According to the 2005 Bankruptcy Act, all courts must adhere to federal guidelines and standards for bankruptcy codes. Oklahoma has 3 districts with 4 court locations throughout the state. The most commonly filed types of bankruptcies are Chapter 7, Chapter 11, Chapter 12 and Chapter 13.
Types of Bankruptcy and Terms
Chapter 7 bankruptcy is known as "elimination bankruptcy." This is because as much unsecured debt is eliminated as possible. Sometimes this comes as a hit to the debtor because his or her assets may be liquidated to cover outstanding financial responsibilities. It is a good option for those with a high debt to low income ratio. Non-dischargeable debts, such as taxes, student loans and child support will remain the responsibility of the petitioner even after bankruptcy is complete.
For petitioners who need bankruptcy relief but would like to protect their assets, a Chapter 13 bankruptcy may be a good choice. With Chapter 13, the debts are minimized and restructured so the debtor can repay them, typically in a 3 to 5 year timeframe. As long as payments are being made, the petitioner's assets can stay in their possession in many cases. Chapter 13 is often an option for those with a steady stream of income, but many outstanding debts.
Chapter 11 and Chapter 12 are both bankruptcy codes specific to businesses. Chapter 11 is for businesses that require debt relief, but would like to stay operational and maintain their assets. Much like Chapter 13, Chapter 11 reorganizes the debt and allows a 3 to 5 year window for repayment. Chapter 12 is much the same, but is written for family farmers and fishermen who require financial assistance.
Steps to Filing Bankruptcy
All petitioners of bankruptcy are required to complete credit counseling within 6 months of filing. Often, the credit counseling will help individuals understand how to get out of debt on their own. For others, bankruptcy is a better option. In that case, there are several steps to completion.
The first step is to determine for which type of bankruptcy an individual is eligible. A Means Test is conducted to compare the debtor's income over the previous 6 months with the income of all other wage earners in Oklahoma. If the petitioner's income is lower than the median, he or she is eligible for Chapter 7 or Chapter 13 bankruptcy. An individual with a higher income has Chapter 13 as an option.
Gathering financial paperwork is the next step of the process. The court will need to review many documents, including but not limited to: tax returns from the last 2 years, monthly expenses, a list of all debts, loan information, and an inventory of all assets, property deeds, vehicle titles, and records of any recent major financial transactions. Petitioners of Chapter 13 are also required to submit a detailed summary of how their debts can be paid off in 3 to 5 years.
This financial framework, the debt repayment summary and all necessary forms are submitted to the court and referred to as "the schedule." It is the prerogative of the petitioner whether to use legal counsel or to file for bankruptcy on their own. The cost to file for Chapter 7 is $306 and can be waived in some cases. Chapter 13's fees cannot be waived and are $281. Of course, any attorney fees are the responsibility of the petitioner.
Once the documents have arrived at the court, an automatic stay is issued to prevent creditors from contacting the debtor directly and to stop any foreclosure proceedings. A court appointed trustee then reviews the case to determine the level of debt and what assets can be liquidated to pay a portion of them. It is also the responsibility of the trustee to arrange a 341 meeting for the creditors and debtor to sit down and negotiate terms. If no agreement can be made, a judge will intervene.
Lastly, all petitioners are required to complete a financial management course. For Chapter 7, this finalizes the bankruptcy. Chapter 13 petitioners must continue making payments conforming to their debt repayment schedule to avoid ending up back in court.
Location Specific Information
Oklahoma is arranged into three districts for bankruptcy. The Oklahoma Eastern Bankruptcy Court is located in Okmulgee. Tulsa is the location for the Northern District. Lastly, Lawton and Oklahoma City comprise the Western Bankruptcy Court.