Oklahoma Bankruptcy: Know The Facts and Explore The Alternative
As of 2021, the total state debt of Oklahoma was approximately $8.5 billion. This includes both general obligation debt, which is backed by the full faith and credit of the state, as well as revenue bonds and other types of debt. In terms of per capita debt, Oklahoma ranks relatively low compared to other states, with a per capita debt of about $2,142 per person. This is below the national average of approximately $3,246 per person. As of 2021, the state of Oklahoma had a bankruptcy filing rate of 2.94 per 1,000 people. This is slightly lower than the national average bankruptcy filing rate of 2.99 per 1,000 people. In 2020, there were a total of 7,230 bankruptcy filings in Oklahoma. Of those, 5,558 were Chapter 7 bankruptcy filings, which involve liquidating assets to pay off debts. The remaining 1,672 filings were Chapter 13 bankruptcies, which involve reorganizing debts and creating a payment plan to pay off creditors over a period of time.
Bankruptcy Laws in Oklahoma
Bankruptcy laws in Oklahoma are based on federal law, but there are also some state-specific rules and regulations that apply. Here are some key points to know:
- Individuals and businesses can file for bankruptcy under Chapter 7, which involves liquidating assets to pay off debts, or Chapter 13, which involves reorganizing debts and creating a payment plan to pay off creditors over a period of time.
- Oklahoma has its own set of exemptions that can be used to protect certain types of property from being liquidated in a bankruptcy case. These exemptions include protections for homesteads, personal property, and retirement accounts, among other things.
- Oklahoma also has a “wildcard” exemption that can be used to protect any property that doesn’t fall under a specific exemption category, up to a certain dollar amount.
- To file for bankruptcy in Oklahoma, you must complete a credit counseling course from an approved provider within 180 days before filing.
- You will also need to complete a means test to determine whether you qualify for Chapter 7 bankruptcy. This test looks at your income and expenses to determine whether you have enough disposable income to pay off your debts over time.
- Finally, you will need to file your bankruptcy case in the appropriate federal court in Oklahoma. Depending on where you live, this may be the Northern, Eastern, or Western District of Oklahoma.
Considering Business Bankruptcy? What You Need To Know
If you’re considering business bankruptcy in Oklahoma, there are several things to keep in mind. Here are some key points to consider:
- Explore all other options first: Bankruptcy should generally be seen as a last resort, so before considering it, explore all other options for addressing your business’s financial troubles, such as negotiating with creditors, seeking financing, or selling assets.
- Consider which type of bankruptcy is appropriate: As with personal bankruptcy, businesses can file for Chapter 7 or Chapter 11 bankruptcy. Chapter 7 involves liquidating the business’s assets to pay off creditors, while Chapter 11 involves reorganizing the business’s debts and operations to continue operating. Learn More about the 3 main types of bankruptcy
- Understand the impact on your credit and future business opportunities: Bankruptcy will have a significant impact on your credit score and ability to obtain credit or financing in the future. It may also affect your ability to start or operate a business in the future.
- Be prepared for the legal and administrative process: Bankruptcy is a complex legal process that involves filing numerous documents and appearing in court. It can also be expensive, as you will likely need to hire an attorney and pay filing fees.
- Consider the impact on your employees and stakeholders: Bankruptcy can have significant impacts on your employees, customers, and suppliers. Be sure to communicate openly and honestly with all stakeholders and consider the potential consequences of bankruptcy for each group.
- Seek professional guidance: Bankruptcy is a complex and challenging process, and it’s important to seek guidance from experienced professionals, such as attorneys, accountants, and financial advisors, who can help you navigate the process and make informed decisions.
Are All Debts Discharged in Bankruptcy?
While bankruptcy can help individuals and businesses eliminate many types of debts, there are certain debts that are not discharged, or forgiven, in bankruptcy. Here are some common examples:
- Certain tax debts: Some tax debts, such as those for which a return was not filed or those incurred through fraud or willful evasion, are generally not dischargeable in bankruptcy.
- Student loans: Most student loan debts are not dischargeable in bankruptcy, unless the debtor can show that repaying the loans would cause undue hardship.
- Child support and alimony: Debts related to child support and alimony are generally not dischargeable in bankruptcy.
- Debts incurred through fraud or willful misconduct: Debts that were incurred through fraudulent or willful misconduct, such as credit card fraud or embezzlement, are generally not dischargeable in bankruptcy.
- Fines and penalties: Debts owed for fines or penalties imposed by government agencies, such as traffic tickets or court fines, are generally not dischargeable in bankruptcy.
- Debts related to personal injury or wrongful death: Debts related to personal injury or wrongful death claims resulting from the debtor’s willful or malicious conduct are generally not dischargeable in bankruptcy.
How Does Bankruptcy Affect Credit Score and Your Future Ability to Get a Loan?
Bankruptcy in Oklahoma, like in other states, can have a significant impact on your credit score and future ability to get a loan. When you file for bankruptcy, it will be recorded on your credit report and will stay there for up to ten years. This negative mark can cause your credit score to drop significantly, making it harder for you to get approved for credit in the future. In addition, bankruptcy can also make it harder for you to get a loan because it indicates to lenders that you have struggled with debt and may be a higher risk borrower. Lenders may be hesitant to lend you money or may require you to pay higher interest rates or provide additional collateral to secure the loan.
How Does Bankruptcy in Oklahoma Affect Tax Debt?
