Chapter 7 Is a Liquidation
Video Transcribed: What is a Chapter Seven Bankruptcy? Edward Kelly here, Tulsa bankruptcy attorney for Wirth Law and I’m going to answer that question. Just exactly what is an Oklahoma Chapter Seven?
Well, there’s three main chapters that I deal with and chances are those are the three you’ll deal with. Chapter Seven, by far the one you want to do if you can, that’s a liquidation. What that means is all your debts go away and all your assets get taken, at least up to the value of what you owe. They don’t take more than what you owe.
Bear in mind that said, certain things are exempt like your homestead. So, up to an acre pretty much unlimited in Oklahoma, and up to 160 acres outside of city limits in Oklahoma, we have a great homestead exemption.
Value of a car, per person if it’s a married couple, this is for each of you, $7,500 in equity. Meaning take what it’s worth minus what you owe, that’s your equity. And that’s all that the bankruptcy court could get if they took it from you.
That’s less than $7,500 you’re exempt. Your day to day personal belongings, they’re not interested in those, generally exempt. They’re looking for things of value.
Now, anything else, pretty much up for grabs. Retirement, as long as it’s in a good IRA account, that’s fine. That is exempt as well. I’m not going to go into all the exemptions.
But the idea is out of what is not exempt, so if you got a boat, four wheeler, extra car, land somewhere, a cabin, they’re going to take all that and liquidate it. Liquidate means convert to cash.
They don’t actually turn it into dollar bills, the idea is they’re going to liquidate that and pay off your debts up to what you owe. If you had so many assets that they were worth more than what you owe, you would get to keep whatever was left over once those debts were paid. Most of my clients don’t have any assets.
The most common Oklahoma Chapter Seven is a no asset case, which means you walk away and your debts are zeroed out. So anything secured, meaning if it has collateral attached to it, that creditor has a right to the collateral on the debt.
So, if you’ve got a car and you haven’t made the payments, in a bankruptcy, you will be discharged. That’s what you’re looking for. The magic word is discharged. But they are entitled to get their car back. And that applies to any sort of proper collateral. Although sometimes they try to pull things where they don’t really have collateral and that’s what your attorney’s there to protect you from.
So again, what is a Chapter Seven? Liquidation. Cut and run. This is what you want to do if you can. If you qualify, meaning if you’re below a certain income cap, you turn over any nonexempt assets.
Most cases you won’t have any, doesn’t include your home, doesn’t include your car in most situations and all your debts go away. So simple, straightforward, and what you want to do if you can. As always, you can reach out to me, Edward Kelly, Tulsa bankruptcy attorney for Wirth Law at our website, makelaweasy.com.