Which Chapter Of Bankruptcy Avoids Foreclosure in Oklahoma?

Bankruptcy Avoids Foreclosure in certain situation but there are conditions that must be met. Most people experience real financial uncertainty or hardship at least once in their life. Filing a chapter 7 or chapter 13 bankruptcy can help individuals manage these challenges and recover from financial hardship. Oklahoma Bankruptcy protections can allow an individual just like you to get a fresh financial start. In some circumstances filing can help a homeowner avoid foreclosure depending on where they stand.

If you’re being crushed by financial obligations and it seems like you never get your financial head above water filing a bankruptcy might be an option for you. Its important to understand the two chapters of bankruptcy that apply to most consumers and which one serves your given situation.

Types Of Bankruptcy Filings

There are six types of bankruptcy filings under Title 11 of the U.S. Code:

• Chapter 7 (Fresh Start)
• Chapter 9 (Municipalities)
• Chapter 11 (Business reorganization)
• Chapter 12 (Family farmers or fisherman)
• Chapter 13 (Individuals with regular income and used most often in cases involving foreclosure)
• Chapter 15 (Foreign cases)

As consumers in Oklahoma the most common bankruptcy being filed is a chapter 7 or a chapter 13. For each chapter there are certain restrictions that must be met for you to qualify and get a successful bankruptcy discharge of some if not all of your debt. Which debt can be discharged and how much can be discharged depends on the classification of the debt and how much income you receive each year.  

Chapter 7

Under Chapter 7 bankruptcy proceedings, an individual’s eligible debts are discharged within months. This form of bankruptcy protection truly affords a filer a fresh start, as they aren’t required to repay their creditors. As a result, only individuals who don’t earn much income are eligible for Chapter 7 bankruptcy protection. While the trustee assigned to a bankruptcy case is empowered to sell a filer’s non-exempt assets to repay their creditors, filers generally don’t need to worry about this risk unless they own valuable luxury property. Most “ordinary” possessions and assets are exempt from sale.

Although both Chapter 7 and Chapter 13 filers benefit from the protections of the automatic stay – which can halt foreclosure proceedings until after a bankruptcy case has concluded – filing for Chapter 13 bankruptcy is usually better for homeowners facing foreclosure. In chapter 7 bankruptcy if you are paying a mortgage you can file but if you want to keep the home the mortgage must be current when you file and you must continue to make payments.

As for your other debt, if the debt is unsecured the majority of that debt is forgiven in bankruptcy. If you are facing foreclosure in a chapter 7 you may not be able to save the home but will be able to discharge any debt resulting from the foreclosure. This kind of debt is referred to as a deficiency judgment. It equals that amount remaining on the mortgage after the house is sold in a foreclosure sale. Chapter 7 will forgive any deficiency judgement.

Chapter 13

Under Chapter 13, individuals with steady income who make above the median family income can reorganize their finances to pay back creditors over a three to five year period. A Chapter 13 case results in the creation of a financial plan to pay back debts over this period making your finances more manageable. If the plan is successfully followed, any eligible debt that hasn’t yet been repaid by the conclusion of the repayment period will be discharged. A filer is no longer liable for any debt that has been discharged.

To be eligible under Chapter 13, the individual filing must have some form of disposable income to repay their debts. The payments are made over three to five years. Chapter 13 Bankruptcy Avoids Foreclosure but you must be able to keep up with both the past due amount and current amount owed on the mortgage. Chapter 13 proceedings may also allow the filer to remove junior mortgages on their property. Still, eligibility for such removal depends on whether the debt is secured by the house. Ultimately, making timely payments under a Chapter 13 plan can help to avoid foreclosure.

How Will Bankruptcy Affect My Credit?

Filing for bankruptcy negatively affects a filer’s credit history and temporarily affects their credit score. On the other hand, unpaid debts can also wreak havoc on anyone’s credit. Often, it is more beneficial to utilize bankruptcy to get a strong repayment plan in place. This repayment can help credit after a fresh start. Also, using bankruptcy to prevent foreclosure can help a filer to avoid foreclosure-related hits to their credit.

Tulsa Oklahoma Bankruptcy Lawyers

Bankruptcy doesn’t always have to be a bad experience. The debt is bad but bankruptcy can be a great solution to your problems. This includes either chapter 7 or chapter 13. Although chapter 7 isn’t always an option to hold off a foreclose chapter 13 Bankruptcy Avoids Foreclosure but you must qualify. For a Free consultation with a Tulsa Oklahoma bankruptcy attorney near you call Kania Law Office at 918.743.2233. Or if you like you can request an online consultation by following this link.