Several bankruptcy options are available in Oklahoma to help you manage your debts and achieve a fresh financial start. The two options that most people will choose between are Chapter 7 and Chapter 13 bankruptcy. However, understanding the differences between each option is important to choosing the best one for you. Here, we’ll break down the eligibility requirements for each as well as what they involve.

Chapter 7 Bankruptcy

Chapter 7 bankruptcy is also known as liquidation bankruptcy. It provides a way to discharge most unsecured debts, such as credit card debt, medical bills, and personal loans, quickly. To qualify, you must pass the means test, which compares your income to the median income for a similar household size in Oklahoma. If your income is below the median, you qualify, but if it is above, you may still qualify after deducting certain allowable expenses.

Under Chapter 7 bankruptcy, you can discharge most debts in a few months and get a clean slate. However, the trustee may sell certain non-exempt assets, and the bankruptcy will stay on your credit report for 10 years.

The process for Chapter 7 bankruptcy includes several steps:

• Filing: Submit a petition and required documentation to the bankruptcy court.
• Automatic Stay: An automatic stay goes into effect, halting most collection actions.
• Trustee: A trustee will review your case, liquidate non-exempt assets, and distribute the proceeds to creditors.

Typically, within 3 to 6 months, you will receive a discharge of qualifying debts.

Chapter 13 Bankruptcy

Chapter 13 bankruptcy is known as a wage earner’s plan or reorganization bankruptcy. It allows individuals with regular income to create a repayment plan to pay off debts over three to five years. To qualify, you must have a regular income to propose and maintain a repayment plan. Your unsecured debts must be less than $419,275, and secured debts must be less than $1,257,850.

This option allows you to keep your property while repaying debts and can stop foreclosure and repossession. However, the repayment plan will take 3 to 5 years, and shows on your credit report for 7.

The process for Chapter 13 bankruptcy includes:

• Filing: Submit a petition and proposed repayment plan to the bankruptcy court.
• Automatic Stay: An automatic stay goes into effect, halting most collection actions.
• Trustee: A trustee oversees the repayment plan and distribute payments to creditors.
• Plan Approval: The court must approve the repayment plan, which outlines how you will pay creditors over three to five years.
• Payments: Make regular payments to the trustee, who distributes them to creditors according to the plan.

After successfully completing the repayment plan, remaining eligible debts are discharged.

Oklahoma City Bankruptcy Attorneys

Oklahoma offers several bankruptcy options, each with its own eligibility criteria, processes, and implications. Chapter 7 provides a quick discharge of debts but may involve liquidating non-exempt assets. Chapter 13 allows for debt repayment over several years while retaining property. If you’re considering filing for any type of bankruptcy, our bankruptcy team at OKC Attorneys can help. Call us today at 405-367-8710 or ask a question online.