Many people are under the misapprehension that they will lose all of their property if they file bankruptcy. That simply is not true. One of the core principles of bankruptcy law is to give a fresh start to good people who are unable to pay their debts. And if a person is going to come out of bankruptcy with a legitimate fresh start, he needs to come out with more than just the shirt on his back.
Therefore, a person filing bankruptcy (the debtor) is allowed to keep certain property that he owns outright. These possessions are known as exempt property. And exactly what property a person is allowed to keep or exempt varies from state to state. Here is the specific list of property that is exempt under Oklahoma law.
Any property that a person owns that is not specifically listed as exempt property is subject to being taken by the Chapter 7 trustee, sold at auction, and the proceeds paid to the debtor’s unsecured creditors. This is the trade-off in Chapter 7 bankruptcy. The debtor willingly gives up non-exempt property in exchange for having certain debts discharged (forgiven, canceled or wiped-out). The good news is that the vast majority of people who file Chapter 7 bankruptcy do not own any non-exempt property.
I have tried to offer a simple explanation of this issue of exempt versus non-exempt property. However, the truth is that the law of bankruptcy exemptions is not a simple matter.
First, a debtor must be knowledgeable about the applicable exemption laws before he actually files bankruptcy or risk the possibility of losing property that is valuable and/or sentimental. Second, a person filing bankruptcy is not just automatically allowed to keep exempt property. He must first declare what property of his he is claiming as exempt and then must refer to the specific law that grants the exemption.
As with all things bankruptcy, you would be wise to discuss your specific situation with a knowledgeable bankruptcy lawyer.
If you’re struggling with debt problems and would like to know more about how bankruptcy may be able to help you, contact me today to schedule a FREE initial consultation. Just fill out the Contact Dan form on the far right side of the page and click the Submit button and I’ll get back with you as quickly as I can. I would count it a privilege to be able to visit with you in a relaxed and confidential environment where I’ll answer all of your questions in plain English and give you the straight scoop on the pros and cons of bankruptcy as related to your specific situation.