When a bankruptcy case is filed, all of the debtor’s property automatically becomes property of their bankruptcy estate, and a federal trustee is appointed to oversee the administration of this estate. However, exemptions in bankruptcy law allow individuals to retain many items of property that would otherwise be subject to levy by a bankruptcy trustee. For most individuals and families this means that a significant amount of their property is exempt.
Although some states allow bankruptcy filers to utilize exemptions pursuant to the federal bankruptcy code, Oklahoma law requires the use of Oklahoma’s state law exemptions, barring the use of exemptions that could be claimed federally. Although exceptions vary based on state and federal law, bankruptcy is a debtor-friendly process and most items necessary for basic living can almost always be claimed as exempt.
For most individuals and families, primary assets such as home and cars can be retained through the bankruptcy process. Under Oklahoma law in a standard Chapter 7 bankruptcy, individuals have up to $7,500 per filing party towards their vehicle. In the event a lender still has a lien against a car, individuals have the option to either abandon the vehicle or retain the car while continuing to make their regularly scheduled payments.
Chapter 13 bankruptcy allows debtors to pay their debts over the course of a 3 to 5-year period under more favorable conditions than repayment outside the bankruptcy context. Chapter 13 bankruptcy allows for the same exemptions as Chapter 7 bankruptcy, with the additional benefit of allowing debtors who have fallen behind on car and/or home payments to retain their collateral while paying off debts through their monthly plan payments.
Common household items such as clothing, furniture and electronics are exempt in bankruptcy proceedings, as well as firearms with a total value of up to $4,000 (in Oklahoma, but not in all states). Pensions, retirement accounts, wages, beneficiary proceeds from insurance, education savings accounts, and more are also common examples of exemptions that fall under the umbrella of exemptions under current Oklahoma law.
Although the bankruptcy process may seem intimidating, with the assistance of an experienced bankruptcy attorney you can remove the burden of crippling debt while maintaining a normal lifestyle for yourself and your family.