Filing for bankruptcy due to repossessions is a major decision. These once secured debts can affect various aspects of your financial life. In Creek County, those who are facing repossession often consider bankruptcy to manage or eliminate their debts. In especially large sums, it can be the only answer for some people’s financial hardships. Here, we’ll discuss whether you can file bankruptcy on repossessions in Creek County, the types of bankruptcy available, and how each type works with the repossession process.
Understanding Repossessions
Repossession occurs when a creditor takes back an asset. This is from financing through a loan due to non-payment. In Oklahoma, creditors may repossess secured assets without a court order as long as they do not “breach the peace.” This means there can be no violence, force, illegal entry, or similar behavior to reclaim the item. If you’re facing repossession and are considering bankruptcy, there are two types of bankruptcy options in Oklahoma:
- Chapter 7 Bankruptcy: Often called liquidation bankruptcy, Chapter 7 allows debtors to wipe out most unsecured debts, such as credit card debt and medical bills. If an asset has been repossessed and the creditor has not yet sold it, filing for Chapter 7 can temporarily halt the sale process through an automatic stay. This prevents creditors from collecting debts during the bankruptcy process. However, Chapter 7 does not provide a way to catch up on missed payments. This means the creditor may eventually be able to repossess the asset unless you pay its current value. If the asset is already sold, then it is now an unsecured debt. This allows it to be discharged in the bankruptcy.
- Chapter 13 Bankruptcy: This is a reorganization bankruptcy where you can keep your assets while making payments with a court-approved repayment plan. If the creditor repossesses the asset but doesn’t sell it yet, Chapter 13 bankruptcy may allow you to recover it. You can potentially include the past due payments in your repayment plan and spread them out over the term of the plan, typically three to five years. This can make catching up more manageable and allow you to retain possession of the asset.
While each type has different requirements, seeking legal counsel will help you understand your best option and your next steps.
Eliminating Debts from Repossession
Sometimes people will seek a bankruptcy after repossession when the creditor sells the asset. Despite the asset selling, a person will often still have the burden of the debt in some capacity. This is especially the case when a vehicle sells for a lesser amount than what the person owes, leaving them with the remainder of the balance. In these circumstances, a bankruptcy is helpful at eliminating the debt. Once the creditor is no longer secured by the asset, it becomes much easier to discharge it in a bankruptcy.
Most people prefer a Chapter 7 for this, but not all will meet the requirements. For a single person with no kids, you must make less than $55,358.00 per year to qualify. A Chapter 13 doesn’t necessarily have a specific wage you must make, but it does require you to make enough to make sufficient payments. This means that there will be a calculation that happens that will determine if you can file or not. The calculation is based on the debt you owe versus the disposable income you have. A bankruptcy attorney can help you to figure out if you qualify for either of these options.
Steps to Take If Considering Bankruptcy to Stop Repossessions
If you’re considering following through with bankruptcy due to repossession, there are certain step you must take. These steps include:
- Consult with a Bankruptcy Attorney: Bankruptcy is complex, and the best course of action depends on your specific financial situation.
- Act Quickly: Once the creditor sells the repossessed asset, it becomes nearly impossible to get it back. Filing for bankruptcy promptly can invoke the automatic stay and potentially prevent the sale.
- Gather Financial Documentation: Collect all relevant financial documents, including those related to your debts, assets, income, and expenses. These will be necessary for your bankruptcy filing and will help your attorney in preparing your case.
- Long-term Impact: While bankruptcy can offer immediate relief, it also has long-term consequences for your credit and financial standing.
It can be a tough decision to make, but all is not lost in a bankruptcy. If you decide this is your best option, your bankruptcy attorney can point you to what your next steps should be.
Creek County Bankruptcy Attorneys
Filing for bankruptcy in Creek County can potentially help manage or prevent the repossession of assets, depending on the specifics of your situation and how quickly you act. Additionally, a bankruptcy can help you to eliminate leftover debt from sold assets. Both Chapter 7 and Chapter 13 bankruptcies offer tools that can address repossessions, but choosing the right type of bankruptcy and understanding what it means for you is key.
If you’re considering bankruptcy due to repossessions, our team at Creek County Attorneys can help you through the process and advocate for you. Call us at 918-209-3709 for a free and confidential consultation or ask a legal question here.
