There are several features of bankruptcy proceedings that are present in nearly every case that are important to understand before filing for bankruptcy. The traditional features of bankruptcy proceedings include the automatic stay, the assignment of a trustee, executory contracts, and the meeting of creditors. The relatively new additions to this list are the “means test” and “credit counseling,” which were both established by the reforms included in The Bankruptcy Abuse and Consumer Protection Act of 2005. What follows is a brief explanation of these key features of bankruptcy in Oklahoma in the order in which they are typically encountered.
Credit Counseling
The bankruptcy reforms of 2005 established the need for individuals who seek to file bankruptcy to undergo a mandatory credit counseling course prior to filing. The purpose of this course is for you to determine if there is away for you to work through your financial difficulties without having to file for bankruptcy. Under Chapter 13 bankruptcy (debt restructuring bankruptcy), the course also requires you to come up with a proposed plan to repay your debt.
The mandatory credit counseling course must be taken with an approved agency no more than 180 days prior to filing for bankruptcy, and a certificate of completion must be filed no more than 15 days after filing. Additionally, prior to receiving a discharge of your debt, you are also required to provide proof of having completed a second course in personal finance and money management from an approved provider.
The Means Test
The 2005 reforms also made it more difficult for individuals with very high incomes to file for Chapter 7 bankruptcy (straight bankruptcy). To determine if you qualify to file for Chapter 7 bankruptcy you must first pass a “means test,” which consists of two parts. In the first part, your monthly income must be equal to or less than the median monthly income for a typical household in your state. If it is not, you must pass the second test, which requires your projected disposable income over the next five years to be less than 25% of your unsecured, non-priority debt. If after this you still do not qualify for Chapter 7 bankruptcy, you may elect to file for Chapter 13 bankruptcy instead.
The Automatic Stay
One of the most important features of every bankruptcy proceedings is the automatic stay. The automatic stay goes into effect immediately after you file bankruptcy and suspends all collection activities against you for the duration of the bankruptcy proceedings, which typically last for three to four months under Chapter 7 bankruptcies and three to five years under Chapter 13 bankruptcies. Your creditors will be required to challenge the automatic stay and have it lifted by court order before resuming any collection activities against you.
The Trustee
With the exception of Chapter 11, when you file for bankruptcy, the court will appoint a trustee who is to be responsible for all aspect of your estate for the duration of the bankruptcy proceedings. The trustee is responsible for conducting the meeting of creditors, evaluating your assets, and distributing to your creditors the proceeds acquired through the liquidation of your estate.
Executory Contracts
Executory contracts are contracts that you entered into prior to filing bankruptcy and that are still in force at the time you file. Examples of executory contracts include business contracts, service contracts, insurance contracts, and most often mortgages and residential leases. The debtor (and ultimately the trustee) has the right to determine which of these contracts, if any, you will walk away from. Executory contracts are particularly significant to your bankruptcy as the decision to honor or walk away from these contracts can have considerable impact on the overall size and complexity of your bankruptcy estate.
The Meeting of Creditors (“341 Meeting”)
Approximately a month after you file for bankruptcy, you will be required to attend a meeting of creditors, which is also referred to as a 341 Meeting in Oklahoma. This meeting is led by the trustee and with the purpose of allowing he or she and your creditors to go over your bankruptcy documents and ask you questions while under oath.
These questions will pertain to the validity of the information that you have provided regarding your assets and your ability to repay your debts. Each creditor will be given the chance to question you. If they don’t like what they hear, they may file a request for an “adversary proceeding” with the court in order to challenge the disposition of your bankruptcy estate. Normally, this meeting of creditors is the only meeting you will be required to attend, and in practice, it is rarely attended by the average creditor.
Low-cost Consultation: Muskogee Bankruptcy Attorney
If you are considering filing for bankruptcy in Oklahoma, you should first understand that it is a long and complicated process. Familiarizing yourself with the main features of bankruptcy can help you ensure that you are following the proper procedures and have the greatest chance of success. Equally important to the success of your bankruptcy is hiring the right attorney to assist you.
Don’t let your financial problems get worse; get help today by calling the Wirth Law Office in Muskogee at (918) 913-0725, or toll-free at 1-(888) 947-8452 (Wirth Law) for a initial strategy session with an expert Muskogee bankruptcy attorney. If you prefer, you can use the box in the upper right-hand corner to send us a short message and an attorney will promptly respond.
