Will I Lose my House or Car if I File for Bankruptcy in Oklahoma?
Bankruptcy Basics: What Is It?
Did you know that you have a constitutional right to file for bankruptcy? It’s true; you do. Though the prospect of filling can be scary and overwhelming, bankruptcy is the most effective way to deal with insurmountable debt and permanently throw off your creditors. In a world of predatory lenders, bankruptcy offers vital financial protection for everyday Americans.
As a debt-relief tool, bankruptcy ends with an official federal order discharging you of your legal obligation to repay your debts. The result is that your creditors are prohibited from ever contacting you or anyone you know regarding those debts again.
Two Types of Bankruptcy
There are two types of bankruptcy filings available to consumers in the US: Chapter 7 and Chapter 13. Chapter 7, also called straight bankruptcy, is a discharge of your indebtedness in 90 days. Any assets you own that are not exempted (more on this later!) can be liquidated during this process. However, this does not mean you will be left with nothing. In fact, Chapter 7 is a highly effective debt relief tool that has helped countless Americans move on from an untenable debt situation.
Meanwhile, Chapter 13 bankruptcy focuses on providing debt relief through debt adjustment. With a Chapter 13 filing, debts are reduced (in some cases, fully reduced to 0%). The adjusted debts are then paid off over three to five years. At the end of the repayment period, and once all of your payments have been made, the court will discharge the remainder of your debts.
Note: some debts cannot be discharged through a bankruptcy filing, including alimony, child support, criminal fines, and educational loans.
Oklahoma Bankruptcy Exemptions
When filing bankruptcy, many people’s primary fear is that they will lose all of their assets and be left with nothing. However, this is not the case. It is unlikely that you will lose your home or car if you file for bankruptcy. Though bankruptcy is handled in federal bankruptcy courts, states do have some control over what exemptions you can use to protect your property. Oklahoma’s bankruptcy exemptions are the most generous in the US.
In particular, Oklahoma’s homestead exemption is incredibly generous. When filing bankruptcy, you can exempt an unlimited amount of your home’s equity, provided your property does not exceed an acre if in a city or town or does not exceed 160 acres if it is not in a city or town. According to Oklahoma Statutes Title 31 §31-2, the exempted property must be used as your primary residence, and no more than 25% of the property must be used for business purposes. Should more than 25% of the property be used for business purposes, the homestead exemption is reduced to $5,000.
Oklahoma also offers a motor vehicle exemption of up to $7500. However, this does not mean that your vehicle can only be worth up to $7500. Instead, this $7500 refers to the amount of equity in the car. Depending on the vehicles you own, you may also be able to keep more than one vehicle. Speak with your attorney to determine how and where to apply your motor vehicle exemption.
Under Oklahoma law, the following may also be exempt from bankruptcy filings:
- Alimony and child support
- Burial plots
- Clothing up to $4000
- College savings accounts
- Earned federal income tax credit
- Furniture
- Guns up to $2000
- Personal books, portraits, and pictures
- Professional tools, books, and apparatuses
- Retirement accounts
- Wedding rings up to $3000
You may also exempt the damages awarded in a personal injury claim up to $50,000, not including any exemplary or punitive damages.
It’s important to remember that just because Oklahoma has generous bankruptcy exemption laws doesn’t mean that your property is not at risk. This is why it is vitally important that you work with an experienced, skilled bankruptcy attorney when filing. Though you can file on your own, working with a bankruptcy lawyer familiar with how the process works in Oklahoma may increase your chances of a better outcome.
Keep reading to learn more about the basics of bankruptcy filings.
Qualifying for Bankruptcy Filing
Before filing Chapter 7, you must make sure you qualify. If your income is at or below the state’s median income level for your household size, you automatically qualify for Chapter 7. However, if you are over the median income level, this doesn’t mean that you are automatically disqualified. Chapter 13 is for people who still have an income and need help managing or reorganizing their debt. It is also often the best option for people facing insurmountable debt but who do not qualify for Chapter 7.
Speak with an experienced bankruptcy attorney, like Mr. Hilton at Hilton Law Firm, LLC, to find out which type of bankruptcy you qualify for and which option is best for your situation.
Waiting Periods
There is a seven-year waiting period after filing Chapter 7 bankruptcy before you can file again. There is no waiting period for Chapter 13 filings.
How an Automatic Stay Order Works
As soon as you file your bankruptcy case, the courts will issue an automatic stay order. This order is sent to your creditors (as listed in your filing), informing them that they must stop all collection activities. This includes calling or harassing you or anyone you know.
An automatic stay order prohibits creditors from the following:
- Billing or invoicing
- Foreclosures
- Garnishments
- Judgments
- Lawsuits
- Repossessions
If a creditor goes against the automatic stay order (or against the final discharge order), they face strict penalties, including fines, punitive damages, court costs, and attorney fees. If a creditor contacts you or anyone you know after an automatic stay or discharge order has been issued, reach out to your attorney – you have rights.
Have questions about bankruptcy filing in Oklahoma? Reach out to Hilton Law Firm, LLC, a law firm exclusively dedicated to bankruptcy. I understand what you are going through, and I am here to provide compassionate, trustworthy legal guidance when you need it most.