What is the Oklahoma Chapter 7 Bankruptcy Income Limit?
by Luke Homen
Chapter 7 bankruptcy can help those with overwhelming unsecured debt (there’s no collateral that the creditor could sell to pay the debt) get a fresh financial start. To qualify, you must pass a “means test” based on a state’s median yearly income. Earning more won’t necessarily disqualify you, but there will be additional information to provide.
If you’re considering filing for bankruptcy, you have choices. One is Chapter 7, which may or may not be right for you and your family. The Convenient Bankruptcy law firm can help you explore your options. Call us at 405-296-0069 or fill out our online contact form, and our bankruptcy attorneys will contact you.
What is Bankruptcy?
Bankruptcy is the federal legal process allowing you or your business to declare that you’re insolvent and unable to pay your debts. Through bankruptcy, you’ll be able to discharge debts (depending on what they’re for) completely, or you’ll pay them over time.
What is Chapter 7 Bankruptcy?
A Chapter 13 bankruptcy case involves the filing of a repayment plan. If you pay them off in three to five years, you’ll put those debts behind you and maintain your equity in a home or vehicle. Under Chapter 7, whatever you have (except property exempt under state or federal laws) can be sold to pay your debts, and any remaining debts are discharged.
Property exemptions for Oklahomans are generous compared to most other states. Even if you go through a Chapter 7 bankruptcy, you are usually able to retain:
- Your equity in your home, manufactured home if it’s a primary residence, or other property covered by Oklahoma law if it’s not bigger than one acre in a city or town, or 160 acres elsewhere.
- Up to $7,500 of equity in your truck, car, van, motorcycle, SUV, or other motor vehicle.
Other exempt property includes household items, retirement savings, pensions, tools for your business, life insurance, alimony, and child support you receive.
Why Does My Income Matter in a Chapter 7 Bankruptcy?
Determining if you qualify for Chapter 7 includes a “means test,” which looks at your expenses and income. The point of the test is to screen people away from Chapter 7 if they have enough disposable income to pay their debts. The test doesn’t apply if your problem is debts mainly from a business you own.
You need to gather and organize financial information for the last six months. Is your household income below Oklahoma’s median income? The median figure is the one in the middle if we list all the incomes earned by Oklahomans from top to bottom.
This varies based on household size and ranges from $55,362 for one person to $91,528 for a family of four for those filing this year (in 2024). If there have been significant income changes in the last six months, like you obtained or lost a job, they will be factored into the calculation. If you made less than the median income, you passed the test and can file for Chapter 7 bankruptcy.
There’s a second part if your income is more than the median. There are “allowable expenses,” which include the following categories:
- Housing
- Healthcare
- Food
- Utilities
- Transportation
- Clothing
- Some Specific Necessary Expenses
If these expenses are deducted from your income, what remains is considered disposable income that could be spent on paying your debts. Although your household income is above Oklahoma’s median, you may qualify for Chapter 7 if your expenses are high enough. This benefits those with a lot of recurring medical expenses and who live in more costly areas of the state. If your disposable income is too high, you don’t qualify for Chapter 7.
What’s Next? You may file for Chapter 7 bankruptcy protection if you pass the means test. If you fail, you can try again in six months or file for Chapter 13 bankruptcy.
Have Questions or Concerns About Chapter 7 Bankruptcy? We’re Here to Help
Are you or your business experiencing financial difficulty? Bankruptcy might be an option. Schedule a free, confidential consultation with a Convenient bankruptcy lawyer. We can talk about your situation, income, expenses, priorities, and the best options for reaching your goals.
A “do it yourself” bankruptcy filing can be a massive waste of time and cause severe financial losses. Your financial future is at stake, so time consulting with a Tulsa Oklahoma bankruptcy lawyer is well spent. You can schedule a consultation with the Convenient Bankruptcy law firm by calling us at 405-296-0069 or contact us online to set up a time to talk. You’ll be glad you did.
Attorney Luke Homen is the President of Convenient Bankruptcy. He placed great value on helping individuals and families solve their financial challenges and achieve real financial freedom. His goal is to find a customized solution that fits each client’s unique situation. Luke has been practicing law since 2008, and was voted “Best Bankruptcy Attorney in Oklahoma” by The Oklahoman in the Reader’s Choice Awards.