What is Chapter 7 bankruptcy in Oklahoma?

by Dan Nunley

There are different types of bankruptcy for different types of debt problems. Chapter 7 is the type of bankruptcy filed by most people. It is sometimes known as “liquidation” or “straight bankruptcy.”

In Chapter 7 bankruptcy, a person’s debts can be “discharged” which simply means forgiven or wiped-out.

Chapter 7 works extremely well for “unsecured” debts such as credit cards and medical bills. It also works well for “secured debts” such as home loans and car loans if you are willing to surrender your house or car to the lender. If so, you can give the house or car back and not owe another penny.

Be aware that Chapter 7 is not able to wipe-out all types of debt. For example, domestic support obligations such as alimony and child support are non-dischargeable in Chapter 7.

The catch in a Chapter 7 bankruptcy is that in exchange for having debts forgiven or discharged you must give up certain types of property. However, the good news is that most people do not lose any property when they file Chapter 7 bankruptcy. This is because Oklahoma laws known as exemption statutes allow a person filing Chapter 7 bankruptcy to keep or “exempt” certain property. And the majority of people filing Chapter 7 bankruptcy simply do not own the type of property which would  be taken from them in bankruptcy.

To be on the safe side, a person thinking about filing bankruptcy should seek the advice of a knowledgeable bankruptcy lawyer. If it becomes clear that you have property that could be taken from you in a Chapter 7 bankruptcy, then you must decide whether it would be worth it to give up the property in exchange for having your debts forgiven. If not, your attorney can advise you about other available options including Chapter 13 bankruptcy.

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.

{ 40 comments… read them below or add one }

Cara Overstreet June 21, 2009 at 11:47 pm

My husband just left me. I owe on past utilities, medical bills, and things of that nature. I have a few questions I would like to ask you.
First, can I file before the divorce is final? Will doing so effect him in any way?
Second, the house is in his name, however, I plan to keep it in the divorce. I wont be refinancing it under my name only stating in the divorce decree that I assume all responsibility, liability and payments ( and so on) in regards to the property. How or will this effect my bankruptcy?
Last but not least… my car…It is in mine and my mothers name…will I loose it? It is my only form of transportation.
Thank you so much for your time. -Cara

Dan Nunley June 24, 2009 at 3:13 am


I have emailed you to discuss your situation privately.

kim November 17, 2009 at 12:20 pm

Hello Sir, I have a question regarding Oklahoma state exemption laws: if one still owes for the house and vehicle, and both are being included in a chapter 7 bankruptcy filing, can the person keep both property items?

Dan Nunley November 17, 2009 at 1:00 pm


A Chapter 7 debtor using Oklahoma exemptions may keep a house that is a personal residence claimed as homestead as long as he/she continues to make the mortgage payments. The debtor cannot simply discharge a valid real property lien and mortgage in bankruptcy and quit making the house payment and get the home for free.

Regarding the vehicle, it depends on how much equity the debtor has in the vehicle. Oklahoma exemptions allow a debtor to protect $7,500.00 of equity in a single motor vehicle. Again, if money is owed to a vehicle finance company who has properly perfected their lien on the vehicle, then the debtor may keep the vehicle but has to continue to make the payments to the lender. Additionally, if the debtor has more than $7,500.00 equity in the vehicle, then the debtor could have to pay the Chapter 7 Trustee the difference between the total equity and the $7,500.00 exemption amount.

Dan Nunley

Shannon December 3, 2009 at 9:23 am

Hello Sir; In a chapter 7 Bankruptcy it is my understanding that I cannot file on an attorney that my husband and I used to prove his innocence in a non-payment of child support case. Is this true in all cases? The “said” attorney has filed an asset hearing and levy on our bank account and we are unemployed and on food stamps. Are there any exceptions to this rule? Either way, we still need to file chapter 7 because our other creditors are after our bank accounts and this is the only foreseeable way to save our home.

Dan Nunley December 4, 2009 at 4:20 pm


When a person who is awarded child support (the obligee) incurs attorney’s fees in their legal action to obtain child support, both the child support and the attorney’s fees are non-dischargeable in a bankruptcy filed by the person owing the child support (the obligor).

However, if it was the obligee who filed bankruptcy, the obligee could discharge the attorney’s fees she owed her own attorney who represented her in gaining the child support. Those attorney’s fees would be just a regular unsecured debt, similar to a credit card or medical bill, and would be fully dischargeable in bankruptcy. This seems to be the situation that you are in.

