Can you get rid of all of your debt? No, but you have options.
Video Transcribed: Edward Kelley here with 188 Debt Line, answering your bankruptcy questions. And this week we’re going to do a series, the top five questions that I get from you as a bankruptcy attorney.
Number five, can I get rid of all of my debt? And related question, can I keep any debts that I like? Okay, let’s do part one. Can you get rid of all your debts? No, I’ll give you the bad news first, that’s always a good policy, get that out of the way. Student loans, can’t do anything with it, although you can generally use that if you have a payment set up as an expense that will bring your income down and if you’re on the line, you might make too much money to do a seven. A student loan payment can help you and one of the great things about a bankruptcy, it can get rid of everything else so you can concentrate on the debt you can’t get rid of.
As of now, student loans are not forgiven or dis chargeable, although you know blood from a turnip. If you don’t have any assets to attach or any way to collect, there’s not a lot they can do. But not dis-chargeable. Child support, same thing for obvious reasons. Taxes, now a lot of people don’t know this, but if your taxes are three years old, they can be discharged. Bear in mind, that’s three years from when they’re filed. So if it’s 2019 and you’re just now filing a 2012 tax return, that doesn’t mean it’s automatically three years old. The three years will start from when you file it. But if they’re three years back, that can all be discharged.
If you have mixed debt, if you have tax debt three years old and then some that isn’t, you can get rid of all the debt that is three years old. So, that’s a big bonus in a bankruptcy. And in another video I’ll talk about a chapter 13, how you can take care of student loans and tax debt altogether through a chapter 13 plan.
Other than that, generally yes, criminal penalties, generally not. Although related civil costs are in some cases dis chargeable. That’s when you’ll have to call me on case by case situation. Other than that, debts are good to go. The basic rule is if it’s a secured debt, if there’s collateral on it, if you want to get rid of that debt, you give up the collateral. On a related video I’ll tell you about cramming down and that’s how 
you can take a vehicle if you bought it a certain amount of time ago, for example, and you can simply pay off the value of the vehicle and the remaining balance that you may owe.
By that I mean the blue book value, not what the creditor says the value is. And the remaining balance becomes an unsecured debt which is dis chargeable and you can lower an interest rate. So different video, we’ll talk about that, but just to wet your appetite.
But generally, if a debt is properly secured by property and you want to get rid of that debt, you need to give up the property and unsecured debts are gone. Now bear in mind if you have any assets, those have to be liquidated. And I’ll tell you in another video, it’s actually number one about what are assets that can be liquidated and what is exempt and totally protected. So I’ll just, again, wet your appetite. Your car, up to 7,500 in value per person and your home.
In Oklahoma we’ve got great exemption laws, generally protected. IRAs, proper retirement accounts, those are good. The rest of the unsecured debts beyond whatever assets are liquidated and paid out to them, totally discharged.
Okay, so part two of that question. So can I keep a credit card here and there? Can I keep a doctor’s bill that I like and the answer on that is no. Give you the bad news again. There’s something called a preference. You’re not allowed to pick one creditor over the other. And though a medical provider can’t do anything about you discharging an unsecured debt, they can in fact stop providing services if they’re a business.
It’s a little bit different with state providers and emergency situations. But that’s a consideration to take into account when you do a bankruptcy and no, you can’t keep a credit card. What you can do is if you have one with a zero balance, that’s not a debt. So that would be okay. Although you can’t pay… There’s something called a look back period where if you paid too much to one creditor, then that’s a no-no.
So hope that’s the long and short of it. So the answer is with some exceptions, yes, you can get rid of all your debt and yes, you have to get rid of it all. A lot of my clients are grudgingly glad that they are forced to get rid of all their debts. They feel maybe more guilty about some. When it’s a predatory lender, usually doesn’t feel too bad. And usually they’ve gotten whatever they lent to you in the first place and now you’re just paying fees and interest. But some debts may have some sentimental value or maybe a friend, relative, but got to get rid of them all. And if you’re trying to make a fresh start, that’s what you want to do anyway. So that’s number five of the top five questions that I get as a bankruptcy attorney.