Oklahoma City Attorneys Provide Alternatives to Bankruptcy

Given the customary nature of the debtor in a Chapter 13 case as someone who generates a relatively regular and dependable income, he or she may have other options available that do not involve filing for bankruptcy protection. These alternatives are numerous in nature and should be carefully tailored to the specific situation of the debtor, but two examples of these alternatives to bankruptcy include:

• Negotiating a settlement – Many creditors will accept less than full payment on a debt that’s seriously delinquent, as the prospect of obtaining no payments at all is very real to them if you file for bankruptcy protection.
• Designing a repayment plan – If you cannot afford lump sum payments to your creditors, you could provide them with a repayment plan that over time allows for them to reclaim at least part of what they’re owed.

Of course, there could be other solutions available, but rather than attempt to handle this problem yourself, you need to speak to an Oklahoma City bankruptcy attorney who understands not only the options available to them but also the laws that govern these situations. For instance, it’s possible that at least some of your debts have moved beyond the statute of limitations for collection and are no longer enforceable.

Rebuilding Credit after Filing for Oklahoma Bankruptcy

When you file for bankruptcy protection, it means that your credit rating is already negative in nature. As a result, filing for bankruptcy could actually improve your credit score in certain cases. Regardless, like most other derogatory entries on your credit rating, filing for protection will remain on your credit history for seven years.

However, if you file for protection under Chapter 13 of the Bankruptcy Code and the payment plan lasts for three years, you should be clear of negative entries only four years thereafter. In the meantime, you could obtain credit in certain circumstances because of the waiting period that is required before being eligible for filing for bankruptcy again.

In terms of rebuilding your credit, you need to treat this as an opportunity for a fresh start. If you borrow money, make sure you can repay it properly, and make sure that your bills are paid on time. You’ll likely need to start small, with perhaps one credit card and build from there as you emerge from your payment plan and more money becomes available. In short, rebuilding your credit is a process, but one that’s possible because of the clean slate that bankruptcy provides for you.

Formulating a Wage Earner’s Plan

The reason that Chapter 13 bankruptcy cases are known as the ‘wage earner’s’ bankruptcy is because this is the chapter of the code that’s usually chosen for relief by those who generate regular income. The reason is clear – in order for a repayment plan to be accepted by the court and the creditors involved, the debtor must show that he or she will be able to make these payments in a timely fashion. Much like a loan, this assurance is provided by proof of income.

Formulating a wage earner’s plan is an almost entirely individually-driven process. The reason is that no two financial situations are ever exactly the same, but basically, a wage earner’s plan will involve making sure that all secured creditors are paid as usual if you intend to keep the property that secures it and then proposing a regular amount of payment to unsecured creditors based on your income and your disposable income, which means any funds that are left over after your expenses have been paid. These plans typically call for a percentage of unsecured debt to be repaid over the life of the plan, but you’ll need to consult with a bankruptcy attorney to obtain an idea of what these payments will be in terms of amount.

Remaining Debt after a Chapter 13 Bankruptcy

After you’ve completed a payment plan in accordance with your Chapter 13 bankruptcy case, the court will basically close the case and discharge any remaining balances on most of your debts. A discharge is akin to a forgiveness of those debts, which means that you do not have to pay any remaining balances.

However, as is the case with other forms of bankruptcy, certain debts cannot be discharged based on how they arose, and examples of these debts include:

• Tax debts
• Student loans
• Child support
• Spousal support
• Debts for intentional torts such as battery
• Debts for recent credit purchases
• Fraud
• Debts incurred for operating a vehicle while intoxicated

There are a few others, but the basis behind not allowing these debts to be discharged is obvious. After you emerge from your payment plan and your other debts are discharged, these debts will usually remain. Other secured debts, such as mortgages, are generally made outside the payment plan and are not part of the case. Therefore, those payments will continue to be due as always.