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The Purpose of the Automatic Stay

On Behalf of O’Brien Law Firm, LLC

Posted on: September 27, 2022

When filing a bankruptcy petition with the court, debtors are frequently not completely aware of the rights the bankruptcy code gives them. One of the most significant rights is the ability to be exempt from creditors’ collection efforts after the bankruptcy petition has been filed. An automatic stay is important because it stops creditors from continuing to try and collect a debt at the same time, the bankruptcy petition is being processed in the court system. It allows the debtor to carry less of the burden of accumulating debt.

Reasons the Automatic Stay is So Important

It’ll keep your lights on. The automatic stay will stop the disconnection of your utilities for at least 20 days. Your utility company cannot threaten to cut off your water, electric, gas, or telephone service because you are late on a bill. Although the cost of a power payment alone rarely makes filing for bankruptcy a good idea, it might if you have other debt you can discharge. Be aware that the utility company can ask you for a deposit to guarantee future payments.

It’ll Keep You in Your Home. The automatic stay may be helpful if you are being evicted from your home, but it is typically only temporary. The automatic stay won’t impact these eviction proceedings if your landlord already has a judgment of possession against you at the time of filing; the landlord can carry on as usual. The automatic stay won’t help you much if the landlord claims that you have been harming the property or using illegal substances there. In other situations, the automatic stay may give you a few days or weeks to move out, but the landlord would likely ask the court to lift it and permit the eviction, and the court will probably grant his request.

It’ll Stop Garnishments. When you file for bankruptcy, most garnishments are immediately stopped. You can erase eligible debt through bankruptcy, such as credit card obligations and personal loans, and receive your total wage. Be careful that debts frequently garnished—like those for continuing alimony and child support—won’t be forgiven. Depending on the bankruptcy chapter filed, past-due child support and back taxes will vary.

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Can I Keep Any Assets?

On Behalf of O’Brien Law Firm, LLC

Posted on: September 13, 2022

Most people want to know if they may maintain their property while considering Chapter 7 or Chapter 13 bankruptcy. The short response is perhaps. There is a catch to Chapter 7 bankruptcy: if you own too much property, the bankruptcy trustee may sell some of it and distribute the proceeds to your creditors.

What kind of property may you keep, then? Exemptions—state rules that outline what you are permitted to protect in Chapter 7 and Chapter 13 bankruptcy—determine the answer.

What Are Bankruptcy Exemptions?

Exemptions allow you to protect a specific amount of assets during bankruptcy, including a cheap automobile, business equipment, clothing, and a retirement account. If an asset is exempt, you won’t have to worry about it being taken or sold for the benefit of your creditors by the bankruptcy trustee assigned to your case.

Many exclusions cover particular types of property, such as a car or furniture, up to a certain dollar level. In some cases, an exemption safeguards the entire asset’s worth.

What Assets Are Non-Exempt?

Anything that isn’t protected by bankruptcy law is regarded as non-exempt, and, in Chapter 7, the trustee may sell it to recoup the debt. How much the debtor in a Chapter 13 bankruptcy will have to pay creditors whose debt is not secured by collateral is based on the value of the non-exempt property.

Non-exempt assets can include:

● Secondary residential property such as a vacation house
● A second car
● Investments (not including retirement accounts)
● Recreational vehicles like boats or motorcycles
● Art
● Musical Instruments
● Fur coats
● Extra televisions
● Jewelry
● Coin collections
● Family heirlooms

There are numerous ways for a filer to prevent a non-exempt asset from being liquidated under Chapter 7 bankruptcy regulations. You can try to persuade the trustee to take an item of exempt property in its place if it’s important to you, or you can offer to repurchase the item from the trustee.

The trustee may determine that a piece of non-exempt property is too difficult to sell or isn’t valuable enough to warrant selling it to benefit the creditors. In that situation, the trustee will formally return the item to you by filing a Notice of Abandonment.

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Most common medical conditions that lead to debt

On Behalf of O’Brien Law Firm, LLC

Posted on: August 17, 2022

Medical bills are a significant source of debt for many American households. In the United States, health care costs are behind more than $88 billion of consumer debt.

Any hospital visit or emergency treatment can quickly become a financial nightmare, but certain medical problems are more costly or require more frequent care than others.

