Understanding the Types of Bankruptcy Available in Oklahoma

When facing financial hardship, understanding the types of bankruptcy available in Oklahoma can be crucial for individuals and businesses alike. Bankruptcy provides a legal solution to manage or discharge debts and regain financial stability. In this article, we will explore the various types of bankruptcy options, primarily focusing on Chapter 7 and Chapter 13, which are the most common for individuals.

Chapter 7 Bankruptcy

Chapter 7 bankruptcy, often referred to as "liquidation bankruptcy," is designed for individuals or businesses that need to eliminate unsecured debts, such as credit cards and medical bills. In Oklahoma, this type of bankruptcy allows debtors to liquidate non-exempt assets to pay creditors, although many individuals can keep significant assets through exemptions.

One of the key aspects of Chapter 7 is the means test. This test determines eligibility based on income and expenses. If your income exceeds the state's median, you may need to consider Chapter 13 instead. However, those who qualify can discharge most unsecured debts, giving them a fresh start financially.

Chapter 13 Bankruptcy

Chapter 13 bankruptcy is a popular option for individuals with a regular income who wish to keep their assets while repaying debts over time. Also known as a "reorganization bankruptcy," it allows debtors to create a repayment plan to pay back creditors over a period of three to five years.

This type of bankruptcy is ideal for individuals facing foreclosure or repossession, as it provides an opportunity to catch up on missed payments while stopping creditors from pursuing collection efforts. Additionally, Chapter 13 allows for the discharge of some unsecured debts after completing the repayment plan, giving individuals a chance to regain control of their finances.

Chapter 11 Bankruptcy

While less common for individuals, Chapter 11 bankruptcy is primarily used by businesses or corporations. This type of bankruptcy allows businesses to continue operations while restructuring their debts. Companies can reorganize their financial affairs and create a plan to pay back creditors over time, ultimately aiming to emerge from bankruptcy as a viable business.

Chapter 12 Bankruptcy

Chapter 12 bankruptcy is specifically designed for family farmers and fishermen. This type of bankruptcy enables these individuals to adjust their debts while continuing to operate their farming or fishing business. Similar to Chapter 13, it involves creating a repayment plan, typically lasting three to five years, to pay back creditors while protecting valuable assets.

Conclusion

Understanding the various types of bankruptcy available in Oklahoma is essential for making informed financial decisions. Whether you are considering Chapter 7, Chapter 13, Chapter 11, or Chapter 12, it is crucial to evaluate your specific situation and consult with a qualified bankruptcy attorney. They can guide you through the process and help determine the best option for achieving financial relief and stability.