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.

{ 16 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

Cara,

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

Kim,

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

Shannon,

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

Charity,

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

Linda,

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

Mandy,

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

Jene,

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

Perry,

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

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