Tuesday, March 26, 2013

Student Loans and Bankruptcy

By Kelley Snyder, Paralegal and Charice Holtsclaw, Managing Attorney

Currently, student loans (whether private or federal) are not dischargeable in bankruptcy. However, with that being said, you can attempt to discharge them in bankruptcy if you can prove that the payments are an undue hardship. This can be incredibly difficult to prove though because you have to show that you are physically unable to work and you will not be able to make money (essentially for the rest of your life). This action is a separate motion that is filed with the bankruptcy court called an adversary case.

Politicians are starting to realize that student loans are becoming a major problem and they are doing what they can to provide some assistance. On January 23, 2013 three senators reintroduced the “Fairness for Struggling Students Act of 2013” and the “Know Before You Owe Act of 2013” to try to help with the student loan epidemic (Orenbuch). The goal of these acts is to revise current bankruptcy rules to allow PRIVATE student loans to be discharged (Orenbuch). This particular bill has been introduced previously and failed to pass (Orenbuch).

Federal student loans are the main issue facing borrowers today. There are approximately $1 trillion in outstanding federal student loans in the United States currently (Orenbuch). These bills do not address federal loans, just private. However, there are numerous consumer groups that are currently pushing to make it easier to discharge federal student loans as well (Orenbuch).

Many opponents believe that if these bills pass it will make it difficult for borrowers to obtain loans. They believe that lenders will impose higher interest rates, making it even more expensive to get an education. Supporters of the bills believe that it will in fact give incentive to private student loan lenders to make good loans. Knowing that they could potentially be discharged could potentially deter them from making risky loans (Cohen).

Considering that the same bill has failed previously, it is hard to judge the likelihood of it passing this time around. But, it is definitely worth keeping an eye on if you are burdened by student loan debt, especially private loans.

In the meantime, your best recourse for dealing with your federal student loan debt is to work with your lender to see if you’re eligible for the Income Based Repayment option. More information on that can be found on the Department of Education’s website here: http://studentaid.ed.gov/repay-loans/understand/plans/income-based

  1. Orenbuch, Moshe, and Meredith Roscoe. “Student-Loan Bill Won’t Get an Easy Pass.” Barron’s. 6 March 2013. 
  2. Cohen, Steve. “Allow Private Education Loan Debts to Be Erased in Bankruptcy.” US News & World Report. 6 March 2013. 

Common Law Marriage

The basic requirements of marriage are fairly straightforward: the parties must agree to marry, must be eligible to marry, and must go through whatever forms are required for marriage in that state where they intend to marry. Marriage is not, however, treated uniformly throughout the states. The formal requirements vary from state to state. In general, parties must secure a marriage license and participate in some form of a ceremony.

There are many people who have not participated in a valid ceremonial marriage but still live and share life together as though they had. Their relationship might instead be defined by an alternative doctrine. Common-law marriage is an example of one such alternative doctrine. It differs from ceremonial marriage in terms of the way in which it is entered into. While it lacks the same formalities (such as obtaining the marriage license), the other substantive limitations still apply. A formal divorce action is necessary to end a common-law marriage, just the same as a ceremonial marriage.

What are the basic elements of common law marriage?

To have a common-law marriage, the parties must first intend to be married. In addition, they must continuously cohabitate and hold themselves out as husband and wife. The “holding out” element entails the public’s perception of the couple, as well as establishing uniformity and consistency. There is essentially no such thing as a secret common-law marriage. “Holding out” might be evidenced by, among many other things: the intent and belief of the couple with respect to the relationship, opinions from members of the community as to how the community regards the couple, use of the same last name, designations on life insurance policies, wedding bands, how the parties refer to each other, and even how their bills are paid and mail is addressed.

It is important to remember, however, that not every state recognizes the doctrine of common-law marriage. According to the National Conference of State Legislatures, only nine states, including Kansas, recognize common-law marriage (along with another five that have “grandfathered” common-law marriage).

Does Missouri recognize common law marriage?

Missouri is not among the states that recognize the common-law marriage doctrine. Under Missouri Revised Statute § 451.040, “common-law marriages shall be null and void.” There is an exception for common-law marriages contracted before 1921.

In order to give full faith and credit to the laws of other states, Missouri will also recognize marriages that have been validly contracted in a different state, as long as the marriage comports with the other state’s requirements. Even if the other state recognizes the validity of a common-law marriage, however, Missouri may not recognize the marriage it if it is found to violate public policy.