Will Chapter 7 Bankruptcies Increase in Oklahoma?

Over the last several years, bankruptcy filings in Oklahoma have slowly declined. Many bankruptcy experts attribute the decline of the number of bankruptcy filings due to the recent economic recovery from the recession that began in 2007. When the recession began, this caused many unfortunate persons and families having their homes foreclosed. In turn, many individuals and families filed bankruptcy in order to protect their home or to get rid of any excessive debts they incurred as a result of the foreclosure, including any deficiency judgments. The table below shows a steady decline in bankruptcy filings over the last five (5) years (please note that the figures consist primarily of consumer debts under Chapter 7 bankruptcy filings):

Oklahoma Bankruptcy Filings by Year:
2013 2012 2011 2010 2009
8,335* 11,970 13,119 14,980 14,500

*This figure includes only until the end of September 30, 2013

Other bankruptcy experts attribute the decline in bankruptcy filings to the fact that not as many people carry as much debt as they previously had. Individuals and families have had to adapt to the recession and as a result, these persons have limited their total amount of debts. People have become pulled back from spending and borrowing money. With little or no debt, there is not much bankruptcy can do for them. This is why our lawyers often recommend prospective clients not to file bankruptcy if their total debts are below $12,000.

On the other hand, some bankruptcy experts are suggesting that bankruptcy filings may increase beginning in October 2013. This is due to the fact that many bankruptcy filers (especially chapter 7 bankruptcy filers) had previously filed bankruptcy prior to October 2005 in anticipation of the major bankruptcy law reforms. Under the 2005 bankruptcy reforms, it made it much more difficult for individuals and families to file for chapter 7 bankruptcy largely in part to the introduction of the means test. Now that eight (8) years has passed from when the bankruptcy reforms were introduced, many of the previous bankruptcy filers are now eligible file for chapter 7 bankruptcy now. Although the recession may have left many individuals and families deep in debt, these persons are now eligible to file for bankruptcy one again. Bankruptcy is now a viable option for those who had previously filed bankruptcy before the major 2005 bankruptcy reforms. Please feel free to contact our office at (405) 702-7795 to schedule a free consultation.

On a side note, as evident on the table below, many bankruptcy filers are taking advantage of pre-petition planning.

2013 Bankruptcy Filings By Month
Jan Feb Mar Apr May Jun Jul Aug Sep
696 806 1,152 1,113 1,040 852 912 899 865

By filing between March through May of any year, people can afford to pay their attorneys by using their tax refund to pay for attorney fees. Further, coincidentally this is the same period when holiday spending bills usually become due. By filing in March through May, many bankruptcy filers are allowed to keep their tax refunds because they will most likely spend their tax refund on attorney fees (a necessary expense). Other necessary expenses include paying rent, mortgage payment, vehicle payment, utilities and food. A trustee will most likely not ask for the tax refund money if the money has been used for necessary expenses prior to the filing of bankruptcy. However, please keep in mind that a trustee may be entitled to tax refunds for the next year. This is the reason most bankruptcy filers choose to file chapter 7 or 13 bankruptcy during March through May of a given year.

In sum, we just have to wait and see whether the number of bankruptcy filers will steadily decrease due to the recovering economy OR possibly increase as a result of the higher number of people eligible to file bankruptcy once again. For any questions or concerns about bankruptcy or debt, please feel free to contact our office at (405) 702-7795 to schedule a free consultation with one of our bankruptcy lawyers.

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Author: Tai Stevenson

Attorney at Law

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Debt Solution Law Center serves clients in the cities of Oklahoma City, Edmond, Moore, Norman, Yukon, Midwest City, Del City, Lawton, Tulsa, Muskogee, El Reno, Purcell, Broken Arrow, Shawnee, and Ardmore, including Oklahoma County, Cleveland County, Canadian County, Pottowatomie County, Lincoln County, McClain County, Grady County, Logan County, and Noble County, Oklahoma.