Spending before filing bankruptcy in Oklahoma is scrutinized by the bankruptcy trustee. This is even more true when the spending involves holiday gifts to friends and family members. The reason for this added scrutiny relates to what bankruptcy actually is and what its intended for. Bankruptcy in Oklahoma is a legal process where a person or company cannot repay their debts to creditors and seeks relief of some or all their debt. If you have decided to file for bankruptcy, avoid these common mistakes that can hurt you. Some of the most common errors by people filing for bankruptcy can put the put getting the bankruptcy approved are:
- Transferring money or property,
- Paying some creditors but not others,
- Buying unnecessary items on credit, making unusual bank deposits, and
- Initiating unnecessary lawsuits.
If you plan to file for bankruptcy sometime before the holidays, be sure to be mindful of the type of gifts you give out. You should be particularly careful with giving cash or high-priced gifts. After all, these gifts can hurt your bankruptcy qualification status. Your income cannot be more than the state median if you want to qualify for Chapter 7 bankruptcy. If you earn too much, don’t worry; it’s not the end of the world. It simply means that you must file for Chapter 13 bankruptcy instead.
Difference Between Chapter 7 and Chapter 13
When filing for Chapter 7 bankruptcy, you are assigned a trustee. A trustee is responsible for selling all your non-exempt assets and using those funds to pay back your creditors. If you own a lot of property that you cannot protect with a bankruptcy exemption, this form of bankruptcy might not be in your best interest. Chapter 13 bankruptcy, on the other hand, differs from Chapter 7 bankruptcy in that you get to keep all your property. Even so, the law requires you to pay your unsecured creditors an amount equal to the value of your non-exempt assets. Fortunately, the payments do not have to be made all at once. Rather, you can pay your unsecured creditors over a three-to-five-year span, depending on the length of your repayment plan. But if your heart is set on keeping certain assets, such as your house and cars, from repossession, then filing under Chapter 7 might be the right move.
In Oklahoma, when filing for bankruptcy, assets you own are either considered exempt or non-exempt assets. You can sell non-exempt assets can be sold and use those proceeds to pay off any debt amount. An exempt asset, however, cannot be sold to satisfy your debt.
Spending Before Filing Bankruptcy
As part of the bankruptcy process, the court will examine past transactions you made within a specified period before you filed. This is known as the “look back” period. Typically, this period is one to two years before you file, but it can sometimes be up to ten years. Therefore, especially around the holidays, it is crucial that you do not purchase huge gifts, such as a new car or fancy items. Generally, clothing, household items, and other common holiday gifts are safe and usually exempt from sale. If someone gives you a significant gift while you are in the middle of filing for Chapter 13 bankruptcy, then you might need to report it. The safest bet is to report the gift to your attorney and avoid spending it until they give you the green light.
Tulsa Bankruptcy Attorneys
Considering filing for Chapter 7 or 13 bankruptcy? If so, contact an experienced bankruptcy attorney near you. Filing for bankruptcy can be a difficult and lengthy process. That is why it is important to not go through it alone and instead have an attorney who understands the process and gets you the best results. Kania Law Office’s experienced bankruptcy attorneys are here to help you. For more insights on whether bankruptcy is right for you or how we can help, touch base with the bankruptcy lawyers at Kania Law Office by calling (918) 743-2233 or contacting us online.