Oklahoma Bankruptcy Laws

With real estate property values and employment prospects dropping around the state of Oklahoma with nearly the speed that credit card (and the enduring march of compound interest rates) account balances are rising, Oklahoma households are desperate for some external help to right their family budgets and dispose of unsecured financial burdens. However, just at the time when Oklahoma borrowers would most need the help of the federal government – principally, the help of Chapter 7 debt elimination bankruptcy – desperate consumers have become increasingly suspicious of the alternative due to the negative impact upon credit reports and those all important and dimly understood FICO scores as well as the recent changes that bankruptcy protection has undergone in the past few years. Towards the end of 2005, the United States House of Representatives passed the Bankruptcy Abuse Prevention and Consumer Protection Act which formally restricted both the liberties of those borrowers in Oklahoma and elsewhere in America as well as limiting the eligibility of prospective applicants for the Chapter 7 bankruptcy program. As such, many Oklahoman households have started to examine some of the alternatives to bankruptcy both dangerous (like Consumer Credit Counseling: a marketing gimmick that only adds to the overall debt loads while harming credit ratings) and potentially successful (like the ever more popular debt settlement negotiation which will be further explained near the end of this article) without ever spending the time necessary to fully understand the parameters modern bankruptcy protection now features. For some Oklahoma residents who have been without work for a majority of the last two years and whose households contain a minimum of what the United States and Oklahoma Bankruptcy Codes may consider to be assets (or whose households have already been forced to sell off their more valuable possessions), Chapter 7 debt liquidation bankruptcy may genuinely be considered the most profound solution to their mounting consumer burdens.

Before anything else, borrowers will have to look at their income for the year prior to filing for bankruptcy protection to check and see whether or not this option would even still be possible after the results of the BAPCPA legislation. According to the statutes, residents of Oklahoma shall only fit the new eligibility requirements if they can show that they earned less than the average household within their state in the first six months of the year prior to filing for the Chapter 7 bankruptcy program. The precise calculations will change from year to year, but, under current regulations, this means that a single Oklahoma borrower must have demonstrated gross earnings below thirty four thousand dollars, a household with two members must have made less than forty six thousand dollars, three members requires less than forty eight thousand, four members requires less than fifty six thousand, and there’s another seven thousand dollars allowed for every additional legal resident. Otherwise, if the earnings are proven to be more than the federal guidelines stipulate, the Oklahoma trustee will have no other alternative – beyond a separate test meant to illustrate the borrower’s inability to handle their monthly debt load regardless of income which, since the household expenses are dependent upon figures averaged by the Internal Revenue Service that cover the entirety of Oklahoma families, rarely works – but to force the filers into the Chapter 13 program. Most similar to Chapter 11 corporate bankruptcy protection, Chapter 13 protection could well be usefully employed by Oklahoma home owners who find themselves facing foreclosure absent the automatic stay provided through Chapter 13 bankruptcy. However, this automatic stay only buys time for the borrowers and possibly allows for an arbitration overseen by the Oklahoma court trustee which could re-structure mortgage payments, and Oklahoma residents who cannot make these payments will likely run into the same problems following the Chapter 13 proceedings with, considering their drop in credit, far less likelihood of success through further options. Oklahoma borrowers who haven’t reported difficulties in paying back their mortgage should find the re-organization offered through Chapter 13 protection pointless at best since no unsecured debts are eliminated and at worse, since the household budget will be at the complete mercy of the trustee’s whims, potentially devastating.

Somewhat ironically, the Oklahoma residents who do qualify for the Chapter 7 debt elimination programs that haven’t experienced any troubles with their home loans may newly be at risk with the increased chances of property seizure that BAPCPA threatens. Oklahomans may take some relative solace in that their state legislature has enacted a homestead exemption which protects all domiciles purchased within twelve hundred and fifteen days of filing for bankruptcy that, after governmental appraisal, are deemed to have less than a hundred and twenty five thousand dollars worth of equity. However, relatively recent home owners should seriously consider whether the risk of forfeiture of their family shelter would be worth the unsecured debt liquidation bankruptcy protection could offer. Similarly, automobiles have an equity cap of seventy five hundred dollars under Oklahoma law, family clothing must valued at less than four thousand dollars, and farms can only keep one gun, two horses (with two bridles and two saddles), ten hogs, twenty sheep, one hundred chickens, and supplies necessary for a calendar year. To be clear, many of the Oklahoma exemptions peculiar to our state are still far more lenient than the weakened protections that appear in the United States Bankruptcy Code. Oklahoman borrowers declaring bankruptcy, for example, won’t have to worry about furniture, books, portraits, ordinary household implements, tools of trade, and burial plots or the funds ear marked for funeral expenses. Most forms of retirement savings and pensions are also exempted as well as virtually all types of public assistance (including unemployment compensation), but every Oklahoma borrower investigating the potential assistance of Chapter 7 debt elimination bankruptcy should spend time considering the negative implications of any program that subjects the entirety of their family’s possessions to the grasp of the state and federal government.

