You are here

Frequently Asked Questions

  • What are the different "chapters" in bankruptcy?
    • Chapter 7 may be filed by an individual, a corporation, or a partnership. A Chapter 7 case may be referred to as a “Fresh Start,” “Liquidation,” or “Straight Bankruptcy.” In Chapter 7, federal and/or state laws allow the individual debtor to claim certain property as exempt. A Chapter 7 Trustee is then appointed to collect and sell all property that is not exempt or mortgaged, and use the sale proceeds to pay creditors. An individual debtor can get a discharge for most or all of their debts in a Chapter 7 bankruptcy case. Corporations and partnerships do not receive a discharge. A discharge releases individual debtors from personal liability for some debts, and prevents the creditors owed those debts from taking any collection actions against the debtor.

      The chapters outlined below require the confirmation of a plan of reorganization or liquidation. Individuals seeking to file under Chapter 11, 12, or 13 are cautioned that it is extremely difficult to obtain confirmation of a plan without an attorney.

    • Chapter 9 of the Bankruptcy Code provides for reorganization of municipalities (which includes cities, towns, villages, counties, taxing districts, municipal utilities, and school districts).
    • Chapter 11 is the reorganization chapter frequently involving a corporation or partnership, but can also be an individual. A Chapter 11 debtor proposes a plan of reorganization to keep its business alive and pay creditors over time.
    • Chapter 12 is for use by "family farmers" or "family fishermen" with "regular annual income." It enables financially distressed family farmers or fishermen to propose and carry out a plan, which must be approved by the court, to repay all or part of their debts. A certain portion of the Chapter 12 debtor's income must come from the operation of a farming or fishing business. In Chapter 12, a trustee receives the plan payments and also monitors the debtor's farming business operations while the case is pending. Once the plan payments are complete, the Chapter 12 debtor receives a discharge of some debts.
    • Chapter 13 is the debt repayment chapter for individuals with regular income, which may be referred to as a “wage earner’s plan.” Corporations and partnerships cannot file under Chapter 13. Chapter 13 generally allows a debtor to keep property and pay debts over time, usually three to five years. A Chapter 13 debtor proposes a repayment plan, which must be approved by the court. The plan payments are made to the Chapter 13 trustee, who distributes the funds to creditors. Once the plan payments are complete, Chapter 13 debtors receive a discharge of some debts.
  • Who can file bankruptcy?

    A debtor is a person or business that owes a creditor money, goods, or services. A bankruptcy can be filed by a debtor or creditors. When a debtor starts the bankruptcy by filing a petition, it is called a "voluntary bankruptcy." If creditors of the debtor start the bankruptcy, it is called an "involuntary bankruptcy." When an involuntary bankruptcy has been filed, the debtor has an opportunity to respond to the petition and show why they should not be in bankruptcy.

    Debtors that are corporations, partnerships, and business trusts cannot proceed without an attorney representing them. Only an individual can proceed in a bankruptcy case without an attorney (also known as "Pro Se").

    It is important to understand that the bankruptcy process is extremely complex. Individuals are strongly encouraged to seek competent bankruptcy counsel before filing or proceeding in a bankruptcy.

  • Is the bankruptcy court a state or federal court?

    Federal courts have exclusive jurisdiction over bankruptcy cases. This means that a bankruptcy case cannot be filed in a state court. There are three federal bankruptcy courts in the State of Oklahoma: the Northern District located in Tulsa, the Eastern District located in Muskogee, and the Western District located in Oklahoma City. The link below lists the counties served by the Northern District located in Tulsa.

  • What is the Bankruptcy Code?

    The Bankruptcy Code is federal law, which is also referred to as Title 11 of the United States Code. It provides help for individuals or businesses in financial difficulty while, at the same time, dealing with their creditors evenhandedly. The Bankruptcy Code is divided into several chapters. Each of the chapters provides a different set of options for dealing with debt. Most cases are filed under Chapter 7, Chapter 11, or Chapter 13 of the Bankruptcy Code. The text of the Bankruptcy Code is available in law libraries, or on the internet at:

  • What is bankruptcy?

    Bankruptcy is a set of federal laws and rules that can help individuals and businesses who owe more debt than they can pay. In bankruptcy, the person or business that owes money is called the debtor. Bankruptcy permits the debtor to work out a plan to repay some or all of the debt, to liquidate assets, or to have some of the debt forgiven ("discharged") in an effort to obtain a "fresh start." The bankruptcy laws give the debtor protection and benefits not available outside of bankruptcy, such as requiring that creditors stop all collection efforts while the debtor is in bankruptcy. In bankruptcy, a debtor must make full disclosure of all assets, liabilities, and other financial information, and must either:

    • surrender non-exempt (unprotected) property for liquidation and distribution to creditors, or
    • provide a "plan" that pays creditors at least as much as they would receive if the assets were liquidated.