How Do I Know if Chapter 7 Bankruptcy is Right for Me?

Chapter 7 bankruptcy is one of several types of bankruptcy available in Oklahoma. When financial stress becomes too much to handle, bankruptcy may provide a way forward. Chapter 7 bankruptcy, sometimes called a “fresh start” or “liquidation” bankruptcy, is one of the most common options. But how do you know if this is the right option for you?

What Is Chapter 7 Bankruptcy?

Chapter 7 is designed to help individuals eliminate most unsecured debts, such as credit card, medical bills, and personal loans.

A bankruptcy trustee may sell certain non-exempt property to repay creditors, but thanks to Oklahoma’s exemption laws, most people who file are able to keep essential items like their home, car, and household goods.

Who Qualifies for Chapter 7?

Eligibility for Chapter 7 depends on your income and financial situation. You may qualify if:

• Your income is below Oklahoma’s median for your household size.
• You pass the means test, which looks at income, expenses, and debts.
• You don’t have enough disposable income to repay creditors under a Chapter 13 plan.

An attorney can guide you through the means test and explain whether you meet the requirements.

When Chapter 7 May Be the Right Choice

Chapter 7 may make sense if you:

• Are overwhelmed with unsecured debts you cannot realistically pay back.
• Are facing lawsuits, garnishments, or bank account levies.
• Have little income left after paying for basic living costs.
• Want a faster process—most cases are completed within 3 to 6 months.

Limitations of Chapter 7

Chapter 7 does not erase every type of debt. You will still be responsible for:

• Child support and alimony
• Most student loans
• Certain tax debts
• Debts from fraud or intentional misconduct

If you are behind on secured debts (like a mortgage or car loan), Chapter 7 may not stop foreclosure or repossession unless you catch up on payments.

Alternatives to Consider

Depending on your goals, other options may fit better:

• Chapter 13 bankruptcy – allows you to catch up on mortgage or car payments while repaying debts over time.
• Debt negotiation or settlement – may be an option if you can pay a portion of what you owe.
• Credit counseling – can help with budgeting or setting up a repayment plan outside of bankruptcy.

It’s important to weigh all of your options before making a decision.

Tulsa Bankruptcy Attorneys

Chapter 7 bankruptcy can be a powerful tool to eliminate debt and start fresh, but it’s not right for everyone. Whether it makes sense for you depends on your income, your assets, and the types of debt you carry. For a free consultation with an Oklahoma bankruptcy attorney in Tulsa, call 918.743.2233. Or you can follow this link to ask a free online legal question.