Filing bankruptcy is stressful, and one worry you might have is whether you can keep your home and car. In Oklahoma, the laws governing bankruptcy allow for certain exemptions that can help you retain these important assets. Here’s more on the options available under both federal bankruptcy laws and state-specific rules in Oklahoma. To learn about other legal topics, check out our Tulsa County Lawyers Blog here.
Understanding Bankruptcy Exemptions
Bankruptcy exemptions are legal provisions that protect specific property, including your car and house, from creditors during a bankruptcy. These exemptions play a crucial role in determining what you can keep after filing for bankruptcy. Oklahoma allows you to choose between state exemptions and federal exemptions. If your home equity is within the state’s unlimited exemption, choosing Oklahoma exemptions might be more beneficial. Similarly, if your vehicle equity is higher than what is covered under federal exemptions, state exemptions may be preferable. However, it’s important to understand both options to make an informed decision about what’s best for you.
Oklahoma State Exemptions
Oklahoma has generous exemptions that often make it more beneficial for residents to choose over federal exemptions. Regarding your home, Oklahoma allows an unlimited homestead exemption for real or personal property used as a residence, as long as it does not exceed one acre in a city or town or 160 acres on rural land. This means that if your home meets these criteria, you can likely keep it after filing for bankruptcy. For vehicles, the state exemption covers up to $7,500 of equity in one vehicle. This means if your car is worth $15,000 and you owe $8,000 on a car loan, you have $7,000 in equity and can fully exempt your car.
Federal Bankruptcy Exemptions
If you choose to take the federal bankruptcy exemptions, the homestead exemption allows you to protect up to $27,900 in equity in your primary residence. For vehicles, the federal motor vehicle exemption covers up to $4,450 of equity. You also have the option to use a wildcard exemption under federal law. This exemption protects up to $1,475 of any property and an unused portion of your homestead exemption up to $13,950.
The Impact of Chapter 7 and Chapter 13
The type of bankruptcy you file—Chapter 7 or Chapter 13—also affects your ability to keep your home and car. While Chapter 7 bankruptcy involves liquidating assets to pay creditors, Chapter 13 enables you to reorganize debts and make payment plans.
In a Chapter 7 case in Oklahoma, if your home and car are fully covered by exemptions, you can keep them. However, if there is significant non-exempt equity, these assets might be at risk. Chapter 13 offers more flexibility. You propose a repayment plan based on your income, allowing you to make missed payments without immediate liquidation risks. This plan can help you keep both assets as long as you continue to make regular payments according to the plan.
Important Considerations
When filing for bankruptcy, it’s crucial to assess the value of your assets and understand the exemptions that apply. Missteps in this process can result in losing important assets like your home or car. Assess your situation carefully and consider how the specifics of Oklahoma law apply to your case.
Tulsa Bankruptcy Attorney
Understanding the differences between state and federal exemptions, as well as Chapter 7 versus Chapter 13, is critical. By carefully evaluating your assets and the protections offered by Oklahoma law, you can make informed decisions to safeguard your property during this challenging time. A Tulsa bankruptcy lawyer can clarify your rights and help you through the Chapter 13 process. Contact Tulsa County Lawyers Group by calling (918) 379-4864 or contacting us online for a consultation.