Dan Nunley

Charity December 28, 2009 at 2:57 pm

Will I automatically lose my house if I am behind on payments and want/need to file a Chapter 7? Or can I include the house in the Chapter 7?

Dan Nunley December 28, 2009 at 9:03 pm


No you won’t automatically lose your house. However, you must get current quickly if you want to keep your house. Chapter 7 bankruptcy does nothing to cure a mortgage arrearage and your mortgage company will likely file a Motion for Relief from the Automatic Stay to gain permission from the bankruptcy court to proceed to foreclose against your home. If you can’t afford your home, a Chapter 7 bankruptcy will allow you to surrender your home and not owe another penny to your mortgage company. If you are set on keeping your house but are unable to get current on your payments, you should talk with a knowledgeable bankruptcy attorney about Chapter 13 bankruptcy which is designed to save homes from foreclosure.

Dan Nunley

Linda Norton February 13, 2010 at 5:48 pm

I am in financial debt with bills. My mortgage is in default and I have until February 23, 2010 to get caught up to cure the default or my home will go into to foreclosure. Is it too late for me to consider filing bankruptcy 13? I am running out of options.

Dan Nunley February 13, 2010 at 8:37 pm


No it’s not too late yet but you don’t want to delay any further. A successful Chapter 13 bankruptcy that will save your home from foreclosure is not something that can just be thrown together at the last minute. And a lack of planning on your part will not constitute an emergency for your bankruptcy attorney. So don’t wait any longer. If you’re serious about saving your home, give me a call at 918-615-8260 first thing Monday morning.

Dan Nunley

Mandy February 28, 2010 at 2:30 pm

I make around $24,000 per year but have around $30,000 in unsecured debt. I have been debating on filing bankruptcy because I am juggling 2 jobs just to pay my debt and at the end of the day I can not even afford to eat or get back and forth to work. I am struggling to live. I don’t want to file but I don’t see any alternative. I am also seeking an attorney could you make any suggestions. I live in Lawton, Oklahoma. Any advice would be helpful.

Dan Nunley March 5, 2010 at 9:43 am


As Lawton is located in the Western District of Oklahoma and I represent bankruptcy clients only in the Eastern and Northern Districts of Oklahoma, I would suggest that you use the Attorney Finder provided by the National Association of Consumer Bankruptcy Attorneys. I wish you well.

Dan Nunley

Jene Martin March 5, 2010 at 12:43 pm

Thank you for your web site. I am being sued so I plan on calling you. I owe about $33,000 in credit cards and my house is in foreclosure. I was hoping I could work it out but I guess not. I make about $35,000 a year. I am about to owe the IRS $2000 – $4000. I know I will have to pay that unless I do Chapter 13, but I don’t think I can swing a 13. If I do a Chapter 7, I only own a Vespa scooter worth about $5,600, a TV worth $800 that I just got for free from my job, a defective Playstation 3 and Xbox 360. What would I lose and can i make arrangments with the IRS outside of this?

Dan Nunley March 13, 2010 at 5:35 pm


I will contact you directly to discuss your situation with you.

Dan Nunley

Perry McGill March 15, 2010 at 5:50 pm

I have my primary residence and am current on my mortgage payments. However, I also own free and clear a mobile home which my disabled sister lives in. If I file Chapter 7 bankruptcy, would my mobile home be exempt from creditors? It’s worth about $5,000.00. I’m leaning toward filing a Chapter 13. I would appreciate any advice you can give me.

Dan Nunley March 16, 2010 at 11:03 pm


In a Chapter 7 bankruptcy, you would be able to exempt your homestead but not the mobile home. Whether or not a Chapter 7 trustee would take the mobile home depends on it’s true fair market value and how much the trustee could realize from its sale. If the trustee’s intent was to take the mobile home, you would have the first opportunity to “buy back” the mobile home by paying the trustee it’s fair market value. In a Chapter 13, you would be required to pay the fair market value of your non-exempt assets including the mobile home to your unsecured creditors.

Dan Nunley

Marie August 29, 2010 at 10:36 pm

My husband and I have a mortgage on the home we live in. We are in east Tulsa in a semi-rural area with very large lots, although not particularly high values (We have about 1.5 acres and home is valued at around $220,000.) if we were to file for bankruptcy, would we be able to exempt our home? It is considered a single lot, so we couldn’t sell part of the property without obtaining a lot split.