Of course, this looming threat to personal property is far from the only danger to household property that Oklahoma consumers will have to consider upon declaring for Chapter 7 bankruptcy protection. Oklahomans petitioning for Chapter 7 have always expected a decline in credit ratings after filings, but, given the growing importance of FICO scores to Oklahoma borrowers (and the necessity of credit cards to so many elements of twenty first century society), there’s been a dramatic turn away from bankruptcy protection by those Oklahoma residents who most the need the program’s help. With the stigma of modern bankruptcy so melodramatically cast as an endangerment of the family’s eventual fortunes, Oklahoma borrowers have been continually searching for alternatives to Chapter 7 bankruptcy protection at all turns regardless of the growing recognition among economic analysts of the problems that these other programs also contain. Debt consolidation programs, given the current credit freeze affecting every segment of the global economy, are now only available to home owners that could take out second mortgages or refinance the primary home loan, and all Oklahoma borrowers should be more than a little suspicious of any strategy toward credit card debt resolution that requires that they dip into the equity of their most precious investment while real estate values continue their precipitous fall. Worse, still, some Oklahoma residents have even emptied their retirement funds in order to lower their collected debt load just because they have become so frightened of the negative consequences that bankruptcy may portend. Fair enough, there are serious credit risks to Chapter 7 bankruptcy protection that every Oklahoman should seriously mull over prior to rendering any decision for their household, but much of the media led paranoia has been rather over blown.

Following the official discharge of the appropriate debts, Oklahoma households should expect to see some record of their Chapter 7 or Chapter 13 bankruptcy declaration remain on their credit report for as long as a decade, but, although the persistent stigma of bankruptcy protection may indeed still harm the family’s prospects for car loans or home mortgages or employment opportunities (or even romantic fulfillment should you believe the recent strain of television commercials), there will still be the potential for resuming credit histories even immediately following the bankruptcy proceedings. Most banks and commercial lenders will be more than happy to offer credit card accounts – at, to be sure, sky high interest rates – simply because the creditors know that the borrowers will not be able to file a bankruptcy petition for at least another seven years, and, with every credit card payment sent on time to the lender, positive numbers will quickly raise the overall FICO scores and better the appearance of the Oklahoma consumer’s credit report for the eventual appraisal of professional debt analysts who will look kindly upon their household’s concerted attempts to renew their credit lives. For that matter, however difficult it could now be for Oklahomans to find a mortgage company willing to take risks with poor credit subjects following the implosion of the sub prime lending industry, home loans are still not beyond the realm of possibility so long as the borrowers in question have minimal secured debt loads and demonstrate sufficient income within the same job (or, at least, the same line of work) for two solid years and be able to afford a sizable down payment.

Given the economic turmoil so devastating the financial outlook of Oklahoma and all of the United States of America, expecting the bankrupt Oklahomans to come up with thousands of dollars in cash or prove a continuous work history may be a bit much, but the important thing for Oklahoman borrowers to remember is that – even during the darkest periods, where mounting debt loads and the never ending harassment of collection agencies may test the patience and bonds of even the strongest of Oklahoman families – there are almost always methods for escape and renewal from the worst of loan balances. Specifically, Oklahoman borrowers struggling against unsecured consumer debt loads have been extraordinarily pleased with the debt settlement negotiation alterative. In the most superficial analysis, settlement negotiators barter with representatives of the credit card companies and collection agencies holding the loans (utilities, by and large, have no reason to haggle and are generally ignored no matter how large the unpaid account balances may be) and, by blending the threat of Chapter 7 debt liquidation bankruptcy and the pledge of complete repayment by the Oklahoma clients, they force significant cuts of the account balances. While there may be a handful of debt settlement specialists who have opened up storefronts in Oklahoma City or Tulsa, most Oklahoman consumers would be better served by taking advantage of one of the many websites that feature settlement negotiation specialists who are more than happy to discuss with Oklahoman households the advisability of the debt settlement strategy as it applies to their own financial situation. Not only is this initial consultation far easier for harried Oklahoma consumers to schedule at their families’ leisure, but – in sharp comparison to the incredible fees charged by experienced Oklahoma bankruptcy law firms nowadays for any communications – the first talk with settlement company representatives should generally be offered for little to no cost to the borrowers. Though reductions of unsecured credit balances approaching seventy percent are common within successful debt settlement negotiations, the system simply hasn’t the potential of total unsecured debt liquidation that Chapter 7 bankruptcy offers those Oklahomans that manage to qualify for the program, but, given the aforementioned drawbacks to bankruptcy we’ve already underlined, the settlement program may still yet be more beneficial to their family’s economic outlook.

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