Introduction

Means Test

Exemptions

Types of Debts

Filing

Costs

Basic Advice

Introduction

The "Means Test"

Exemptions

• Your home, regardless of value (if you've lived there, or in another Oklahoma homestead, for at least the past 40 months, otherwise up to $125,000 of equity value)
• All household and kitchen furniture
• Cemetery lots
• Farm equipment not to exceed $10,000 in value
• Tools of the trade not to exceed $10,000 in value
• Books, portraits and pictures of the household
• Up to $4,000 of wearing apparel per person
• Up to $3,000 of value in wedding and anniversary rings
• All professionally prescribed health aids
• Up to $7,500 wholesale equity or value in a motor vehicle per person ( which can be combined into one $15,000 vehicle for joint filers)
• Guns, not to exceed $2,000.00 in aggregate value, that are held primarily for the personal, family or household use of such person or a dependent of such person
• 75% of any unspent portion of your last 3 months of take-home pay. (Don’t worry about what you’ve already spent on living expenses and bills in the past three months! This exemption applies to whatever money remains in your bank account or in your possession ... and if that remaining amount is less than $2000 or so, you’re probably okay.).
• Your right to receive child support and alimony
• Any tax exempt retirement plan, including a 401K, Keogh, and IRA's, regardless of value or total
• The first $50,000 of any personal injury or wrongful death claim or lawsuit.
• All workers' compensation proceeds (100% exemption).
• Social Security, VA Disability, tax exempt benefits, most public service pensions
• Anything you receive from the federal Earned Income Tax Credit.  Remember, your regular income tax refund is not exempt – only the Earned Income Credit.  However, if your upcoming tax refunds – federal and state – are below the $1500 - $2000 range (not counting whatever you get from the Earned Income Credit.), the bankruptcy trustee usually won’t take your tax refund.
  
  (Many other exemptions are available, especially for farm animals and supplies) 

Types of Debts

• SURRENDER or return the property to the creditor in full satisfaction of the debt.  Even if the creditor sells the property for less than the debt, all the debt is discharged.  You must return the collateral within 45 days of filing bankruptcy.
•  REAFFIRM the debt and continue to make payments according to the original terms of the note.  If you want to reaffirm, the creditor will normally require that you be current on your debt, or at least close to current.  Thereafter, the reaffirmation can be rescinded (terminated) within 60 days of filing if you change your mind.  If you default on the reaffirmation, the creditor has the right to repossess the property, sell it, and come after you for any deficiency.  Therefore, you should be careful when reaffirming any debt.
• REDEEM the property by paying the secured creditor the value of the property held as security.  The creditor is not required to refinance a redemption.  The redemption value is the current fair market value of the property and has nothing to do with the total due to the creditor.
• FILE A CHAPTER 13.  In a Chapter 13, you can refinance the debt over a 3 or 5 year period. With secured debts, if the loan is over 2-1/2 years old (for motor vehicles) or over 1 year old (all other personal property) , the debt can be "crammed down" to the fair market value of the collateral. In the case of a home mortgage, bankruptcy law says you cannot change the terms of the note and mortgage (the interest rate, the monthly payment, etc). However, on "unsecured debts" (credit cards, medical bills, small loans), creditors are usually paid only a small percentage.

Filing Bankruptcy

- Copies of your drivers license and Social Security card (or 1099 or W2).

- Copies of the last 3 months statements for all checking, savings, or credit union accounts you have (or had) at any financial institution.

- Copies of all brokerage account statements for the past 12 months

- Copies of loan agreements with any creditor having a lien on your home, or your car, boat, or other personal property.

- Legal description of all real property (land) that you own. This can be found on the deed or tax statement.

- Titles to all vehicles, boats, trailers (including mobile homes) in your name.

- Pay stubs or other records showing the gross income of all people in your household for the past 6 months (For example, if you plan on filing your bankruptcy in December, we’ll need to know the gross income from June through November).

- For everyone in your household, all pay stubs or income records for the 60-day period immediately preceding the date that we file your bankruptcy.

- Copies of the most recent bills from your creditors.

- Copies of your federal and state income tax returns for the past two years

Costs

Basic Advice

You can only file a Chapter 7 every 8 years plus 1 day from the previous filing. Also, if you had a Chapter 7 or Chapter 13 case dismissed (as opposed to having your debts "discharged"), you’ll usually have to wait at least 1 year before you can file another bankruptcy.

If you are going to reaffirm and keep property with a mortgage or lien on it, unless we tell you otherwise, YOU MUST CONTINUE TO MAKE THE PAYMENTS AFTER FILING! For example, if you have decided to keep your house and reaffirm the debt, you need to keep current on the payments. Also, if you are going to keep your car, keep it insured. If you are not going to keep it and it is not insured, stop driving it.

