If you’re overwhelmed by debt and wondering if there’s a way out, Chapter 7 bankruptcy may be a solution. For many Oklahomans struggling with credit cards, medical bills, or personal loans, Chapter 7 offers a legal way to eliminate most unsecured debts and get a fresh financial start. Here’s what you need to know about how Chapter 7 bankruptcy works in Oklahoma.
What Is Chapter 7 Bankruptcy?
Chapter 7 bankruptcy is often referred to as a “liquidation” bankruptcy and allows individuals (and sometimes businesses) to discharge most unsecured debts. In exchange, a court-appointed bankruptcy trustee may sell off some of the debtor’s non-exempt assets to repay creditors. However, most people who file for Chapter 7 in Oklahoma keep all or most of their property due to generous state exemptions.
Who Qualifies for Chapter 7 Bankruptcy?
To qualify, you must pass the means test, which compares your income to the median income for households of similar size in Oklahoma. If your income is below the median or your disposable income is too low to support a Chapter 13 repayment plan, you may qualify for Chapter 7.
In addition to the means test, you must:
- Complete a credit counseling course from an approved provider
- Not have received a Chapter 7 discharge in the last 8 years
- Be honest and cooperative with the court and trustee
The Oklahoma Chapter 7 Process
- Filing the Petition: You begin by filing a bankruptcy petition in federal bankruptcy court along with schedules listing your debts, assets, income, and expenses.
- Automatic Stay: Once filed, an automatic stay goes into effect, which stops most collection actions, including wage garnishments, repossessions, and lawsuits.
- Meeting of Creditors (341 Hearing): You’ll attend a brief meeting with the trustee (not a judge) to answer questions under oath. Creditors can attend but rarely do.
- Liquidation of Non-Exempt Assets: The trustee may sell certain non-exempt assets to repay creditors, but Oklahoma law protects many types of property, including your home (subject to equity limits), vehicle, clothing, and retirement accounts.
- Discharge of Debts: Usually within 3–6 months, the court issues a discharge order, wiping out qualifying debts such as credit cards, medical bills, and payday loans.
What Debts Can’t Be Discharged?
Some debts are not discharged, including:
- Student loans (except in rare cases of undue hardship)
- Child support and alimony
- Recent income taxes
- Debts from fraud or intentional harm
- Fines and criminal restitution
Will I Lose My Property?
Oklahoma bankruptcy exemptions are generous, so most people keep all of their property. Exemptions include:
- Up to $5,000 equity in a vehicle
- Unlimited equity in your homestead (with certain acreage and use limitations)
- Retirement accounts, like IRAs and 401(k)s
- Household goods, tools of trade, and clothing
An experienced bankruptcy attorney can help ensure you claim all allowable exemptions.
Wagoner Bankruptcy Attorneys
Filing for Chapter 7 is a serious decision, but for many people, it’s the first step toward regaining financial freedom. Our team at Wagoner County Attorneys are here to give you the answers you need to your debt issues. For a free consultation, call us today at 918-283-7394, or reach out to us on our Ask A Lawyer page.