Ongoing treatment for specific diseases and chronic pain

Most medical debt comes from specific diseases and conditions such as heart disease or gastrointestinal problems. Costly treatment is a major reason why so many Americans choose to reduce debt burdens by filing for bankruptcy.

As with specific diseases, chronic pain and injuries usually require ongoing treatment, and medical bills can add up for a long time.

One-time medical expenses

When the unexpected happens, such as a car accident or a broken bone, medical debt is often the result of turning to credit cards without any other options.

Surgery, both emergency and planned, is among the most costly one-time medical expenses. Whether it is the knee, back or another type of surgery, these procedures often cost more than average-income households are ready to take on.

Dental issues

For some individuals, teeth are a top concern leading to high medical debt. Because many people do not have adequate or any dental insurance, they may have to cover dental expenses out of pocket.

According to research by the Kaiser Family Foundation, other top medical conditions that lead to debt include mental health issues, pregnancies and infections such as pneumonia and the flu. Whatever the reason for high medical debt, struggling adults should know that there is help out there.

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American medical debt statistics

On Behalf of O’Brien Law Firm, LLC

Posted on: June 16, 2022

America has a growing medical debt problem. The United States Census claims that 19 percent of households cannot afford medical care.

The Census also says the median amount of debt was $2,000. Medical debt is particularly devastating because it often leads to bankruptcy and the forced neglect of other medical treatments.

Education is a risk factor

Some factors influence the likelihood of medical debt. Education is the largest corollary to unpaid medical bills. Over 26 percent of households without a college degree suffer from some level of medical debt. However, education above a bachelor’s degree does not necessarily decrease the likelihood of debt.

Poor health creates spiraling debt

Individuals with fair to poor health have a much greater rate of medical debt. Still, over 14 percent of healthy households cannot pay for medical bills. These families are at significant risk if an unforeseen medical emergency happens.

High medical debt afflicts lower-income families

High medical debt afflicts only four percent of the US population. The Census measures high medical debt as liabilities over 20 percent of a family’s annual income. The primary factor that contributes to high medical debt is poverty. Households that cannot afford health insurance are nearly three times more likely to accumulate high medical debt. Clearly, the combination of poverty, lack of prospects, and poor health create a snowball effect that seems impossible to alleviate.

Medical debt does not have to be a life sentence. Start by educating yourself about the various tools and resources available to people who suffer financial difficulties. Take the first step today, and start working towards a debt-free future.

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Tips for dealing with medical debt

On Behalf of O’Brien Law Firm, LLC

Posted on: May 13, 2022

Medical debt refers to the money owed for such things as a medical procedure or prescription medication. Many Americans, especially the uninsured, have medical debt resulting from an unexpected illness or injury.

Here are some tips for dealing with medical debt in the best possible way.

Negotiate

You can always attempt to negotiate the sticker price of medical bills. If you do not have medical insurance, ask about any discounts your healthcare facility provides. Many hospitals offer payment plans to those having trouble paying. Regardless of your insurance status, you can ask for an itemized bill to see exactly what the facility is charging you for.

Consider financial assistance

There are places that can help you with paying off medical bills. Ask your provider or hospital staff if they know of any organizations in your local area that provide this service. If that does not result in any leads, you can search online for medical financial assistance.

Avoid letting bills accumulate

As with any debt, you want to avoid letting medical bills pile up to the point where they become unmanageable. While you do not want to make rash decisions regarding payment, you do want to be aware of any interest that may be accruing on those bills. Attempt to pay off what you can, even if it is only a small amount.

The more you know about medical debt, the better able you are to potentially negotiate a lower payment amount, achieve better terms of payment, and avoid going into bankruptcy.

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What are the three biggest financial challenges for families?

On Behalf of O’Brien Law Firm, LLC

Posted on: May 6, 2022

Long gone are the days when a single-income family could thrive in middle America.

Many people struggle to make ends meet when life is normal, and an event such as a job loss, divorce or medical emergency can derail a family’s financial future. The top three money sinks are also the most essential budget items.

