There’s Two Main Factors, Your Income and Your Assets
Video Transcribed: Do I qualify for a Chapter 7 bankruptcy in Oklahoma? I’m Edward Kelley, Oklahoma bankruptcy attorney at Wirth Law where we make law easy, makelaweasy.com. And I’m going to answer that question, how you can tell if you qualify for an Oklahoma Chapter 7?
Well, there’s two main factors, your income and your assets. One is a rather hard line whether you qualify or not, that’s your income. And then your decision of whether you want to do a 7 will have to do with your assets. So, income.
The cutoff for a 7, meaning if you make more than this amount, you are not supposed to be able to do a 7, is based on what are called IRS standards, which change often quarterly.
And the IRS determines this is basically the poverty line for various household sizes.
So I have a little chart that I go to that’s updated periodically and if your case is being filed in the state of Oklahoma for example right now, with a household of one, generally your cutoff is going to be in the mid to high forties. It’s a little variable.
Now, if you’re just a bit over that amount, expenses can bring you down. So in Chapter 7, you use dollar for dollar mortgage and car figures.
So if you’ve got a high mortgage payment or a high car payment, or both, even if you’re a little bit over, you might be able to be pulled down.
So again, for one person, your cutoffs going to be in the forties, add about $10,000 on top of that for each additional person, two fifties, three sixties, et cetera.
So if you get there on the income, then the question is, do I want to do this? And that’s really a question of what assets you have.
So you’re exempt, meaning you get to keep your home in Oklahoma. We have a great exemption. If you’re on an acre or less in the city, pretty much unlimited.
If you’re outside the city, you can have up to 160 acres. If you have more than an acre in the city, you want to be careful, be sure and consult your attorney on that one. Vehicles, $7,500 in equity.
So if you own it out right, it shouldn’t be worth more than $7,500. Of course that’s a pretty fluid number. Hard to pin that down, so if you’re close you’re probably all right.
Equity meaning, so you’ve got a $17,500 car it’s worth $17,500, but you owe $10,000. Take that $17,500 minus the $10,000 you owe, you have $7,500 in equity. The value. So you’re okay.
Now, if it’s a $27,500 value car and you only owed $10,000, well, then you have $17,500 equity, and you’re going to have a problem.
The trustee can convert that car and compensate you $7,500 or try to make a deal with you to keep it. But then you’re going to have some issues.
And now your household belongings, generally that kind of stuff you don’t need to worry about. That’s exempt as personal belongings.
But we get into tractors, four wheelers, jet skis, boats. Again, if anything has value that can be taken, that’s not going to be exempt in a Chapter 7.
So if you’ve got a boat that’s paid off and jet-skis, you have any land that you don’t live on, that’s not your homestead, because that home being exempt assumes that you live there, then those things can be taken.
So if you hit the income requirements, meaning you’re below that cutoff for the size of your family. And if, for example, you only have a car at home or maybe not even those, and you’re under the exemption caps and you don’t stand to lose anything. No brainer. Do a 7.
If you’re going to have to give up some assets, that’s when you want to start thinking about it and maybe start thinking more strategically longterm. We’ll talk about that in a future video.
So again, I’m Edward Kelley, Tulsa bankruptcy attorney for Wirth Law. You can always reach out to me at makelaweasy.com if you need a bankruptcy attorney.
