Bankruptcy Q&A

What is Bankruptcy?

Personal bankruptcy is a legal proceeding by which a person seeks relief from the burden to pay bills, loans, and credit card debt that they are financially unable to pay. Many factors contribute to an inability to pay bills. The most frequent reason someone files bankruptcy is divorce. Other reasons include unforeseen medical expenses from an accident or illness and job layoffs.

What bankruptcy options are available?

Most debtors will choose to file for reprieve under either Chapter 7 or Chapter 13 of the Bankruptcy Code. Chapter 7 is commonly referred to as a fresh start filing wherein the debtor’s nonexempt assets are taken to satisfy the claims of creditors. The remaining debt is wiped clean giving the debtor a fresh start to a new life. In many instances under Chapter 7, a debtor will have no assets that can be taken to satisfy the claims of creditors and all debts are discharged without the creditors receiving anything. The court indicates such cases as “no asset” cases. Under Chapter 13, a debtor agrees to a payment plan wherein all of the debtor’s income not otherwise needed to maintain a household is paid to the Bankruptcy Court for disbursement to creditors. Payment plans are either 36 or 60 months long. The amount of time depends on income and amount of debt. Chapter 12 offers relief for family farm debt.

What property can I keep if I file Bankruptcy?

Oklahoma is one of the most liberal states in the US when it comes to exempting property from the claims of creditors. With a few restrictions, a debtor can keep his or her home, clothes, furniture, a vehicle, tools that they use for work or to work a farm, and can even keep a certain number of horses, cows, chickens, etc. The only time a creditor is able to claim one of these items is when they have a perfected security interest in it, such as the mortgage company’s claim on the house or the banks lien on a vehicle.

Will I lose my retirement savings account?

No, the exemptions under both Federal and State law protect your retirement contributions and all interest that it has accumulated over the years. You must not have changed the identity of the funds by withdrawing the money from your retirement account. If the funds are withdrawn, they are then considered an asset that the Bankruptcy Court can attach to repay your creditors.

What if I still owe on an item and I want to keep it after the bankruptcy?

If a debtor still owes on an item, say a vehicle or home, they can decide to either let the creditor reclaim the item or they can reaffirm the debt. Reaffirmation is a contractual agreement between the debtor and the creditor whereby the debtor agrees to pay for the item they wish to keep after the bankruptcy court discharges the rest of the debts. Once a final agreement is reached between the debtor and creditor, the debtor is obligated to repay the debt in exchange for the right to keep the property. Debtors must be careful not to reaffirm a large sum of debt. Otherwise, they will not experience the relief of bankruptcy.

Will filing for bankruptcy relief eliminate all of my debt?

It is dependant on what type of debt you have accumulated. If your debt is primarily consumer debt like credit cards or a car payment then yes, you probably will get complete relief if you want to be debt free. You may need to give up some of the purchases you made to be completely debt free. However, if your debt is made up of school loans, taxes, child support or spousal support then you will probably not get completely out of debt by filing bankruptcy. Bankruptcy may offer enough relief that you can repay the debt that does survive the discharge in bankruptcy.

Will my credit be ruined forever?

Bankruptcy remains on your credit report, but you will find that many companies are still willing to extend credit. Normally, credit will be offered at a higher interest rate in order to offset the credit risk. The biggest problem is that relief provided by bankruptcy can only be taken advantage of once every six years. If a person accepts all of the credit being offered to them, they will quickly be back to where they started and will be obligated to repay the debt.

Will my creditors stop calling me all the time?

Yes, once the petition is filed the creditors are not allowed to make attempts at collecting the debt. The easiest thing to do is tell the collector that you have spoken with an attorney about bankruptcy and they will usually back off. Once the petition has been filed, give the collector the petition number when they call and that will be the end of the phone calls. Most people will tell you that this gives them the greatest piece of mind and the quickest sense of relief. And, most people will tell you that they wished they had filed sooner then they did.

How long does it take to file bankruptcy?

You play a large part in how long it takes. To prepare a bankruptcy petition, we need information that only you can provide. We have a questionnaire ready for you to take home and fill out. The questions provide us with all the information needed to prepare a petition for filing with the court. If the debtor is filing for relief under Chapter 7, a discharge will typically be issued within three months. If the debtor files a plan under Chapter 13 then the plan must be paid out over 36 or 60 months.

How do I start?

Starting is easy, simply call and schedule an appointment with me, Matthew E. Riggin. We will discuss your options and start you down the path of debt relief.