Housing

For most Americans, housing is the most significant line item of their budgets. Many people hoping to buy their first or second home are struggling to qualify for mortgage loans as the U.S. housing prices continue to climb. Additionally, renters are having trouble keeping up with their month-to-month payments as rent increases across the country. A few key reasons for the current housing crisis include:

  • Low inventory of available existing homes for sale or rent
  • Slowed permit process for new construction
  • Decreased workforce in construction and agricultural industries

Childcare

Single-parent households or dual-income families rely on childcare providers to take care of young children during shifts. Reliable child care is expensive, and according to a recent survey, parents spend ten percent or more of their annual income on daycare.

Healthcare

Even with employer-subsidized insurance, a family of four may pay as much as ten percent of their monthly income on health coverage. Additionally, nearly one-fourth of Americans carry medical debt that they are struggling to pay off.

Bankruptcy serves as a lifeline for those circling the drain. The stress that comes with money troubles can destroy a family, but having the courage to hit the reset button provides much-needed relief and the space to start again.

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3 Ways bankruptcy can benefit families

On Behalf of O’Brien Law Firm, LLC

Posted on: February 16, 2022

You may view the process of filing bankruptcy in a negative light. Filing for bankruptcy is a serious undertaking.

Bankruptcy also provides many benefits to families not available outside of the bankruptcy process.

1. Keep your home

If you are behind on your mortgage payments, you know how hard it is to catch up with the arrears. Lenders add late fees and penalties to increase the amount you owe. An aggressive mortgage holder can start foreclosure proceedings against you to take possession of your property. If the lender forecloses on your home, you will lose the property.

By filing for bankruptcy, you can stop any foreclosure proceedings. As part of your bankruptcy, you can negotiate a way to pay back any arrearage and stop the running on penalties and interest.

2. Stop creditor harassment

If you receive regular calls from creditors trying to collect bills you cannot pay, a bankruptcy filing will stop creditors from calling. Bankruptcy also stops any litigation proceedings creditors may have against you. The only recourse creditors will have is through the bankruptcy court.

3. Eliminate debts

If you qualify to file a Chapter 7 bankruptcy, you can probably eliminate most of your unsecured debt, including credit cards and medical expenses. If you file Chapter 13, you will likely pay a small percentage of the amounts owed to unsecured creditors through one monthly plan payment.

Bankruptcy can provide significant relief for your family if you have overwhelming debts that you cannot pay. After filing, you can start over and change your financial future.

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Handling a credit report after bankruptcy

On Behalf of O’Brien Law Firm, LLC

Posted on: February 6, 2022

Bankruptcy can be a burden in many ways. Even after you pay off your debt and get on solid footing, you still have to worry about creditors reporting your bankruptcy information.

Negative information in your credit reports can affect your financial options in the future, so you should be mindful of the ramifications. At the same, you should not feel as if your bankruptcy will leave a permanent mark.

Your creditors’ rights

For up to a decade, a credit bureau can keep your bankruptcy on your report. Your creditors can also keep negative information such as judgments and lawsuits for up to seven years in most cases. On top of this, if you do not pay some of your tax liens, this information can stay on your record for 15 years. You should keep all of this in mind if a company offers to remove negative information earlier than the standard timeframe.

Your rights

Errors can easily happen in your credit reports and you have the right to bring them into question. For one, the Consumer Financial Protection Bureau is always there if you have a complaint. Also, if you have trouble getting credit with a company because of a report, the Fair Credit Reporting Act entitles you to a free copy of the report (as long as your request is within 60 days). The company that denies you must also provide you with the phone number, name and address of the credit reporting agency.

While a bankruptcy discharge can help you, you should prepare yourself for what may come after. Understanding how credit reports work can help you repair your finances and move on.

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3 ways to take control of your credit cards

On Behalf of O’Brien Law Firm, LLC

Posted on: December 27, 2021

If you have excessive credit card debt, you are far from alone. In fact, in 2020, the average American owed more than $5,000 to credit card companies. This makes sense, as many individuals have little choice but to reach for credit cards to cover both ordinary and emergency expenses.

Having credit cards is a good way to build a good credit score. If you accumulate too much debt, however, your credit cards may work against you. Here are three ways to take control of the plastic in your wallet or purse.

1. Stay within your means

Because many credit cards offer cashback and other types of rewards, it can be tempting to pay with your card. Still, you should not let your credit cards lure you into developing poor spending habits. If you can stay within your means and pay off your credit card balances each month, you are likely to realize some immediate financial benefits.

