Tulsa Chapter 7 Bankruptcy

Tulsa Chapter 7 Bankruptcy Requirements Using the Means Test

Chapter 7 bankruptcy is one of the most attractive forms of bankruptcy because it allows for the complete discharge of most unsecured debts. Many liken a Tulsa Chapter 7 bankruptcy to starting fresh with a clean slate. However, in order to be able to be eligible for a Chapter 7 bankruptcy, you must have an income below the federal mandated threshold. In order to calculate eligibility, the bankruptcy judge will use the means test. If you fail the means test, you will not be permitted to proceed with your Chapter 7 petition. Instead, you should explore other options, such as a Chapter 13 bankruptcy, which is targeted more towards debtors who have high incomes but struggle to pay their bills.

The means test uses a special formula that considers a number of factors, including income, assets, expenses, and debts. It is not a simple income level threshold. As such, by using the skills and expertise of a bankruptcy attorney, you may be able to structure your assets to not only become eligible for Chapter 7 but also protect the property that is most valuable to you from your creditors.

The means test is not designed to weed out people who are poor. Rather, the means test weeds out people who are able to pay their debts. If you are wealthy but have astronomical expenses, you may be unable to pay your debts. If your monthly income is below your state median income level for the state of Oklahoma and your specific household size, you have established prima facie eligibility. You can file for Chapter 7 without any further calculations in the means test.

If your monthly income is over the median, you may still qualify. The means test will first calculate your monthly income. This is known as your current monthly income (CMI). To calculate your CMI, the means test will take the average of your monthly income for the past 6 months. The following are all included in your monthly income:

 

• Wages, tips, overtime pay, commissions, bonuses


• Investment income such as interest or dividends


• Rental property income


• Retirement income


• Pension income


• Net income from your personal business


• Child support


• Alimony


• Worker’s compensation


• Unemployment


• Social Security payments


• Disability payments


• Annuities

The means test will then calculate your monthly expenses. The means test will subtract your average monthly expenses from your average monthly income. The result is your disposable income. Disposable income can be used to pay your debts. If your disposable income is too high, you will likely be able to pay some or all of your debts and thus won’t be eligible for Chapter 7.

An online means calculator can help you do a quick means test. However, it is best to consult with a bankruptcy attorney to ensure you are including all eligible income and expenses.

Tulsa Chapter 7 Bankruptcy Consultation

If you are eligible for Tulsa Chapter 7 bankruptcy according to the means test, you may proceed with your filing. You will be required to undergo credit counseling prior to filing, and if your credit counselor drafts a debt management plan, you must include that as part of your filing. However, just because you are eligible does not mean that Chapter 7 bankruptcy is the right course of action for you. The Oklahoma bankruptcy court in a Chapter 7 proceeding may demand that you liquidate your assets to satisfy creditors before receiving the benefit of a discharge. In addition, Chapter 7 bankruptcy will remain on your credit report for 8 years. Only a bankruptcy attorney can properly counsel you on your options and advise you on your best course of action.

Tulsa Chapter 7 Bankruptcy

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Judgement Liens Oklahoma Bankruptcy

Forgiving Judgement Liens Oklahoma Bankruptcy

For many people considering filing for bankruptcy, the catalyst is being sued by a creditor.  For creditors who have exhausted all other collection options, filing and winning a lawsuit gives them powerful tools to use against the debtor as a “judgment creditor”.  The two most widely used, and most concerning for debtors, are garnishment and judgment liens. Judgement liens and Oklahoma bankruptcy go hand in hand. Many times judgement liens are what causes the bankruptcy and the bankruptcy will discharge most if not all judgement liens.

Garnishments come in two forms:  bank garnishments and wage garnishments.  A bank garnishment occurs when a judgment creditor takes funds directly from the debtor’s bank accounts.  If a judgment creditor believes that the debtor has funds with a particular bank, be it in checking, savings, or some other type of account, the judgment creditor will send a request to the bank to confirm whether or not those funds exist.  The bank is required to comply with this request and answer truthfully.  If funds do exist, the creditor can then take from those funds until they are exhausted, or the judgment is satisfied.  The only silver lining for a debtor is that these requests are singular events.  The judgment creditor must make a new request every time they wish to seek funds from a bank account in this manner.

That is not the case with wage garnishments.  If a judgment creditor knows that the debtor is employed, the creditor can use a similar type of request as with a bank garnishment, only this one is directed at the debtor’s employer.  This “request” is actually an order from the court directed at the employer to withhold a portion of the debtor’s net pay, up to 25%, and pay it directly to the creditor each pay period until the judgment is satisfied.  The employer must comply with the order and must set aside the funds specified by the court.  Furthermore, this is ongoing.  The creditor is not required to file a new garnishment with every paycheck, though they would be required to file one with a new employer if the debtor switched jobs.

The other tool that judgment creditors get access to is a judgment lien.  A judgment lien is a fall back measure that can insure the creditor is eventually paid, even if they cannot effect a wage or bank garnishment.  If the judgment creditor determines that the debtor owns real estate, be it a home, business, or empty plot of land, they can file their judgment with the appropriate county land records office.  By filing their judgment, the creditor “clouds the title”.  What that means is that the property cannot be sold to another buyer without first satisfying the judgment, as a real estate transaction can’t occur without clear title.   That way, even if the creditor cannot collect through garnishments, they can still collect when the property is eventually sold.

These collection methods can sound drastic and unfair to debtors.  Fortunately, there is a solution for most of them in bankruptcy.  As for garnishments, filing bankruptcy cuts off all future garnishment attempts.  That cut off is permanent for any debt that is dischargeable, though it should be noted that for a non-dischargeable debt, the cut off only lasts during the pendency of the bankruptcy, usually about 90 days.  This applies to both wage and bank garnishments.  Filing, however, does not force the creditor to return money garnished before the bankruptcy was filed.  Those funds were legally collected and are rightfully the property of the creditor.  Thus, it is important to file as quickly as possible when faced with a potential garnishment situation happens (ideally, before the lawsuit is even filed).

Judgment liens can be dealt with in bankruptcy as well, assuming the debt is dischargeable, but it requires an additional process.  While the bankruptcy may discharge the debt underlying the lien, it does not, on its own, remove the lien.  For that to take place, a “motion to avoid lien” must be filed.  The most critical step in filing a motion to avoid lien is determining that one needs to be filed in the first place.  Therefore, it is strongly advised that any potential bankruptcy candidate who owns real estate contacts their county land records office to check whether any liens (other than an authorized lien, like a mortgage) have been placed against the property.  By knowing that a motion to avoid lien needs to be filed during the initial bankruptcy proceedings, debtors can save a great deal of time and money by avoiding having to reopen the bankruptcy years later to remove the lien before sale of the property.

Lawsuits can be a scary prospect for potential Oklahoma bankruptcy candidates, but they don’t have to be.  With smart, fast action and good planning, the consequences of a creditor’s lawsuit can be avoided in bankruptcy.

Judgement Liens Oklahoma Bankruptcy; Free Consultation

If you are considering filing a bankruptcy and need a free consultation regarding judgement liens Oklahoma bankruptcy call us today. Call 918-739-8984

Judgement Liens Oklahoma Bankruptcy

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