Chapter 13 Bankruptcy, a Way to Keep More of Your Assets While Getting Relief
We all know that bankruptcy is an option when our level of debt becomes overwhelming. Bankruptcy operates under federal law, specifically under the United States Bankruptcy Code. There are varying types of bankruptcies available for varying situations. There are times when you may want to liquidate your assets, pay off your debt, and start over again. Chapter 13 bankruptcies are different.
In a Chapter 13 bankruptcy, you can enter into a repayment plan for a specified period of time instead of liquidating your assets. This allows you to keep more of your assets during and after the bankruptcy. At the end of your repayment period, any remaining debt is discharged.
Chapter 13 Eligibility
To qualify for Chapter 13 bankruptcy in Oklahoma, you must have a regular income source and debts below specific limits set by bankruptcy laws. As of 2022, the unsecured debt limit, such as from credit cards, was $419,275, and the secured debt limit, such as from homes, was $1,257,850. These limits are adjusted periodically based on changes in the consumer price index so it’s best to check current guidelines or consult with an Okmulgee bankruptcy attorney.
You may also have a waiting period. If you have received a discharge in a previous bankruptcy case, there are waiting periods before you can file for Chapter 13 again. For example, if you previously received a Chapter 7 discharge, you must wait eight years from the date of filing that case to file for a Chapter 13 bankruptcy. These waiting periods are strictly enforced, so consult with an attorney regarding your specific case.
Before filing for Chapter 13 bankruptcy, you must also complete a credit counseling course from an approved agency within 180 days prior to filing. This course aims to assess your financial situation and explore alternatives to bankruptcy.
After filing for Chapter 13 bankruptcy, you must complete a financial management course from an approved provider. This course helps you develop budgeting and money management skills to improve your financial situation after bankruptcy.
Finally, to be eligible, you must have filed your federal and state income tax returns for the past four years before filing for Chapter 13 bankruptcy. Failure to file tax returns can impact your eligibility.
Chapter 13 Bankruptcy Repayment Plan
Your repayment plan is a crucial aspect of the process. It outlines how you will repay your debts over three to five years. During this time, you make monthly payments to a bankruptcy trustee, who then distributes the funds to creditors according to the plan. The plan must comply with various legal requirements and be approved by the bankruptcy court. Here are some things to know about repayment plans.
You and your Okmulgee bankruptcy attorney will prepare the repayment plan and submit it to the bankruptcy court for approval. The plan must be feasible and meet the legal requirements outlined in the Bankruptcy Code.
The repayment plan distinguishes between priority debts such as taxes, child support, and certain other debts with special status, and non-priority debts such as credit card balances, medical bills, and unsecured loans. Priority debts must be paid in full through the plan, while non-priority debts may be paid partially or in some cases, not at all.
Your repayment plan is based on your disposable income, which is the income left over after deducting your reasonable and necessary living expenses from your total income. The Bankruptcy Code sets standards for what expenses are considered reasonable and necessary. Consult an Okmulgee bankruptcy attorney to see how this may affect your particular circumstances.
The plan also specifies how much each creditor will receive during the repayment period. Secured creditors, those with collateral, like a mortgage or car loan are typically paid the value of their collateral or the amount necessary to bring the collateral current. Unsecured creditors may receive a percentage of what they are owed, often significantly less than the full amount.
Once you complete all payments under the repayment plan, including fulfilling other requirements such as attending financial management courses, you may receive a discharge of remaining eligible debts. This discharge releases you from personal liability for those debts, marking the conclusion of the Chapter 13 bankruptcy process.
Other Issues
Filing for Chapter 13 bankruptcy triggers an automatic stay, which halts creditors’ collection efforts, such as wage garnishments or foreclosure proceedings. This stay gives you time to reorganize their finances under court supervision.
Oklahoma has specific bankruptcy exemptions that allow debtors to keep certain assets during bankruptcy. These exemptions may include a homestead exemption which protects a certain amount of equity in a primary residence, exemptions for vehicles, household goods, personal property, and tools of the trade. The amounts and types of exemptions can vary, so it’s crucial to understand Oklahoma’s exemption laws.
It’s important to note that bankruptcy laws can be complex, and the specifics of Chapter 13 bankruptcy in Oklahoma may vary depending on individual circumstances and updates to the law. Consult with an Okmulgee bankruptcy attorney today.
Low-cost Consultation: Okmulgee Ok Bankruptcy Lawyer
If you’d like to speak with a bankruptcy attorney about your possible options Call (918) 756-9600 now to set up a confidential bankruptcy consultation with an Okmulgee Ok bankruptcy lawyer at the Wirth Law Office – Okmulgee. Or, you can enter your legal question or concern in the firm at the top right of this page, and one of our attorneys will email or call you.
