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Bankruptcy: Oklahoma

Filing bankruptcy in Oklahoma gives debtors an opportunity to overcome overwhelming debt and allows creditors to be repaid to the extent that the debtor’s property value or earnings permit. 14,486 bankruptcies were filed in Oklahoma in 2010, ranking Oklahoma 31st in the country for the number of bankruptcy filings per capita. 83% of Oklahoma’s bankruptcy petitions in 2010 sought protection under Chapter 7 bankruptcy.

Filing Bankruptcy in Oklahoma

Federal law governs bankruptcy proceedings in Oklahoma, and as such all bankruptcy cases are filed in the US Bankruptcy Courts located in Tulsa, Okmulgee, Lawton and Oklahoma City.

Whereas federal courts have jurisdiction over bankruptcy proceedings, Oklahoma law prohibits petitioners from using the exemptions listed in the U.S. bankruptcy code, instead requiring debtors to choose from the state exemptions list. An Oklahoma bankruptcy attorney can help explain to debtors what personal property the exemptions permit the petitioner to keep in bankruptcy, and what must be sold.

Chapter 7 Bankruptcy, Oklahoma

Chapter 7 bankruptcies in Oklahoma are the most common bankruptcy filing.  Chapter 7 is best suited to petitioners who lack significant assets such as investments or substantial equity in a home, since a Bankruptcy Trustee may liquidate personal property that isn’t protected by Oklahoma’s bankruptcy exemptions. Liquidation takes place when the Trustee converts personal assets to cash to distribute to creditors. Oklahoma’s Chapter 7 bankruptcy law allows debtors to keep some essential property and the exempt assets are off-limits to creditors seeking repayment.

The vast majority of Chapter 7 cases are “no-asset” cases where no property is taken.

Oklahoma Bankruptcy Exemptions

Oklahoma bankruptcy law designates specific property exemptions that allow debtors to keep certain personal property and assets so they may move forward from bankruptcy as productive members of society.  This means creditors cannot force debtors to sell the shirt off their back to settle a debt.  Bankruptcy in Oklahoma permits petitioners to choose exemptions only from the state list.

Property exemption values are subject to change, so it is recommended that individuals or couples considering bankruptcy seek the counsel of an Oklahoma bankruptcy attorney and discover the options open to them.  Oklahoma bankruptcy exemptions include:

Oklahoma Homestead Exemption

  • Unlimited Value: Real property or manufactured home; property cannot exceed 1 acre in city, town, or village, or 160 acres elsewhere
  • $5,000 total: Real property or manufactured home, if more than 25% of total sq. ft. area used for business purposes
  • Debtor is permitted to rent homestead under the condition no other residence is acquired

Oklahoma Personal Property Exemption

  • $4,000 total: Clothing
  • $3,000 total: Wedding and anniversary rings
  • $2,000 total: Guns for household use
  • $7,500 total: Motor vehicle
  • Health aids
  • Books, portraits and pictures
  • Household and kitchen furniture, personal computer and related equipment
  • College savings plan interest
  • Deposits in an IDA (Individual Development Account)
  • Federal earned income tax credit
  • Food and seed for 1 year’s crops
  • War bond payroll savings account
  • Livestock for personal or family use: 5 dairy cows and calves under 6 months; 100 chickens; 20 sheep; 10 hogs; 2 horses, bridles and saddles; forage and feed to last 1 year
  • $50,000 total: Personal injury and wrongful death recoveries
  • Prepaid funeral benefits
  • Burial plots

Oklahoma Tools of Trade Exemption

  • $10,000 total: Implements needed to farm homestead, tools, books and apparatus

Oklahoma Wage Garnishment Exemption

  • 75% of wages earned in 90 days prior to filing bankruptcy (Low-income debtors may be authorized for more)

Oklahoma Public Benefits Exemption

  • Social Security
  • Public assistance
  • Workers’ and Unemployment compensation
  • Crime victims’ compensation

Oklahoma Insurance Exemption

  • Annuity benefits and cash value
  • Assessment or mutual benefits
  • Fraternal benefit society benefits
  • Group life policy or proceeds
  • Life, health, accident and mutual benefit insurance proceeds and cash value, if clause prohibits proceeds from being used to pay beneficiary’s creditors
  • Limited stock insurance benefits
  • Funeral benefits prepaid and placed in trust

Oklahoma Pensions and Retirement Savings Exemption

  • Disabled veterans
  • Firefighters, Police officers, Law enforcement employees
  • County employees, Public employees, Teachers
  • Judges
  • ERISA-qualified benefits, IRAs, Roth IRAs, Education IRAs and Keoghs
  • Tax exempt benefits

Oklahoma Miscellaneous Exemption

  • Alimony, child support
  • Beneficiary’s interest in a statutory support trust
  • Property of business partnership
  • Liquor license

Chapter 13 Bankruptcy, Oklahoma

In 2010, 17% of petitioners filed for protection under Chapter 13 bankruptcy in Oklahoma.  Filing Chapter 13 bankruptcy in Oklahoma starts a financial reorganization process in which a court-appointed Trustee negotiates with creditors and implements a 3-5 year repayment plan using the debtor’s future earnings to repay creditors.  Chapter 13 petitioners in Oklahoma keep most – or all – of their property.

How to File Bankruptcy in Oklahoma

Qualifying for property exemptions should be a key point in deciding whether to file for bankruptcy protection from creditors. The aim is to protect major assets and discharge debts. Because each bankruptcy case is unique, an Oklahoma bankruptcy attorney can inform debtors of their options regarding Chapter 7 and Chapter 13 bankruptcies.

Bankruptcy Attorney: Oklahoma

It is the bankruptcy petitioner’s responsibility to know their rights and commitments as a debtor.  The bankruptcy process can be upsetting and complex for some.  An Oklahoma bankruptcy attorney can guide petitioners through bankruptcy exemption procedures and provide valuable advice on the practicality of bankruptcy options for each financial situation.