Comparison of Chapter 7 vs. Chapter 13 in Oklahoma
If you're a resident of Oklahoma who's struggling with mounting credit card, medical or other debts, bankruptcy may be your best option for dealing with the situation. Consumers may file for Chapter 7 or Chapter 13 bankruptcy protection, depending on the their debts, income and assets. If you think bankruptcy is the solution to your financial problems, it's important to understand the difference between the two to determine which chapter to file.
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Function
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Chapter 7 and Chapter 13 bankruptcy function very differently. Chapter 7 bankruptcy is known as a liquidation bankruptcy because you agree to surrender some or all of your assets in exchange for erasing your debt. This type of bankruptcy is typically suitable for people with little or no income, few assets and no means of repaying what they owe. In a Chapter 13 bankruptcy, you are allowed to keep your assets but you must agree to repay some or all of what you owe over a three- or five-year period. Chapter 13 is typically preferable if you need help in making certain debts more manageable. Filing either chapter also shields you with protection from your creditors through an automatic stay against collection actions.
Eligibility
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To be eligible for Chapter 7, you must pass a means test. The means test looks at your income for the previous six months and compares it against federal median income guidelines by household size. For Chapter 7 cases filed after November 1, 2010, a single debtor in Oklahoma is allowed a maximum income of $36,289. A family of four is allowed a maximum income of $63,004. If your income exceeds the allowed limit, you may have to consider Chapter 13 instead. To file Chapter 13, you must have a regular source of income that exceeds your monthly expenses. As of 2010, your total unsecured debt may be not more than $360,475. Your total secured debt must not exceed $1,081,400.
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Filing Requirements
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The filing requirements vary only slightly for Chapter 7 and Chapter 13. All Oklahoma residents are required to attend credit counseling within the six months prior to filing for either chapter. All bankruptcy petitions must be filed with the Northern, Eastern or Western district bankruptcy court, depending on where you live. As of 2010, the filing fee for Chapter 7 was $299. The fee for Chapter 13 was $274. When you file, you must submit proof of income, a list of debts and assets, a list of creditors, a statement of financial affairs and your prior year's tax return. Chapter 13 debtors must also submit a detailed plan outlining how they will repay their debts.
Discharge
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To receive a discharge of a Chapter 7 or Chapter 13 bankruptcy in Oklahoma, you must complete a course in financial management within 45 days of filing. You must also attend a meeting of creditors. At this meeting, the bankruptcy trustee in charge of overseeing your case will ask you questions about your financial situation to determine whether to recommend you for discharge. A Chapter 7 case is typically discharged within six months of filing and remains on your credit for up to ten years. A Chapter 13 case cannot be discharged until all your plan payments are made, unless you can prove you are experiencing an undue financial hardship. Chapter 13 bankruptcy can remain on your credit for up to seven years after discharge.
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References
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