If you are going to surrender property, stop making the payments on it. Don't waste your money! Also, if you know you are going to file bankruptcy, stop making payments on any unsecured debt (credit cards, medical bills, signature loans, etc.)

Prior to filing bankruptcy, do not accept certified mail unless you’re 100% sure it’s something "good."

Income tax debts (federal and state) can be discharged in bankruptcy. In general, if your return was filed more than 3 years ago, the tax debt is fully dischargeable in bankruptcy. However, there are many exceptions to this, especially with late-filed returns and assessment dates, so you’ll need to discuss your particular tax situation with one of our attorneys. Remember, you cannot discharge taxes owed for any years in which you didn’t filed a return. Taxes not dischargeable in a Chapter 7 may be repaid in a Chapter 13 Plan over 3 or 5 years without interest (unless a lien was filed).

Student loans are a special problem. They may be discharged if the repayment creates a severe economic hardship on you. This is very difficult for you to prove, and the law requires you to start an adversary proceeding to prove the hardship. This means we must litigate the case in the Bankruptcy Court, and there will very likely be a trial conducted before the Bankruptcy Judge. We charge an additional $200.00 per hour for adversary proceedings, and require a retainer of $1,500.00 to initiate this kind of action. If you want to discharge a student loan, we’ll discuss the process with you and help you decide if it's really in your best interests to spend this much money (usually it is not).

At the time of filing, the law places an "automatic stay" in effect, and all creditors are stopped from proceeding to collect their debt (unless you’ve filed a previous bankruptcy case that was dismissed by the Court within the past one year). Creditors cannot call you, sue you, continue a lawsuit, or continue a garnishment. After your initial consultation and payment, you should refer all creditors to this office. Remember to get the name and phone number of any persistent or abusive creditors, so we can put a stop to their harassment.

Your first payment in a Chapter 13 is due 30 days from the date of the filing of the bankruptcy petition, even if the Plan has not been officially confirmed by the Court. The Court will routinely ask if you are current with your Plan payments, and will dismiss your case if you are not. You must make all the payments as provided in the Plan.

If you bank at a credit union, you would be wise to remove all funds that you’ll need for survival. Credit unions will often claim a setoff, and freeze your share accounts until you reaffirm the debt. If you do not reaffirm, they may try to keep the balance of the account.

You may add creditors to the bankruptcy until your case is closed by the Court. To add on creditors, you must come to the office and make arrangements to pay the additional fees and complete our forms.

You MUST be at the Meeting of Creditors. If both you and your spouse file jointly, both of you must attend the hearing. The Trustee cannot excuse one of the debtors from being present, even if the creditors have no objection. You will need to obtain a court order or complete interrogatories (answer written questions) if there’s a valid reason why one of the debtors cannot be present; otherwise, the hearing cannot be concluded. You must contact our office as soon as possible in the event of these extenuating circumstances (e.g.; military, incarceration, terminal illness.)

At a minimum, you must bring the following to the Meeting of Creditors:

(1) Picture ID (such as a Driver's License or Passport);

(2) Your Social Security Card (or W-2 or 1099 form);

(3) Copies of any Titles (vehicle(s) and mobile home), along with proof of insurance.

Certain trustees require additional documents. If this applies to your case, we or your trustee will send you a letter telling you what else you need to bring. Meanwhile, don’t worry about your hearing – we’ll be there with you.

MEETING OF CREDITORS - When you go to your First Meeting of Creditors, your trustee will ask you several basic questions under oath. Here are the usual questions asked by trustees at these meetings:

State your name, social security number, and current address for the record.

Have you read the Bankruptcy Information Sheet provided by the United States Trustee? (in this pamphlet)

Did you read the petition, schedules, statements, and related documents before you signed them?

Did you sign the petition, schedules, statements, and related documents?

Are you personally familiar with the information contained in the petition, schedules, statements, and related documents?

To the best of your knowledge, is the information contained in the petition, schedules, statements, and related documents true and correct?

Are there any errors or omissions to bring to my, or the Court’s attention at this time?

Are all of your assets identified on the schedules?

Have you listed all of your creditors on the schedules?

Have you filed bankruptcy before? (If so, the trustee will ask you when and where, to make sure you are eligible for another discharge).

SOME OTHER GENERAL QUESTIONS (Often asked when deemed appropriate by the trustee.)

1. Do you own or have any interest whatsoever in any real estate?

If own: When did you purchase the property? How much did the property cost? What are the mortgages encumbering it? What do you estimate the present value of the property to be? Is that the whole value or your share? How did you arrive at that value?