2. Look for other options

Credit cards often come with massive interest rates. If you are not able to pay off your total balance at the end of a billing cycle, you are likely to pay more for goods and services than they are worth. Therefore, if you have an unexpected expense, it may be wise to look for other financing options. For example, your bank may offer you a loan at a lower interest rate than your credit card.

3. Open your statements

If your outstanding debt makes you uncomfortable or nervous, you may not open your credit card statements. Still, to regain control over your finances, you need to know how much debt you have, how much credit you have left and how much interest you are paying.

Ultimately, if opening your credit card statements causes you to panic, you may want to explore bankruptcy or other debt-relief options.

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An automatic stay offers protections but there are limits

On Behalf of O’Brien Law Firm, LLC

Posted on: November 3, 2021

When you file for bankruptcy, you activate an automatic stay, which puts a halt to creditor harassment.

There is even more to the implementation of an automatic stay that should allow you to sleep better at night. However, it cannot solve every problem.

Keeping the lights on

Perhaps a gas, electric or water company threatens to cut off your service because you are behind on payments. An automatic stay can prevent disconnection, usually for 20 days or more.

Avoiding foreclosure and eviction

If you are a homeowner and behind on your mortgage payments, the stay will stop foreclosure, at least until your bank finds a way to continue the process. If your landlord is threatening to evict you, the automatic stay will buy you a little more time to remain in your home. Keep in mind, however, that courts often favor the landlord in disputes with tenants and a court case once instituted is likely to continue.

Stopping wage garnishment

After you file for bankruptcy protection, an automatic stay will put an end to wage garnishment until the stay is lifted.

Understanding the limitations

There are certain situations an automatic stay cannot control. For example, it will not prevent the Internal Revenue Service from auditing you or from issuing a tax assessment. However, the automatic stay will prevent the IRS from placing a tax lien against your property. Also, the stay will not help if you owe child support payments. If you are dealing with a criminal proceeding, part of which also concerns a debt you owe, the automatic stay will stop the debt, but the criminal portion will continue.

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Can you get rid of credit card debt with bankruptcy?

On Behalf of O’Brien Law Firm, LLC

Posted on: October 22, 2021

If you have been struggling to pay for everyday items recently, it may not surprise you that prices have increased. In fact, the U.S. Bureau of Labor Statistics consumer price index shows a 5.4% jump in prices in the last year alone. This may leave you with little choice but to reach for your credit cards to make ends meet.

Credit card debt can sneak up on you quickly. If you have excessive debt or can only make the minimum payments on your cards, you may be looking for debt-relief options. Fortunately, with both Chapter 7 and Chapter 13 bankruptcy filings, you can probably discharge most or all of your credit card debt.

Chapter 7 bankruptcy

With Chapter 7 bankruptcy, you disclose all your assets and debts to the bankruptcy trustee. The trustee may then sell some of your assets to pay your creditors. There are many exemptions, though, so you are not likely to lose everything. Then, you no longer have to pay debts that qualify for discharge. Unsecured debts, like credit card balances, unusually fall into this category.

Chapter 13 bankruptcy

Chapter 13 bankruptcy works differently than Chapter 7 bankruptcy, as you and the bankruptcy trustee come up with a repayment plan for your outstanding debts. At the end of your repayment period, which may be three or five years, your remaining credit card debt is typically dischargeable. That is, once you complete your repayment plan, your qualifying credit card debt goes away.

There are many factors that influence whether your debt is dischargeable during bankruptcy. Ultimately, so nothing catches you by surprise, it is critical to explore all your legal and financial options before filing for either Chapter 7 or Chapter 13 bankruptcy protection.

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3 Truths to change your perspective on bankruptcy

On Behalf of O’Brien Law Firm, LLC

Posted on: September 17, 2021

If you are drowning in debt and your self-esteem and motivation are at their lowest, you are not alone. The truth is, facing unpayable debts can be a terrifying and stressful experience for many people. Anxiety and depression are common.

Despite everyone’s constitutional right to file for bankruptcy, there are still many lingering myths and stigmas that can keep debtors down throughout the process. To help overcome these feelings, it can be helpful to shift your perspective on things.

Debt does not define your worth

There are many reasons why a person might have debt. While some reasons might reflect personal choices like poor money management, others do not. For example, significant consumer debt in the U.S. reflects medical emergencies. Regardless, your reasons for debt do not define your worth.

