No Collateral, High Priority, No Discharge
Video Transcribed: Good afternoon everybody, my name is Edward Kelly. I am a bankruptcy attorney in Oklahoma City, here with another 3 Minutes to Financial Freedom.
We’re in video 3 in our 5-part series on what kind of debts are there in bankruptcy and what can I do with them. So I gave you a summary. We’ve got secured, has collateral backing them, unsecured, no collateral, hybrids, part secured, part unsecured, priority unsecured, they’re unsecured but you can’t just get rid of them, special types, and administrative.
So far we’ve talked about administrative, secured, unsecured, and hybrids. So let’s talk about that priority unsecured. So what does that mean? Well, they’re unsecured, meaning there’s no collateral. You don’t have collateral against your student loans. You don’t have collateral against child support. They’re unsecured.
But they’re given priority and generally aren’t dischargeable. So what happens? In Chapter 7, you can’t discharge your child support ever. There are certain cases that you can file an adversary proceeding. We’ll cover this in another video. It’s unusual and difficult.
Generally, you can’t discharge your student loans. Those are federally backed student loans. You know, if you just took out a loan and that’s what you used it for, you can discharge that one. But if the government-backed it, if you went through FAFSA, you’re out of luck generally. The government’s just protecting itself.
Pretty controversial that they treat them that way. But that’s how it is. Fines to courts, some criminal restitution. These are priority unsecured. They cannot be discharged. They’re either untouched in a 7 or paid in full or partially in a 13, but anything left over stays owed and is not discharged.
So that’s how those work. We’ll be back with video 4 in this series tomorrow. Again, you can always reach me, an Oklahoma debt collection lawyer, at oklahomacitybankruptcyattorney.pro or at (405) 563-7888.