OKLAHOMA CITY — Despite the attention paid to billion-dollar business failures, they make up a small fraction of bankruptcies in Oklahoma and nationwide.

Ninety-six percent of the 9,127 bankruptcies filed in Oklahoma in 2007 were personal bankruptcies, according to the American Bankruptcy Institute. The national percentage was similar.

Bankruptcy remains the only way for many Oklahomans to escape financial troubles, said Jeff Raymond, executive director of the nonprofit Oklahoma Foundation for Consumer & Patient Rights.

Statistics on repeat filers show far too many Americans never escape the cycle of debt.

Nationally, 30 of Chapter 13 filers in 2007 had filed for bankruptcy during the previous eight years.

“No one wants to see abuse of the system, but the pendulum has swung too far in the direction of those who market credit cards to college students and give homebuyers mortgages they obviously can’t afford,” Raymond said.

Myths about bankruptcy persist, says John Mashburn, an Edmond bankruptcy attorney and trustee for the Western District of Oklahoma.

Among them:

• Filers lose everything: Most states, including Oklahoma, have exemptions for retirement income, cars, homes and clothes, up to a certain value.

• Filers lose nothing: “Means testing” and close scrutiny keep those able to pay from abusing the sweeping debt relief offered under Chapter 7 and instead channel them to Chapter 13, where debts must be repaid.

Mashburn said medical problems, divorce and job loss lead to many bankruptcies.

“They may have been two-income families, and one lost their income,” he said.

Trustees compare filers’ incomes with averages to help determine whether they quality for Chapter 7. Filers must disclose substantial information about their finances.

“If it’s done correctly, it’s a pretty precise determination,” Mashburn said of qualifying for debt relief. “Full disclosure is the price for the fresh start people get from bankruptcy,” he said.

According to the Administrative Office of the United States Courts, Oklahoma Chapter 7 filers in 2007 earned roughly $2,100 a month. Their expenses were roughly $2,200 a month.

Mashburn said up-front costs make corporate bankruptcy an expensive undertaking. Small businesses typically liquidate rather than attempt to reorganize under Chapter 11, he said.

“There’s an extensive amount of litigation immediately — as in the first day of filing,” said Mashburn, who represents several SemGroup LP creditors. “It just real quickly can consume a lot of money.”

Mashburn said bankruptcy doesn’t guarantee companies will emerge strong. Overall, he said, the bankruptcy system works as Congress intended when it changed the law in 2005.