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Oklahoma Debt Relief: Your Guide to State Laws and Managing Debt
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It’s not uncommon for people to go into debt for a variety of reasons, then become trapped to such an extent that they can’t pay it off. This predicament can damage your credit, making it even harder to qualify for better loans, and lead to some undesirable options.
There is hope, however; there are rules and restrictions in Oklahoma that can protect you from overly aggressive lenders and debt collectors, if you’re having a hard time paying off your debt. We’ll discuss those limits so that you know what you’re legally accountable for, rather than what harassing debt collectors might be trying to get you to agree to.
- Debt in Oklahoma: At a glance
- Debt collection in Oklahoma
- Oklahoma debt relief programs
- Payday lending laws in Oklahoma
- Tips to tackle debt in Oklahoma
- Filing for bankruptcy in Oklahoma
- The bottom line
Debt in Oklahoma: At a glance
|Type||Per capita balance, 2018||Rank out of 50 states*||U.S. per capita balance|
|Credit card debt||$2,590||41||$3,220|
|Student loan debt||$4,540||40||$5,390|
|*No. 1 is the highest
**First-lien debt only
Source: Federal Reserve Bank of New York, March 2019
Debt collection in Oklahoma
Life would be great if we could all pay off our debt on time, if not early. But it doesn’t always work out that way. If you can’t make your monthly payments on time, aside from your credit score being harmed, a few things will happen.
Your lender may hire an outside collections agency or attorney to try to get you to pay the debt. It can also sell your debt to a debt buyer, which now owns your debt and will require your payment to clear the debt from your name.
This sounds scary, but it’s important to know that you do have clear protections laid out by federal law (the Fair Debt Collections Practices Act, in this case). These laws only apply to third-party debt collectors in Oklahoma, as the state hasn’t extended these rules to the original creditor.
However, third-party debt collectors cannot:
- Call you before 8 a.m. or after 9 p.m.
- Contact you at all (except in certain cases), if you ask them in writing to stop
- Harass or intimidate you with threats, arrest or lies
- Tell other people (such as your employer or friends and family) that you owe money
Another thing that debt collectors can do is sue you for the debt. The chances of this happening may go up if you owe a very large debt, or if you live in a state that allows debt collectors to garnish your wages (allowed in Oklahoma, to an extent).
If a debt collector does sue you in Oklahoma, a few things can happen, assuming the judge rules against you. A judge can issue a court order for a debt collector to garnish your wages, up to 25% of your after-tax pay).
However, if you own a home, it’s safe from debt collectors in the state, unless you don’t pay your mortgage. In that case, the lender can foreclose on your home.
Responding to collection letters
First and foremost when any debt collector contacts you: Make sure it’s legit and not a scam or a consequence of identity theft. Ask them to send you a written verification letter (so you have a record) with the following information:
- The name and address of the collection agency
- The original creditor’s name (i.e., who sent you to collections)
- The amount and breakdown of the debt (fees, principal, interest, etc.)
- What the debt is for
Once you get this information in the mail, you can decide what to do with it. Aside from ignoring it (never a good idea), you can ask the debt collector to do the following things:
- Contact your lawyer, not you
- Stop contacting you at all
- Stop contacting you at certain places (such as at work)
You can also notify the debt collector that you don’t actually owe this debt and ask for more information about it.
The Consumer Financial Protection Bureau (CFPB) has sample templates for each of these situations to use to communicate with debt collectors. In some cases, you only have 30 days to respond to the creditor, so make sure you do it quickly.
If the debt collector is harassing you or not following the rules, you can also file a complaint with these three agencies:
- CFPB Complaint Submission Form
- Federal Trade Commission (FTC) Complaint Assist
- Oklahoma Attorney General Consumer Complaint Form
Another option is to file a lawsuit against the debt collector if they’re really overstepping boundaries. It’s important to note that even if you sue them and get a favorable judgment, you will still owe the original debt.
Understanding Oklahoma’s statute of limitations
Although a debt collector can sue you in Oklahoma if you don’t pay your debt, this right isn’t all-encompassing. They can only sue you within a certain period of time, known as the statute of limitations. After that period passes, they can no longer sue you for the debt, although they can still contact you to try and get you to pay up. Here are the statute of limitations for different kinds of debts in Oklahoma:
|Oklahoma Statute of Limitations on Debt|
|Mortgage debt||5 years|
|Medical debt||5 years|
|Credit card||5 years|
|Auto loan debt||5 years|
|State tax debt||10 years (for a lien to be placed on your property)|
If you’re unable to pay a debt and you’re waiting out the period for the statute of limitations to end, it’s also important to know that you can reset the clock if you take certain actions. If you agree to send in a payment, no matter how small, or agree to do so in the future, that clock will restart.
For example, if it’s been four-and-a-half years since you paid anything toward your credit card balance and you agree to send in a payment after speaking with a debt collector, the clock starts fresh and now there’s a new five-year window in which a debt collector can sue you for non-payment.
If you do pass the statute of limitations time period, it’s important to know that you still will owe that debt, and debt collectors may still contact you to try and collect it. The only thing that changes is that now debt collectors can’t sue you for it. It will still be reported on your credit report for up to seven years after your last payment, which can lower your score and make it more difficult to qualify for loans and credit in the future.
In some cases, a creditor may eventually decide to stop collecting on a debt and forgive it entirely. If this happens, you’ll get an IRS Form 1099-C in the mail, and you may owe taxes on that forgiven debt amount.
Oklahoma debt relief programs
If all of this sounds like a lot of information, it is. There are even attorneys out there who specialize in debt relief and assistance. There definitely are times when hiring such an attorney is worth it, such as if you’re being sued by a debt collector. But if you can’t afford an attorney or if you just need help in dealing with your debt burden or collections, a debt relief program might be better for you.
