To work with the best business debt settlement companies in Oklahoma, know a little Oklahoma law. How much of your house can be devoted to business and still be a homestead? How does the state’s debt pooling ban affect settlement providers? How do funders domesticate their judgments in the district courts of Oklahoma County and Tulsa County?
How do I find the best business debt settlement companies in Oklahoma?
Oklahoma has no commercial financing disclosure law and no licensing list for business settlement providers. Make sure any company you consider will check:
- whether you live in a city or town and whether more than 25% of your house’s square footage is business space;
- how a New York or New Jersey judgment gets filed in an Oklahoma county and how long the funder must wait to enforce it;
- how to structure the payments so that they don’t run afoul of Oklahoma’s debt pooling statute unless they’re licensed attorneys; and
- whether they will require the funder to file releases of the liens in every county clerk’s office where it filed a Statement of Judgment.
We explain how much business debt settlement costs elsewhere, but the federal ban on advance fees by debt relief telemarketers does not extend to business-to-business calls under 16 CFR 310.6(b)(7). So get any promise of no advance fee written into the contract.
How do Oklahoma’s homestead laws treat a home-based business?
Oklahoma has no dollar limit on the equity in a homestead that’s your principal residence under 31 O.S. 1. However, if you live in a city or town, your homestead can include no more than one acre, and at least 75 percent of the total square footage of the improvements must be used as your principal residence under 31 O.S. 2(C). If more than 25% of the square footage of your house is devoted to your business, your homestead exemption is limited to $5,000.
So, if your house is 2,400 square feet and your home office and showroom total 500 square feet, your exemption stays intact because your business occupies only about 21% of the house. If they total 700 square feet, your exemption is limited to $5,000 because your business occupies about 29% of the house.
Under (A), your homestead can include up to 160 acres if you live in a rural area. Under (B), rural land annexed by a city on or after November 1, 1997 keeps that limit if used for both residential and commercial agricultural purposes. Neither subsection includes the square footage test in (C), but ask an attorney how Oklahoma courts would apply this to your property. We discuss whether a personal guarantee on a merchant cash advance extends to your house separately.
How do funders enforce an MCA judgment in Oklahoma County and Tulsa County?
Most funders sue on the contract, often in New York or New Jersey. They rarely obtain confessions of judgment against Oklahoma debtors because 12 O.S. 689 allows a confession of judgment only if the debtor personally appears in court. New York has also prohibited filing confessions of judgment against debtors who don’t live in the state since 2019 under CPLR 3218.
Under 12 O.S. 721 and 722, the funder files its judgment with the clerk of a district court in Oklahoma. It then becomes an Oklahoma judgment, subject to the same defenses and motions to reopen or vacate. The clerk mails you a notice of the filing, and the funder cannot execute on the judgment for 20 days. That’s often the best time to negotiate a settlement. The judgment does not become a lien on your real estate until the funder files a Statement of Judgment with the county clerk under 12 O.S. 706(B). A homestead lien is exempt from forced sale but still clouds the title when you sell or refinance.
After this, garnishment under 12 O.S. 1173.3 is swift: the bank answers and turns over the money within 10 days of service. If you claim an exemption, the court sets a hearing within two to 10 days, and you carry the burden of proving it.
Can an Oklahoma settlement company legally take my monthly payments?
Only in limited ways. Debt pooling is prohibited under Oklahoma law, specifically 24 O.S. 15, 16, 17 and 18. That bars any paid arrangement where someone takes your periodic payments and distributes them to creditors. The law isn’t limited to consumers, and violations are misdemeanors carrying $100 to $500 in fines and/or up to 30 days in jail. Licensed attorneys distributing funds on their clients’ behalf are exempt. A program where the money stays in an account you control avoids the problem, so be sure to ask where your monthly deposits will be held.
Does Oklahoma’s 45 percent rate ceiling help with a merchant cash advance?
Only if you can convince a court that your merchant cash advance is really a loan. Under 14A O.S. 3-605, any finance charge on a loan that is not a consumer loan cannot exceed 45%, the rate referenced in 14A O.S. 5-107(2). Since your MCA is, in form, a purchase of receivables, and your contract likely picks New York law, any provider telling you about the 45% ceiling without discussing these two concepts is doing you a disservice. On whether you’re personally liable at all, see Am I personally liable for my business MCA debt?
Frequently Asked Questions
Can the MCA funder use a confession of judgment against me in Oklahoma?
Not very likely. Under 12 O.S. 689, the debtor must confess judgment in person before the court, with the creditor’s assent, and since 2019 New York bars filing confessions against non-residents, so the funder will likely sue on the contract and bring the judgment back to Oklahoma.
Does the business-use cap apply to my farm or rural acreage?
On its face, no: the 25% test and the $5,000 cap apply only to homesteads within a city or town, and the rural 160-acre homestead has no business use test. No ruling we found settles this, so consult an attorney.
What types of business assets are exempt in Oklahoma?
Oklahoma law exempts tools, apparatus and books used in your trade or profession up to $10,000 in total value, and one motor vehicle up to $7,500. It also exempts qualified retirement funds, including IRAs and SEPs, and 75% of wages earned in the last 90 days. Oklahoma has opted out of the federal bankruptcy exemptions, so these same exemptions apply in bankruptcy.
How long can a judgment creditor enforce their judgment in Oklahoma?
It becomes dormant if the creditor doesn’t issue an execution, file a notice of renewal, serve a garnishment summons or seek an income assignment within five years of the judgment or the last of those actions. See 12 O.S. 735.