Dan Nunley September 2, 2010 at 9:43 am


Oklahoma law limits the bankruptcy exemption of real property to a maximum of 1 acre if your homestead is within the city limits and 160 acres if outside the city limits. If your homestead is within the city limits, a Chapter 7 trustee could potentially seek to partition a half-acre and administer that parcel for the benefit of your unsecured creditors. However, whether or not a trustee would actually seek to take the non-exempt property would depend on many factors including the topography of your real property, how easy it would be to partition, how easy it would be to sell the partitioned property, etc. I have represented a good number of people in bankruptcy who have been able to keep real property that the trustee could have taken but chose not to take for various reasons.

Dan Nunley

lee October 28, 2010 at 5:29 pm

My pay check is being garnished for a car I gave back. I was laid off my job and my wife was laid off her job 2 weeks later then she had a bad illness. I could not afford to pay the car payment, house payment and all the bills. What can I do? They’re taking $500.00 a month which leaves me with not much to live on. Do I need to file chapter 7 or 13? I’m not sure what to do. I’m in Midwest City.

Dan Nunley November 4, 2010 at 9:25 am


Based on what you have described, it sounds like Chapter 7 bankruptcy would be the appropriate bankruptcy option. However, you need to contact a knowledgeable bankruptcy attorney near you and consult with that attorney in more detail and follow his or her advice. You live in Midwest City which is located in the Western District of Oklahoma and I limit my bankruptcy practice to the Northern and Eastern Districts of Oklahoma. I wish you well.

Dan Nunley

Paul February 18, 2011 at 5:00 pm

We are in our home now which is in foreclosure. In fact, it has gone to sheriff’s sale but the sheriff’s sale has not been confirmed. If we file Chapter 7 will we be able to stay in the home? Home valued at $250k, Sheriff sale was for $229k, principal balance on note is $198k. Payments are $2100 per month and we can now easily afford. Problem is we have arrearages in the amount of $85k so a Chapter 13 is not feasible since our payments will be around $9000 per month. Will a Chapter 7 be something to look at in our situation in order to stay in our home?

Joseph Buckley February 18, 2011 at 6:26 pm

My ex-wife and I filed Chapter 7 bankruptcy in September 2002. Do I have to wait 10 years to file again? I have serious medical bills due to cancer and I am on disability. I rent and have no “real” property. Just debt.

Dan Nunley February 18, 2011 at 10:03 pm


You are eligible for another Chapter 7 discharge once eight years have elapsed from the date you filed your previous Chapter 7 case. If you filed in September 2002, you have been eligible to file again since September 2010. For more detailed information, read my blog post “Can I File Bankruptcy Again?”

Dan Nunley

Dan Nunley February 18, 2011 at 10:14 pm


Unfortunately, Chapter 7 bankruptcy will not help you to be able to remain in your home for more than a short period of time. Chapter 13 bankruptcy is the type of bankruptcy designed to stop foreclosures and allow homeowners to cure arrearages through a three to five year payment plan.

If you file Chapter 7 prior to the hearing confirming the Sheriff’s Sale, then the bankruptcy automatic stay will stop further proceedings in the foreclosure suit for a period of time. However, the mortgage company would likely file a Motion for Relief from the Automatic Stay in your bankruptcy case alleging your default on the promissory note and the bankruptcy court would issue an Order allowing the mortgage company to proceed with the foreclosure suit. The mortgage company would then reschedule the hearing confirming the Sheriff’s Sale and once that hearing is conducted, your would no longer be the legal owner of the real property and you could easily be evicted.

Dan Nunley

Donna May 23, 2011 at 10:22 am

If we file chapter 7, will our 401k be taken to satisfy debts?

Dan Nunley May 23, 2011 at 10:42 am


No. A 401K is an exempt asset pursuant to Oklahoma statutes and therefore is protected when a person files Chapter 7 bankruptcy. See Tit. 31 O.S. sec. 1(A)(20).

Dan Nunley

Ashley August 27, 2011 at 11:27 pm

I was just wondering would say a sally mae loan be exempt from a chapter 7?

Dan Nunley August 28, 2011 at 6:48 am


A Sallie Mae student loan would generally be non-dischargeable in a Chapter 7 bankruptcy. In order to have a student loan discharged in bankruptcy, you would also need to file an adversary proceeding in conjunction with the bankruptcy case and have the find that an “undue hardship” exists regarding your ability to repay the student loan.

Bankruptcy exemptions apply to assets not debts. A Sallie Mae student loan is a debt not an asset. Therefore, the student would not be “exempt” but instead would be non-dischargeable in a Chapter 7 bankruptcy absent a finding of undue hardship.

For more information, read this post that I wrote about student loans in bankruptcy.

