Chapter 7

Get Out of Debt

     Chapter 7 bankruptcy, also known as liquidation bankruptcy, typically results in most of your debts getting discharged and allows you to become completely debt-free in about 90 days. Filing bankruptcy (either Chapter 7 or Chapter 13) initiates the automatic stay, giving you immediate relief from your creditors and stops lawsuits, garnishments, repossession, and foreclosures. Your creditors are not even allowed to send you a bill in the mail or call you on the phone.

EXEMPTIONS

     Every state has exemptions that may be used to protect property when filing for Chapter 7 bankruptcy. Oklahoma exemptions can be found here: OKLAHOMA EXEMPTIONS. Funds in ERISA-qualified retirement plans such as 401(k)s are exempt by federal law. Property is not valued at what you paid for it but rather at what it is worth now (garage sale value), which is why people who file bankruptcy actually lose nothing.

WHAT IS NOT DISCHARGED

Along with several other technical exceptions, all of your debts will be discharged except:

  • Child support

  • Student loans

  • Recent taxes (within the last three years)

  • Most traffic tickets and criminal fines

WILL I QUALIFY?

     The Bankruptcy Abuse Prevention and Consumer Prevention Act (BAPCPA) was passed by Congress in 2005 and made several significant changes to the previous Bankruptcy Code. The time limit between Chapter 7 filings was increased from seven to eight years, and you cannot have received a Chapter 13 discharge in the past six years. Additionally, you must complete a Means Test to decide if you have enough disposable income to repay some of your debts. The Means Test is calculated by comparing your household income over the past six months to the average household income of the same size in the Northern/Eastern District of Oklahoma. Even if your income is higher, you can still qualify if your total allowed monthly expenses result in no disposable income, as is the case with the vast majority of people.

REBUILDING YOUR CREDIT

     While debt consolidation can last for many years, a Chapter 7 bankruptcy is usually closed in about three months and ends with most, if not all, of your debts being discharged. While any bankruptcy will stay on your credit for ten years, it will typically only affect you adversely for as little as two years, allowing you to get back on track and proceed toward a better life.

Chapter 7

Get Out of Debt

     Chapter 7 bankruptcy, also known as liquidation bankruptcy, typically results in most of your debts getting discharged and allows you to become completely debt-free in about 90 days. Filing bankruptcy (either Chapter 7 or Chapter 13) initiates the automatic stay, giving you immediate relief from your creditors and stops lawsuits, garnishments, repossession, and foreclosures. Your creditors are not even allowed to send you a bill in the mail or call you on the phone.

EXEMPTIONS

     Every state has exemptions that may be used to protect property when filing for Chapter 7 bankruptcy. Oklahoma exemptions can be found here: OKLAHOMA EXEMPTIONS. Funds in ERISA-qualified retirement plans such as 401(k)s are exempt by federal law. Property is not valued at what you paid for it but rather at what it is worth now (garage sale value), which is why people who file bankruptcy actually lose nothing.

WHAT IS NOT DISCHARGED

Along with several other technical exceptions, all of your debts will be discharged except:

  • Child support

  • Student loans

  • Recent taxes (within the last three years)

  • Most traffic tickets and criminal fines

WILL I QUALIFY?

     The Bankruptcy Abuse Prevention and Consumer Prevention Act (BAPCPA) was passed by Congress in 2005 and made several significant changes to the previous Bankruptcy Code. The time limit between Chapter 7 filings was increased from seven to eight years, and you cannot have received a Chapter 13 discharge in the past six years. Additionally, you must complete a Means Test to decide if you have enough disposable income to repay some of your debts. The Means Test is calculated by comparing your household income over the past six months to the average household income of the same size in the Northern/Eastern District of Oklahoma. Even if your income is higher, you can still qualify if your total allowed monthly expenses result in no disposable income, as is the case with the vast majority of people.

REBUILDING YOUR CREDIT

     While debt consolidation can last for many years, a Chapter 7 bankruptcy is usually closed in about three months and ends with most, if not all, of your debts being discharged. While any bankruptcy will stay on your credit for ten years, it will typically only affect you adversely for as little as two years, allowing you to get back on track and proceed toward a better life.

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