Individuals filing for bankruptcy have a number of options when it comes to the type of filing they’d like to choose; however, the only option that allows for the reorganization of debt is a Chapter 13, according to Tulsa bankruptcy attorney Ron Brown. Brown is the owner of the Brown Law Firm, a premiere bankruptcy practice that has helped thousands of families in the Oklahoma area get rid of their debts and get on with their lives.
“To reorganize in a Chapter 13 means to put all of your debts into one set monthly payment,” Brown explains. The amount of this set monthly payment depends upon the filer’s income and what he or she can afford at the time. “With a Chapter 13, it is not as much about how much you owe as it is about how much you currently make,” he says.
The Internal Revenue Service sets standards that bankruptcy attorneys use to measure out how much of their clients’ income should be spent on paying off debt through the reorganization plan each month. “Using the IRS standards, we take a person’s income and subtract out living expenses like food, shelter, and utilities,” Brown says. “Anything that is left over is disposable income, and that is what has to be paid to the trustees to be used on the debt payments.”
In a Chapter 13 debt reorganization plan, a debtor’s trustee is the person who is in charge of paying off the debtor’s creditors each month. These payments are made at “pennies on the dollar,” however, which means that the debtor is not actually paying the full amount he would have owed had he not gone into bankruptcy. Instead, reorganization is a way to negotiate debts with creditors so every creditor gets something—even though most creditors are probably not getting back the full amount that was originally owed.
Essentially, reorganizing debt during a Chapter 13 bankruptcy is just figuring out how much disposable income a debtor has each month, and then determining which creditors will receive which portion of that disposable income each month. Although debtors filing for a Chapter 7 bankruptcy also have the right to reorganize their debts, that is a much less formal process, according to Brown. “During a Chapter 7 bankruptcy, reorganizing debts is just a loose term that means that the debtor is going to figure out his or her own financial life. There is no formality to it, like there is with a Chapter 13 filing,” Brown says.
Although there are many bankruptcy attorneys out there, Brown says very few will agree to handle actual Chapter 13 debt reorganizations these days. The average bankruptcy attorney in Tulsa is unlikely to take on a Chapter 13 bankruptcy case because these cases are much more complicated than Chapter 7 bankruptcy cases. “There is a lot more work and there are a lot more court hearings in a Chapter 13 case,” Brown says. “And frankly, a lot of these attorneys just don’t want to deal with it.”
To ensure you are hiring an attorney who handles Chapter 13 filings, Brown recommends asking upon your first meeting. “Most attorneys would prefer to just do Chapter 7 filings because they are easier,” he says. “But if you think a Chapter 13 might fit your situation better, then make sure to ask about that right away.” Most attorneys will be honest about which types of cases they do and do not handle, because it is in their interest not to take on any cases they are not interested in.
Additionally, Brown says people need to make sure the attorneys they are hiring have enough experience in whichever type of filing they are thinking about choosing. “There are also a lot of attorneys out there who claim they do bankruptcy, but there is a lot that can be lost if you hire someone who doesn’t have the proper experience,” he explains. “There are mistakes that can be made in bankruptcy cases having to do with assets that need to be protected and proper planning beforehand, and attorneys who have not had much experience just don’t know where the traps are hiding.”
Brown recommends that clients in Tulsa ask a bankruptcy attorney who his trustees are, how long he has been practicing, and whether he does bankruptcy law exclusively. The answer to these three questions will tell you immediately whether the attorney you are working with has the right kind of experience for your case, says Brown.
In Oklahoma especially, hiring an attorney who focuses his entire practice on bankruptcy is important, because certain exemptions in Oklahoma are different than they are in other states. “In a Chapter 7 filing, we are only allowed to use the Oklahoma exemptions rather than the federal exemptions,” Brown says. Unfortunately, an attorney who is unfamiliar with these things would easily mess that up and end up costing the debtor even more money and anxiety. For people considering filing for bankruptcy in Tulsa, bankruptcy attorney Ron Brown has experience working on debt reorganization plans for many of his clients throughout the state of Oklahoma.
This article is for informational purposes only. You should not rely on this article as a legal opinion on any specific facts or circumstances, and you should not act upon this information without seeking professional counsel. Publication of this article and your receipt of this article does not create an attorney-client relationship.
