The bankruptcy process is filled with terms and concepts that the average layperson will not be familiar with. For a better understanding of the bankruptcy process and how filing bankruptcy in Oklahoma can help you, here are several terms that you should know.
The Automatic Stay
The biggest immediate relief provided by bankruptcy is the automatic suspension of all creditor activities against you. This means that any wage garnishments, repossessions, foreclosures and phone calls from collection agencies will have to cease. Your financial life generally will be on hold for the duration of the bankruptcy proceeding.
The Bankruptcy Trustee
For each chapter of bankruptcy (excluding Chapter 11), after you have filed bankruptcy in Oklahoma all of your assets will be held in a virtual trust, which will be managed by an appointed court official known as your bankruptcy trustee. Your trustee will be in charge of all dealings with both your assets and liabilities; and will be responsible for notifying your creditors of your bankruptcy, liquidating your assets and distributing the proceeds to pay off your debts.
Your Bankruptcy Estate
Your bankruptcy estate includes all of your assets and liabilities. This means everything that you own, with the exception of certain options that are exempted by federal and state bankruptcy statutes.
In most cases, your bankruptcy estate includes everything that you have acquired until the time you file bankruptcy in Oklahoma. However, with chapter 13 bankruptcies, which can last for up to five years, your bankruptcy estate will include everything you have acquired before filing and anything you acquire during your bankruptcy proceedings as well.
Avoidance Powers
When you file bankruptcy in Oklahoma, the trustee has the power to void any contracts or financial arrangements that you have entered into prior to filing bankruptcy. Avoidance powers are usually exercised if the trustee believes that you have made any recent transactions aimed at shielding your assets from creditors or transactions that may compromise the satisfaction of debt that enjoy greater priority.
Executory Contracts
Any valid contract under which you are still obligated at the time you file bankruptcy in Oklahoma is an executory contract. During your bankruptcy proceeding, you have the right to walk away from certain executory contracts, with the trustees approval. The trustee in turn has the right to order certain executory contracts terminated or assumed (allowed to continue). Typically, you and your trustee have up to 60 days to decide which contracts will be terminated and which you will assume.
Secured and Unsecured Debt
Your debt can be broken down into two categories:
- Secured debt: Debt that is guaranteed by some form of collateral; for example, a home loan is secured by your home, which may be foreclosed on by the bank if you fall too far behind. Likewise, if you don’t make your payments on your auto loan, your car may be repossessed.
- Unsecured debt: Debt for which no form of collateral has been pledged. These are typically credit card bills, medical bills, utility bills and back rent.
In terms of your bankruptcy, the main distinction between secured and unsecured debts is that secured debts cannot be discharged under chapter 7 bankruptcy; and secured debts always have priority over unsecured debt under other chapters of bankruptcy in Oklahoma. While your unsecured debt may be completely dischargeable under chapter 7 bankruptcy, the assets that were pledged as collateral when you secured the loan will be used to satisfy your secured debt, in part or in full.
Conclusion
Bankruptcy in Oklahoma can present the first time filer with many unfamiliar terms and concepts. But, familiarizing yourself with these bankruptcy terms will help you to understand the process and better communicate to your attorney the desired outcome you wish to achieve. For a broader explanation of terms you should know related to bankruptcy in Oklahoma, consult with an experienced Oklahoma bankruptcy attorney.
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