Bankruptcy is the legal process through which an individual, a couple or a business legally cancels their debts and obtains a "fresh start" financially.
Bankruptcy cases are filed in United States Bankruptcy Courts. Bankruptcy cases are regulated under Title 11 of The United States Code, ["The Bankruptcy Code"] and The United States Code of Bankruptcy Procedure.
The Bankruptcy Process
a) Preparation of the case
A Bankruptcy case consists of a petition, schedules of assets and liabilities, schedules of income and expense, a statement of financial affairs, list of applicable property exemptions, statement of intention and other supporting documents, such as bank statements, pay stubs, etc. It's best to hire an experienced bankruptcy lawyer to prepare any bankruptcy.
b) The Automatic Stay
When a bankruptcy case is filed, The court immediately orders the "Automatic Stay" [See 11 USC 362]. The automatic stay is an injunction against all collections - giving the filer "debtor" unlimited protection from his creditors. Creditors are prohibited from engaging in any/all forms of collection whatsoever. Creditors cannot file or continue existing lawsuits, make phone calls, send bills, garnish wages, repossess property, foreclose, etc. If any creditor disregards the automatic stay and attempts to collect during bankruptcy, the Debtor can sue the Creditor for punitive damages, court costs, attorney fees and fines for contempt of Federal Court Orders.
c) Bankruptcy Discharge
When the court has administered a case, (approximately 90 days) the Debtor is granted a discharge order. [See 11 USC 727]. The discharge order forever bars creditors from attempting collection on past debts. The automatic stay protections become permanent, life-long protections.
Types of Consumer Bankruptcy [Chapter 7 & Chapter 13]
Straight Bankruptcy (90 days). Technically, Chapter 7 is considered a "liquidation" of non-exempt assets. However, most assets are exempt and Oklahoma has the most generous exemptions in the USA. EXEMPT PERSONAL PROPERTY - which cannot be liquidated includes:
- Your home and all of its equity;
- Your home furnishings and electronics;
- Your car(s) (2 cars for couples/partners filing jointly);
- Your wages, retirement income, SSI, disability income;
- Your retirement savings, 401K, IRA;
- Your wedding jewelry;
- Your Tools;
- Your work vehicle (in addition to your personal vehicle);
- Earned Income tax credit refunds;
- Student loan income;
- Your pets.
The vast majority of Chapter 7 filers keep all of their property. The property most often liquidated in Chapter 7: Mineral Rights/Oil & Gas Interests, land/income/investment property other than the property you live in (unless there is a mortgage on it- investment property with a mortgage and little or no equity value you can keep ); windfall income from lawsuits already pending when you file bankruptcy [you keep the 1st $50,000 -net of expenses- of any personal injury settlement you receive while in bankruptcy; A % of one year's tax refund; inheritance received FROM A PERSON WHO HAD ALREADY DIED before you filed bankruptcy. OUR LAW FIRM HAS BEEN IN THE TOP 3 OF CHAPTER 7 FILINGS IN OK FOR OVER 15 YEARS. 97% OF OUR CHAPTER 7 CLIENTS KEEP 100% OF THEIR PROPERTY. We know your rights and will inform you of what they are before you decide.
Chapter 13 - Personal Reorganization
Monthly Payments of a % of what you owe over 3-5 years. Complete Discharge is granted after payments are complete - regardless of the % you paid. For people who: a) have high earnings [substantially over median income/means test] or, b) have already filed a Chapter 7 bankruptcy and received a discharge within the previous 8 years. The amount you pay is a percentage which depends on several things, including: a) disposable income available after taxes, insurance, house and ar payments, medical expenses, education expenses, etc. . You can pay off the Chapter 13 early if you choose to.
Small Business Chapter 7
For smaller businesses which are losing money, such that repayment of debt from earnings is no longer possible. Here, the business owner has choices. Our approach usually involves protecting the individual owner first - by filing a personal bankruptcy so his business creditors cannot attach his personal assets. He/she can then file the small business entity in a separate bankruptcy later if necessary...although it usually isn't. You can stay in the same trade without interruption - most of our small business filers do by simply starting a new business
after closing the old one.