Chapter 7 bankruptcy is the most common, and is the one that most people are familiar with. It allows you to discharge, or wipe out, debts by surrendering any non-exempt asset for liquidation by the court and by returning property you can’t afford to your creditors.
Federal bankruptcy law allows each state to choose the types of property that will remain out of reach of your creditors. I Oklahoma, necessities such as cars, clothing, home furnishings, and your home are exempt, subject to some value and quantity limitations. Property that is not exempt and, therefore subject to liquidation, is property that exceeds exemption limitations, and other property such as boats, trailers, and tax refunds. It is very important to discuss what property you own with an attorney so that you can utilize all available exemptions to provide sufficient protection of your assets.
Most unsecured debts, such as credit cards, medical bills, utility bills, personal loans, judgments, and past due rent are dischargeable. Secured debts, such as home mortgages and car loans, are also dischargeable as long as the debts are not reaffirmed. There are some debts, whether secured or not, that are never dischargeable. These include such debts as some taxes; domestic support obligations—alimony, child support; debts resulting from fraud; court fines and criminal fines; student loans; and debts resulting from willful or malicious injury to another.
Some debts have to satisfy certain criteria before they can be discharged. It is very important to discuss the dischargeability of your debts, so that you may be assured the “fresh start” you are entitled to.