Most people like yourself, who are declaring bankruptcy, often believe or have been told by peers, that all of your student loans are exempt from being discharged. In Oklahoma, there are a few parts of the law that may be able to help you. These rules are narrow in scope, but they do exist.
For example, you may be able to have a portion of your student loan discharged if the loan was not entirely used for your schooling expenses. Let’s say you took out $75,000 per year in loans, but your education-related expenses only totaled $55,000, then the remaining $20,000 may be able to be discharged.
If all of your student loans were used for educational expenses, you still may be able to get them discharged if you and your bankruptcy attorney can prove hardship. Under this part of the law, your Oklahoma city bankruptcy attorney has to prove three main factors involved:
- Your and your whole family will not be able to maintain a minimal standard of living if you are required to repay your loans.
- Your financial status will be in this state for a long time. This may pertain if you are, or have become, ill or are disabled.
- You have made an effort in good faith to repay the loans. You may have made minimum payments or at least some payments over the past months or years.
When your bankruptcy attorney makes their case for you, it must be made professionally, and all the data needed to prove these factors will need to be satisfied. Even if that is the case, it’s still in the hands of the court as to whether your student loans will be discharged. It is vital then, that you are represented by a professional Oklahoma bankruptcy attorney. Only by doing this will you increase your chances of success in this part of your bankruptcy proceedings.
The bankruptcy laws are designed as a legal, protective measure so that you can move forward with your life and future financial matters successfully. Student loans are usually a major part of your debt, and if they are discharged (or greatly reduced), this could have a life-changing effect on your future life and finances.
What Types of Debts Are Not Discharged Unless you Can Prove an Exception?
There are usually only two types of debt that fall under the category of unable to be discharged. They are:
- Student loans
- Regular income tax debt
In Oklahoma, there are commonly only three types of debt that are not discharged in your bankruptcy. Some debts can never be discharged, some are not discharged unless you and your bankruptcy attorney can successfully argue that they should be, and some are not discharged only if the creditor successfully argues that they should not be.
The courts consider your debts in specifically defined categories. Most of the categories usually do not require a court hearing to determine their dischargeability status, and you would have to prove substantially that extraordinary circumstances exist to override the common public policy.
Some examples of these types of debts are:
- Debts for court-sanctioned alimony or child support
- Debts owed to an ex-spouse arising out of divorce or separation
- Debts to government agencies for fines of penalties
- Student loans (can be affected by exceptions)
- Debts for personal injury due to or caused by a debtor’s drunk driving
- Debts to certain HOA (condominium associations) or co-op housing fees
- Debts to the court for fines or criminal restitution
There are a few debts that simply can never be discharged. Examples of these are:
- Child Support and Alimony
- Court dictated fines, penalties, and restitution for breaking the law
- Debts arising out of someone’s death due to your drunk driving
These are partial lists, which allow you to certainly ascertain that getting the outcome you are looking for in your bankruptcy case is a complex legal matter. Only with the help of an Oklahoma City bankruptcy lawyer will you likely be as successful as you deserve in your bankruptcy filing.
What Do the Oklahoma Courts Look for Regarding my Student Loans?
The Oklahoma courts are aware and may look for reasons other than just your student loans as the reason for your filing for bankruptcy. They also may determine that you have not made financial gains due to the education that your student loans permitted you to obtain.
The first three factors looked for by the courts are called the Brunner test. The Brunner test specifically addresses the discharge of your student loans in your bankruptcy. Not all courts use the Brunner test, so be sure to discuss this detail thoroughly with your bankruptcy lawyer.
Also, your student loans may not be automatically included in your bankruptcy filing. Your bankruptcy lawyer may file a separate document called a “Complaint to Determine Dischargeability”. This can be looked at as a formal lawsuit and is a part of your bankruptcy filing. In the lawsuit, you will have to prove that paying your student loans will cause “undue hardship”. So if you have student loans, carefully read the fine print with your attorney before you file for bankruptcy.
Some student loans (usually private ones) have a “universal default clause.” This means that if you file for bankruptcy, even if only for debts other than your student loans, any loans subject to “universal default” will be immediately due in full.
You deserve all the benefits of bankruptcy that you legally deserve. Schedule a free consultation with your Oklahoma City bankruptcy attorney today! Bankruptcy can positively affect you, your family, and your future financial well-being. Don’t make the mistake of not knowing your rights or of facing this challenge without the actual legal facts.