrong with doing a bankruptcy so long as you do it with the intent to better your life and to better your input to society. So, once you’re in the situation where you need to do a seven, with creditors with compounding interest, with penalties, late fees, 99% of the time, depending on your income and if your income qualifies for a seven or qualifies for a low payment on a 13, it is what it is, you’re never going to get out of that. That’s just the reality. And then it becomes a question of swallowing your pride, showing some humility and doing what you have to do to move forward. That’s what this is for.
Oklahoma Bankruptcy Attorney Edward Kelley with oklahomacitybankruptcyattorney.pro is here to answer all bankruptcy questions. This is the best time to file bankruptcy. So, lets discuss all the bankruptcy chapters in one post. As a reminder, Chapter 7 = Basic Liquidation, Chapter 11 = Business Reorganization, Chapter 13 = Personal Reorganization.
In Chapter 11 a business goes in and tries to keep itself alive. How does it do that? Well, when it files Chapter 11, it’s basically becoming a debtor in possession. What does that mean? It means it’s getting to run the business under the direction and authority of the trustee, and to some extent, to the creditors themselves.
Chapter 7 Is a Basic Personal Liquidation Bankruptcy. So, what does this mean? Well, You qualify by your income meeting certain guidelines based on your household size and your gross income. That’s your gross, not your net. Not what you bring home, but how much you make before deductions.
This may be the best chance or silver lining of all this trouble is this might be the best time for you to file a chapter seven or 13. Again, if your income’s down, although that’s going to be tough on you, it may bring you under the cutoff so that you can qualify for a chapter seven, get rid of all your debt and actually come out ahead. Again, in Oklahoma at the moment for one person, the cutoff for a seven is in the forties. You had about 10,000 for each member of your family.
So the deal is, many States have legalized marijuana, whether medical, recreational, or for various uses. Oklahoma although still a medical marijuana state, in many ways is one of the freest. It was done on the way out by former governor, Mary Fallin, not much regulation, not a lot of specifics were put in place. However, for all these States, the tension is the federal government has not legalized it. It’s still considered illegal at the federal level.
Chapter 13, you got to keep it up for those five years. You got some things out of your control to contend with, mortgage payment changes as any homeowner knows. It’s usually a result of the insurance on your home changing. All of a sudden your payment usually is up. Occasionally it can go down, but those hit, and if they’re big enough, they can shake up the terms of a plan. If you’re already at your max of 60 months, that can be trouble.
If you’re coming into a mountain of debt, either making too much to do a 7. For example, in Oklahoma, if you’re over mid forties per person, if you’re one person household, then you might be looking at a 13. Or if you’re losing your home or vehicle and you want to keep it, you’ve got to do a 13, and that’s where those powers come in. So with all the chapters, the automatic stays, the big one, creditors can’t talk to you, touch you, do anything except through their attorneys, through the bankruptcy court proceeding. So you get breathing room.