Dan Nunley

Melissa September 2, 2011 at 6:36 am

My husband and I are considering filing chapter 7. We have approx $35,000 in debt, 4 kids, no real property, and can hardly afford to live. We have signature loans from little loan places that let you renew every 2 – 3 months when you make a payment, which basically gets you your payment back that you made that day, which we have to do a lot of the time just to get by. We’ve had those the past 2 – 3 years. Can we list those on our chapter 7?

Dan Nunley September 2, 2011 at 8:04 am


When you file Chapter 7 bankruptcy, you must disclose each and every debt that you owe. So yes you would list the payday loans and they would be discharged.

Dan Nunley

Jason September 2, 2011 at 9:48 am

Hi. When filing a chapter 7 bankruptcy, do we have to list our minor child’s SSI monthly payments as part of our monthly income?

Dan Nunley September 2, 2011 at 10:00 am


Your son’s Social Security income would be excluded from the Means Test but should be included in your monthly income if the Social Security benefits are used for family expenses. If the benefits were deposited into a savings account owned by your son and therefore not spent on family expenses, then in my legal opinion the Social Security benefits could be excluded from your monthly income. However, the savings account would need to be either properly disclosed and exempted if you also are listed on the account or the funds declared as property under your control that belong to another.

Dan Nunley

Erik October 11, 2011 at 7:25 pm

I have recently had a suit filed from a business interest I helped a relative start when I was 18 and i had thought I had been removed from. I currently have a mortgage and moderate revolving debt. My relative has no means of repaying the debt and I’m afraid they’ll come after me. Is Chapter 7 an option if any or is it too late?

Dan Nunley October 19, 2011 at 1:23 pm


Chapter 7 may be a viable option for you but until I know more about your specific financial situation including income, expenses, debts and assets, I won’t have the information necessary to determine whether you would qualify financially to be a Chapter 7 debtor. Feel free to contact me and we can schedule an initial consultation during which I can obtain the information that I need in order to give you good legal advice and answer all of your questions.

Dan Nunley

Penny February 1, 2012 at 9:01 am

What is the current vehicle exemption limit? My mother is going to be filing and owns a car worth about $10K.

Dan Nunley February 1, 2012 at 9:26 am


It depends on what exemption statutes your Mother will be using. Exemption statutes vary greatly from state to state. Oklahoma law provides an exemption of $7,500.00 equity in a motor vehicle.

Dan Nunley

Dana March 12, 2012 at 4:40 pm

Mr. Nunley:

I have filed against a individual and his company for non payment of T-Shirts we had delivered to him. I received judgement against him and asked for a asset hearing to received the information I needed to garnish him for payment. He failed to appear and a bench warrant was issued. He was picked up and he did appear for the next asset hearing, although he never brought forward any information that was requested. He did agree to make payments but only made two payments. I went back to court and he failed to appear when he was to be recognized. Another bench warrant was issued. Today I received a notice that he had filed Bankruptcy Chapter 7. He lives in a $353,000 house and he and his wife drive a Escalade and he was driving a new BMW but now he drives a new Mercedes. Do I have any rights since I have a judgement against him. Or does he possibly get off scott free?


Dan Nunley March 13, 2012 at 11:04 am


Be aware that the automatic stay prohibits you from taking any type of collection activity unless your request and receive relief from the automatic stay from the bankruptcy court.

As a judgment creditor, you have all of the rights of any other creditor. You can attend and participate in the First Meeting of Creditors; you can review the debtor’s bankruptcy schedules and inform the case trustee if you have evidence of the debtor’s misrepresentation of assets or income; and if the case becomes an asset case, you will have the ability to file a Proof of Claim and share in the distribution of assets liquidated by the case trustee.

Dan Nunley

Evelyn Maynard March 15, 2012 at 10:06 pm

My husband and I are considering filing bankruptcy Ch. 7 we have a foreclose from about 6 or 7 years ago this is in his name it was before we got married. I also have some doctor bills and past utility bills from before we where married as well as doctor bills from seance we have been married. will we still be able to file together to discharge the debt or will we have to file separate? We really don’t have any assets we rent the house we live in we have one van that we are still paying off and all payments are up to date (we don’t want to file on the van) we have no credit cards not bank accounts etc. We just want a fresh start! Do you think this would be best for us?

Dan Nunley April 4, 2012 at 9:12 am


I will contact you in the near future to schedule an initial consultation during which we can discuss the specifics of your financial situation and determine whether Chapter 7 or Chapter 13 would be the better option for you.

Dan Nunley

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