If renting: Have you ever owned the property in which you live and/or is its owner in any way related to you?

2. Have you made any transfers to any property or given any property away within the last one year period (or such longer period as applicable under state law)?

If yes: What did you transfer? To whom was it transferred? What did your receive in exchange? What did you do with the funds?

Depending upon the facts in your case, the trustee may ask you additional questions. If we believe this will be likely, we’ll work with you and help you anticipate those questions and answer them honestly.

BANKRUPTCY INFORMATION SHEET - At your hearing, the trustee will show you a sheet of paper with substantially the same information as you’ll read in the following section. This is called the "Bankruptcy Information Sheet." Your trustee will ask you if you read and understood it. -- here it is:

BANKRUPTCY INFORMATION SHEET
BANKRUPTCY LAW IS A FEDERAL LAW.
THIS SHEET GIVES YOU SOME GENERAL INFORMATION ABOUT WHAT
HAPPENS IN A BANKRUPTCY CASE. THE INFORMATION HERE IS NOT COMPLETE.

WHEN YOU FILE BANKRUPTCY:

You can choose the kind of bankruptcy that best meets your needs:

Chapter 7 - A trustee is appointed to take over your non-exempt property. Any non-exempt property of value will be sold or turned into money to pay your creditors. You will be able to keep all of your exempt property, as well as any non-exempt property (e.g., boats, second homes, luxury items) in which you have little or no equity.

Chapter 13 - You can usually keep your property, but you must earn wages or have some other source of regular income and you must agree to pay part of your income to your creditors. The Court must approve your repayment plan and your budget. A trustee is appointed and will collect the payment from you, pay your creditors, and make sure you live up to the terms of your repayment plan.

Chapter 12 - Like chapter 13, but it is only for family farmers.

Chapter 11 - This is used mostly by businesses. In chapter 11, you may continue to operate your business, but your creditors and the Court must approve a plan to repay your debts. There is no trustee unless the Judge decides that one is necessary; if a trustee is appointed, the trustee takes control of your business and property.

If you have already filed bankruptcy under chapter 7, you may be able to change your case to another chapter.

Your bankruptcy may be reported on your credit record for as long as ten years. It can affect your ability to receive credit in the future.

WHAT IS A BANKRUPTCY DISCHARGE AND HOW DOES IT OPERATE?

One of the reasons people file bankruptcy is to get a "discharge." A discharge is a Court order which states that you do not have to pay most of your debts. Some debts cannot be discharged. For example, you cannot discharge debts for the following:

* certain taxes;

* most student loans;

* child support;

* court fines and criminal restitution;

* alimony;

* personal injury caused by driving drunk or under the influence of drugs.

The discharge only applies to debts that arose before the date you filed. Also, if the Judge finds that you received money or property by fraud, that debt may not be discharged.

It is important to LIST ALL OF YOUR PROPERTY AND DEBTS IN YOUR BANKRUPTCY SCHEDULES. If you do not list a debt, for example, it is possible the debt will not be discharged.

The Judge can also deny your discharge if you do something dishonest in connection with your bankruptcy case, such as destroy or hide property, falsify records, or lie, or if you disobey a Court order.

You can only receive a Chapter 7 discharge once every eight years. No one can make you pay a debt that has been discharged, but you can voluntarily pay any debt you wish to pay. You do not have to sign a reaffirmation agreement or any other kind of document to do this.

Some creditors hold a secured claim (for example, the bank that holds the mortgage on your house or the loan company that has a lien on your car). You do not have to pay a secured claim if the debt is discharged, but the creditor can still take the property.

WHAT IS A REAFFIRMATION AGREEMENT?

Even if a debt can be discharged, you may have special reasons why you want to promise to pay it. For example, you may want to work out a plan with the bank to keep your car. To promise to pay that debt, you must sign and file a reaffirmation agreement with the Court. Reaffirmation agreements are under special rules and are voluntary. They are not required by bankruptcy law or by any other law. Reaffirmation agreements –

! must be voluntary;

! must be in your best interest;

! must not place too heavy a burden on you or your family; and

! can be canceled anytime before your discharge or within 60 days after the agreement is filed with the Court, whichever gives you the most time.

If you are an individual and you are not represented by an attorney, the Court must hold a hearing to decide whether to approve the reaffirmation agreement. The agreement will not be legally binding until the Court approves it.

If you reaffirm a debt and then fail to pay it, you owe the debt the same as though there was no bankruptcy. The debt will not be discharged and the creditor can take action to recover any property on which it has a lien or mortgage. The creditor can also take legal action to recover a judgment against you.

THE TRUSTEE IN YOUR CASE IS NOT RESPONSIBLE FOR GIVING LEGAL ADVICE.

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