The National Foundation for Credit Counseling is the best resource for people looking for help in dealing with their debt. This is an organization that can refer you to reputable nonprofit member agencies that can assist you in dealing with debt collectors, developing good money management skills such as budgeting, and creating a debt management plan. Services provided by these agencies may be free, or at least reasonably priced.
Watch out for any credit repair or debt relief firms that promise to make any promises with a “100% guarantee” or require upfront service fees before they do any work. These could be red flags you’re dealing with a bad actor.
Payday lending laws in Oklahoma
Payday loans are short-term loans (commonly between 12 and 45 days) designed to tide you over if you run out of money before your next paycheck. Because they usually come with a very high annual percentage rate (APR), payday loans aren’t usually the best debt relief solution. The following are Oklahoma’s limits on payday loans:
Maximum loan amount: $500, not including the finance charge
- Maximum loan term: 45 days
- Finance charges: $15 for every $100 borrowed up to $300; $25 for every $100 borrowed after that
Be aware: Payday loan fees can be very high; lenders can charge $15 for every $100 borrowed between $100 and $300, and $25 for every $100 borrowed between $300 and $500. In Oklahoma, payday loans are limited to just $500 total, not including any fees.
One unique aspect of payday lending in Oklahoma is that if you’ve taken out three payday loans back-to-back (from rolling them over), you can request an installment payment plan from your lender. This means that instead of writing another postdated check (or signing an ACH authorization form) to pay off your third loan, you can break those payments up into four equal payments spaced out over your next four paydays.
If you opt for this easier repayment plan, a lender can charge you a processing fee of up to $15 total. You also aren’t allowed to take out any new payday loans while you’re on this installment plan, or for at least 15 days after you’ve paid it off.
Tips to tackle debt in Oklahoma
Regardless of whether you’re having trouble making your payments or not, there are a lot of options available in Oklahoma to help with lowering your monthly payments, or even restructuring your debt so that you can pay it off sooner. Here are some suggestions:
Consolidate your Oklahoma debt
If you have several different types of debt you’re working to pay off, such as multiple credit cards and/or personal loans, one thing that can simplify the process is consolidating your debt. This essentially means taking out a single new personal loan to pay off your other debts and rolling everything into one loan. Ideally, this loan would carry a lower interest rate than your current debt, so that you’re also saving money. You can also stretch out your new loan for a longer period so that your monthly payments are lower. But be aware that this may mean you’ll end up paying more interest overall, because you’ll be in debt longer.
However, there are a few downsides to this approach. If you don’t have good credit, it can be difficult to find good rates or be approved for a loan, even after you’ve shopped around for lenders. And some types of debt, such as federal student loan debt, come with certain protections such as the option for income-driven repayment plans that you will erase by consolidating them into private loans.
You may also end up paying more in fees to consolidate your loans than you’d save, if you don’t run the numbers. Finally, if your debt is a result of poor money management skills and you don’t do anything to address those underlying habits, a consolidation loan may only make it easier for you to slide further into debt.
One popular option for auto loans and mortgages specifically is to refinance your debt, if you qualify to do so. Rather than consolidating multiple loans, you still only have one loan — only this time you replace your current loan with a new one.
There are a few reasons to refinance an auto loan or mortgage:
- To extend your payments further, and thus get a lower monthly payment
- To shorten the loan term, so you can pay it off faster
- To get a lower interest rate
- To switch from a variable-rate loan with unpredictable payments to a fixed-rate loan with predictable payments
Remember, though, that extending your loan further means you may pay more in interest over time, even if you refinance at a lower interest rate.
Use a balance transfer card
You also can also consider transferring your credit card debt to a balance transfer credit card. This strategy can save you money because these cards often offer a promotional period during which you won’t pay any interest on existing credit card balances that you transfer over to your new card. It’s essentially like a short-term interest-free loan, although most balance transfer cards do charge a balance transfer fee to move your debt from one credit card to the other.
This strategy works best if you can qualify with a good credit score and know you’ll be able to pay off your credit card debt before the promotional interest period is over. If you don’t, you will start owing a conventionally high rate of interest on the remaining balance, unless you move that debt to a new balance transfer card (and potentially pay even more balance transfer fees).
Filing for bankruptcy in Oklahoma
If all else fails, and you simply can’t repay your debt, one option is to file for bankruptcy. This does come with a lot of costs, but it still may be a better choice than your alternatives. It’s highly recommended to hire a bankruptcy attorney if you decide to go this route, because navigating the laws surrounding bankruptcy can be difficult. The Northern District of Oklahoma and the Oklahoma Bar Association maintain a listing of attorneys and organizations that may be able to help you for free or at low cost if you qualify.
It’s also important to note that there are two main types of bankruptcy that may apply to you. Chapter 7 bankruptcy is the one most people think about, in which some or all of your assets are sold to repay your debts. Chapter 13 bankruptcy, on the other hand, can allow you to keep some of your assets (such as your home) in exchange for setting up a three- to five-year repayment plan. At the end of that repayment plan, some or all of your debts may be forgiven and you can start over again, minus the hit to your credit score.
The bottom line
Although being in debt can be incredibly stressful, you have lots of options to consider. Yes, some of them may be painful and take a long time to resolve. None of them are easy. But you don’t have to be trapped in debt forever.
These strategies can help you get out of debt in Oklahoma, whether it’s working out a deal with your debt collectors, refinancing or consolidating your debt — or even filing for bankruptcy. No matter what your situation, you can move past your debts and start over fresh, if you follow the right steps.
The information in this article is accurate as of the date of publishing.