Bankruptcy

Chapter 7

Chapter 7 bankruptcy, also known as liquidation bankruptcy, typically results in most of your debts getting discharged in about ninety (90) days.  Imagine that you are debt free in only ninety (90) days that is what happens in most chapter 7 bankruptcy cases. Additionally, filing either chapter 7 or 13 initiates the automatic stay, which gives you immediate relief from your creditors, stopping lawsuits, garnishments, repossessions and foreclosures. Your creditors are not even allowed to send you a bill in the mail or call you on the phone.

The Process

During your free strategy consultation, I will evaluate your financial documents to determine if you qualify for Chapter 7 bankruptcy.  Depending on my findings, I’ll make recommendations that will help you decide if the process is right for you. I understand the financial strain you are under fee is very affordable. Typically I can file a chapter 7 bankruptcy for $1100.00 plus costs. For this fee, I will analyze your existing debt, decide what property, like your home or car, is exempt from collection, help prepare all of the paperwork, and act as a barrier from harassing phone calls from collection agencies. I will also help make sure the process runs smoothly and that you are fairly represented. After Meeting with you and collecting the documentation to complete your paperwork, you and I personally will sit down and go over each and every page of your bankruptcy paperwork. After confirming that everything is correct, I will typically file the case with the court electronically while you are in my office, immediately providing you with a case number. About four weeks later you and I will meet a court official called a trustee.  The trustee will ask you about ten to fifteen questions regarding your assets, which I’ll give you weeks beforehand, and after that there is a 60 day waiting period before you get your discharge.

Will I Qualify?

The Bankruptcy Abuse Prevention and Consumer Prevention Act was passed by Congress in 2005 and made several significant changes to the previous Bankruptcy Code. The time limit between chapter 7 filings was increased from seven to eight years, and you cannot have received a chapter 13 discharge in the past six years. Additionally, you must complete a Means Test to decide if you have enough disposable income to repay some of your debts. The Means Test is calculated by comparing your income over the past six months to the average family of your size’s income in Northern/Eastern District of Oklahoma. Even if your income is higher, you can still qualify if your total allowed monthly expenses result in no disposable income, as is the case with a vast majority of people.

Exemptions

Every state has exemptions that may be used to protect property when filing for chapter 7 bankruptcy. Oklahoma exemptions are found here: OKLAHOMA EXEMPTIONS.  Funds in ERISA qualified retirement plans such as 401(k)s are exempt by federal law. Property is not valued at what you paid for it, but rather what it is worth now (garage sale value), which is why most people who file bankruptcy actually lose nothing.

What Isn’t Discharged?

Along with several other technical exceptions, all of your debts will be discharged except:

  a). Child support

  b). Student loans

  c). Recent taxes (3 Years)  

  d). Most traffic tickets and criminal fines.

Rebuilding Your Credit

While debt consolidation can last for many, many years, a chapter 7 bankruptcy is usually closed in about three months, and ends with most if not all of your debts being discharged. Yes, any bankruptcy will stay on your credit for ten years, but it will typically only adversely affect you for as little as two of those years, allowing you to get back no track and onto a better life.

Chapter 13 - Plan

 

A person may file a Chapter 13 bankruptcy rather than a Chapter 7 bankruptcy case for a variety of reasons. Several prime examples are:

  • A person may make too much money to qualify for Chapter 7 bankruptcy;

  • A person may have too much non-exempt property that would be lost to the trustee in a Chapter 7 bankruptcy case;

  • To pay off taxes that would not be discharged in a Chapter 7;

  • To stop a foreclosure sale and get caught up on mortgage payments;

  • To strip off liens on real estate that are wholly unsecured.

 

Whatever the reasons, filing a Chapter 13 bankruptcy case can be a very complicated undertaking. Chapter 13 allows a person to reorganize their debt into a payment plan that fits their budget and typically lasts three to five years. Rather than paying dozens of different creditors every month, you will send in one payment to a court-appointed trustee, who then disburses payments to creditors. The monthly payment is your disposable income, which is your monthly income minus necessary living expenses.

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