The BULLEIGH LAW FIRM assists consumers with personal bankruptcy, which takes one of two types, Chapter 7 or Chapter 13.  The below is given for informational purposes only, and should not be used as a replacement for legal advice.  Please contact us for a free initial consultation concerning your bankruptcy options.

 

Chapter 7

 

The most common form of bankruptcy, Chapter 7 bankruptcy is the court-ordered process by which a trustee reduces a debtor's assets to cash and distributes the cash according to the rights of the various creditors.  These distributions are subject to certain exemptions of the debtor, which vary from state to state, and subject to the rights of secured creditors.  As part of the Chapter 7 process, the debtor is able to receive a discharge of certain qualifying debts (typically credit cards, personal loans, and utility and medical bills), and is given a "fresh start."  As implicated, there are several types of debt that are not dischargeable and examples include taxes, student loans, alimony and child support and debts obtained by fraud. 

 

In 2005, the Bankruptcy Abuse Prevention and Consumer Protection Act was passed and this legislation amended the Bankruptcy Code to require a "means test" to determine whether a debtor (individual consumer) qualifies for a Chapter 7 filing.  Generally speaking, in applying the means test, the court will review previous months income for the debtor, and compare it to the median income for that state in a household of similar size.  Depending on whether the debtor falls above or below this median income, a Chapter 7 filing may or may not be viable.  Please contact us if you would like us to review the Oklahoma means test with you.

 

Chapter 13

 

Chapter 13 bankruptcy allows a debtor to present a plan to the bankruptcy court whereby the debtor repays the creditors over time, usually 3 to 5 years.  Often a debtor prefers a Chapter 13 filing because it allows the debtor to keep a valuable asset, such as the debtor's house.  Chapter 13 may also be required in a situation where the debtor does not satisfy the means test to be able to file a Chapter 7 bankruptcy.  At a hearing, the bankruptcy court will either approve or disapprove the repayment plan presented by the debtor.  Before any debts are discharged, the debtor must complete the payments as required under the agreed upon repayment plan. 

 

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