Oklahoma law allows residents to use state-specific bankruptcy exemptions, which differ from federal exemptions. When filing for bankruptcy in Oklahoma City, debtors can protect certain property from being liquidated to pay off creditors by claiming exemptions. These exemptions help ensure that debtors can retain essential assets and maintain a basic standard of living during and after the bankruptcy process.
Key Oklahoma Bankruptcy Exemptions
There are a few bankruptcy exemptions you should know about when deciding whether or not you want to file. While this is not a full list, these are some of the most common ones that people choose to take. However, a bankruptcy attorney will be able to walk you through all of your exemption options.
Homestead Exemption:
The Oklahoma homestead exemption is one of the most generous in the country. It allows debtors to exempt the full value of their primary residence, whether it’s a house, mobile home, or other dwelling, as long as it does not exceed one acre in a city or town or 160 acres elsewhere.
Motor Vehicle Exemption:
Debtors can exempt up to $7,500 in equity in one motor vehicle. If the equity in the vehicle exceeds this amount, the excess value may be subject to liquidation.
Wages and Income Exemptions:
Seventy-five percent of earned but unpaid wages are exempt. If a debtor is the head of household, eighty-five percent of earned but unpaid wages are exempt. Public benefits (social security, workers compensation, etc.) are fully exempt.
Retirement Accounts:
Qualified retirement accounts, including 401(k) plans, IRAs, pensions, and other retirement savings accounts, are fully exempt. It doesn’t matter how much you have in the account so long as its in there in the normal course. Additionally, IRAs and Roth IRAs have a limit of $1,512,350 per person.
Insurance Benefits:
The cash value of life insurance policies and proceeds from life insurance are exempt if the policy designates a dependent beneficiary. This is important and includes both whole life and term insurance policies. Disability benefits are generally exempt so long as they are not co-mingled with non exempt assets.
Alimony and Child Support:
Alimony and child support payments reasonably necessary for the support of the debtor and their dependents are exempt. They payments must be court ordered and are not in the nature of a property settlement.
College Savings Accounts:
Up to $25,000 in Oklahoma 529 college savings accounts is exempt, provided the funds have been in the account for at least one year.
Other Considerations
To use Oklahoma state exemptions, the debtor must have been a resident of Oklahoma for at least 730 days (two years) prior to filing for bankruptcy. If this residency requirement is not met, the debtor may need to use the exemptions of the state where they previously resided.
In some cases, debtors can also use certain federal non-bankruptcy exemptions, such as those protecting retirement accounts and Social Security benefits, in addition to state exemptions. Properly planning and understanding how to apply exemptions is crucial for maximizing asset protection. Consulting with a bankruptcy attorney can help ensure that exemptions are claimed correctly and strategically.
Oklahoma City Bankruptcy Attorneys
Oklahoma City residents filing for bankruptcy can protect various assets using state-specific exemptions, including generous homestead exemptions, motor vehicle exemptions, and protections for personal property, wages, retirement accounts, and public benefits. Understanding and correctly applying these exemptions is essential for safeguarding property during the bankruptcy process. If you’re considering filing for bankruptcy, our bankruptcy team at OKC Attorneys can help. Call us today at 405-367-8710 or ask a question online.