Bankruptcy in Oklahoma can affect tax debts in different ways depending on the type of tax debt you have and the bankruptcy chapter you file. In general, income tax debts that are more than three years old and meet certain other requirements may be discharged or eliminated in bankruptcy. This means that you may not be required to pay them after the bankruptcy is complete. However, other types of tax debts, such as payroll taxes or tax fraud penalties, are not dischargeable in bankruptcy. If you file for Chapter 7 bankruptcy, your eligible tax debts may be discharged, but you will need to provide documentation and meet specific requirements. If you file for Chapter 13 bankruptcy, you may be able to repay your tax debts over a three to five-year period through a court-approved repayment plan.
Will You Lose Your Home or Car in Bankruptcy in Oklahoma?
Whether or not you will lose your home or car in bankruptcy in Oklahoma will depend on a variety of factors, such as the type of bankruptcy you file, the value of your property, and the equity you have in it. In Oklahoma, you may be able to keep your home or car in bankruptcy by using exemptions. Exemptions allow you to protect a certain amount of equity in your property from being sold or liquidated to pay off your debts. Oklahoma has specific exemptions for both homes and vehicles. If you file for Chapter 7 bankruptcy, you may be required to liquidate some of your non-exempt assets to pay off your debts, including your home or car if you do not have enough exemptions to protect them. However, if you are current on your payments and can continue to make them, you may be able to keep your home or car by reaffirming the debt. If you file for Chapter 13 bankruptcy, you may be able to keep your home or car by including the payments in your court-approved repayment plan. This can allow you to catch up on missed payments and continue to make payments on your property.
Statute of Limitations for Collections in Oklahoma
In Oklahoma, the statute of limitations for collections varies depending on the type of debt. The statute of limitations is the time period during which a creditor can sue you to collect a debt. After the statute of limitations has expired, the creditor is no longer legally able to sue you for the debt. For written contracts and open accounts (such as credit cards), the statute of limitations in Oklahoma is five years from the date of the last payment or written acknowledgment of the debt. For oral contracts and promissory notes, the statute of limitations is three years from the date of the last payment or written acknowledgment of the debt. It is important to note that the statute of limitations only applies to the creditor’s ability to sue you for the debt. It does not prevent the creditor from continuing to contact you or attempt to collect the debt through other means. Additionally, making a payment or acknowledging the debt in writing can restart the clock on the statute of limitations.
Cons of Bankruptcy in Oklahoma
Filing for bankruptcy in Oklahoma can have several disadvantages, including:
- Damage to Credit Score: Filing for bankruptcy can significantly impact your credit score, and it can take several years for it to recover. A lower credit score can make it difficult to obtain loans, credit cards, or even rent an apartment.
- Public Record: Filing for bankruptcy becomes a matter of public record, and this information can be accessed by anyone, including potential employers, landlords, and creditors. This can affect your reputation and your ability to secure future employment or housing.
- Loss of Assets: Depending on the type of bankruptcy you file for, you may be required to sell off some of your assets to pay off your creditors. This can include your home, car, or other valuable property.
- Cost: Filing for bankruptcy can be expensive. You may have to pay filing fees, attorney fees, and other associated costs.
- Limited Access to Credit: Even after bankruptcy, you may find it challenging to obtain credit, and if you do, it may come at a high interest rate.
Compare the Pros and Cons of Bankruptcy: Pros and Cons of Filing Bankruptcy
Why People Regret Filing Bankruptcy
People may regret filing for bankruptcy for several reasons, including:
- Damage to Credit Score: As mentioned earlier, filing for bankruptcy can have a significant impact on your credit score. This can make it difficult to obtain loans, credit cards, or even rent an apartment in the future.
- Loss of Assets: Depending on the type of bankruptcy you file for, you may be required to sell off some of your assets to pay off your creditors. This can include your home, car, or other valuable property.
- Public Record: Filing for bankruptcy becomes a matter of public record, and this information can be accessed by anyone, including potential employers, landlords, and creditors. This can affect your reputation and your ability to secure future employment or housing.
- Stigma: There is still a significant stigma attached to bankruptcy, and many people feel ashamed or embarrassed about filing. This can affect their self-esteem and their relationships with others.
- Emotional Toll: The process of filing for bankruptcy can be emotionally draining and stressful. It can be challenging to come to terms with the fact that you are unable to pay off your debts and that you need to seek legal help to resolve the situation.
What Are The Alternatives To Bankruptcy?
If you do not qualify for bankruptcy in Oklahoma, there may be other options available to you to help address your debt issues. One of which is debt settlement. Debt settlement involves negotiating with creditors to settle debts for less than the full amount owed. There are some potential benefits to debt settlement over bankruptcy that may make it a more favorable option for some individuals.
- No BK on your credit report: Filing for bankruptcy shows on your credit report for up to 10 years. On the other hand, debt settlement does not show as a bankruptcy.
- Cost: Filing for bankruptcy can be expensive, with filing fees, attorney fees, and other costs adding up quickly.
- Emotional Impact: People report horror stories of the negative emotional impact of BK.
- With a bankruptcy for the rest of their life: Employers or lenders can ask if someone has filed BK for the rest of their life. It is much less likely to be asked if one ever used debt settlement to pay back an agreed to amount.
- Control: With debt settlement, you may have more control over the process and negotiations with your creditors, whereas with bankruptcy, a court will make the final decision.
- Less severe consequences: Filing for bankruptcy can have significant consequences, such as the liquidation of your assets, whereas debt settlement may allow you to negotiate a more manageable repayment plan while keeping your assets.
Bankruptcy vs. Debt Relief: What’s Right For You and How We May Be Able To Help
CuraDebt – An Alternative To Consider
CuraDebt, a professional debt settlement firm, is a great alternative to bankruptcy. We have a team of debt professionals who are ready to help you better understand and potentially eliminate your debts. Contact us today for your free consultation. 1-877-850-3328