Bankruptcy is a constitutional right and protection

At the end of the day, bankruptcy is one of your constitutional protections. It protects you, the consumer, not the creditors to whom you owe money. When you think about the logic of the situation, it makes sense why they would not encourage you to file; it is not in their favor.

Bankruptcy is an opportunity

For consumers who are considering bankruptcy, debt can feel crushing. Sometimes, it can feel like failing. While you may be struggling right now, filing for bankruptcy can give you the opportunity to both start over as well as increase your knowledge about personal finances and budgeting.

Undeniably, facing bankruptcy can be challenging, but changing your perspective can end up changing your entire situation.

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Why so many Americans file for bankruptcy

On Behalf of O’Brien Law Firm, LLC

Posted on: September 2, 2021

A financial situation leading to bankruptcy could happen to any household faced with unexpected medical costs or a sudden loss of income. Whether used to seek relief from overwhelming consumer debts or to stave off foreclosure, bankruptcy may offer a workable path forward.

Health care debt is a common cause of bankruptcy; as noted by the American Journal of Public Health, medical bills contributed to nearly 67% of American bankruptcies in 2019. The U.S. Census Bureau reported that 19% of American households were unable to pay their medical bills in 2017. Households with children or residing in southern states were more likely to experience unmanageable medical debt.

Medical expenses often lead to financial hardships

Although many employers provide health insurance, out-of-pocket expenses and co-pays add up quickly. If an individual needs time off to recover or care for an ill family member, the loss of income could have a significantly negative effect on a household’s ability to manage a budget.

Financial hardships generally begin when a household can no longer meet its normal monthly expenses. While attempting to cover basic necessities, the overwhelming burden could take a painful toll on a family’s emotional and mental well-being.

Bankruptcy may provide the needed relief

As described in an opinion article in The Chattanoogan.com submitted by a U.S. district judge, the bankruptcy court acts as a “court of second chances” for individuals faced with unmanageable debts. Individuals often file petitions because of an economic downturn or financial issues they had no control over.

Many debtors begin to consider bankruptcy for relief after receiving phone calls and letters from collection agents threatening legal action. Filing a petition may stop collection activity and qualify for a discharge of unpaid consumer debts including medical bills.

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Can medical debt be discharged during bankruptcy?

On Behalf of O’Brien Law Firm, LLC

Posted on: July 13, 2021

Falling ill or facing an injury may leave you strapped for cash. If you are unable to work, you may sink further and further into debt. Bankruptcy may prove the best way to relieve some of the stress debt causes.

What happens to the medical debt during bankruptcy? The good news is that, like most unsecured debts, medical bills are available for discharge. Depending on the route you take through the process, the way the court handles it varies.

Chapter 7 discharge

Chapter 7 bankruptcy involves liquidating certain assets to pay a portion of your debts. A court-appointed trustee will place your creditors in line to receive payment after this liquidation. Secured debts are those things with collateral attached, such as your home. Unless you want out of your mortgage, you will likely retain your home even during liquidation. After secured debts come those that do not have collateral. These unsecured debts include credit cards and medical bills. If you follow the terms set forth by the trustee, the judge will discharge your unsecured debts if there is not enough money to pay them. This includes your medical bills.

Chapter 13 repayment

Chapter 13 bankruptcy does involve the discharge of unsecured debts, but it also requires repayment of a portion of the debt. The hallmark of Chapter 13 bankruptcy is a repayment plan that fits with your income. The trustee gathers your debts, looks at your income, and gives you one monthly payment to make for a period not to exceed five years. After you make the requisite payments, the judge will discharge the remaining debts, including medical bills.

Bankruptcy may provide you a way to get out from under the medical bills that put you in debt in the first place.

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Chapter 7 and 13 bankruptcy: a brief intro to the 341 meeting

On Behalf of O’Brien Law Firm, LLC

Posted on: May 14, 2021

Bankruptcy is a valuable tool provided by the government to grant individuals like you the chance for a fresh start. Chapter 7 bankruptcy is one of the options available to consumers and involves the sale of your nonexempt property to pay off debts. The other alternative, Chapter 13 bankruptcy, involves the development of a repayment plan instead.

Both of these require you to attend a 341 meeting, or creditors’ meeting. This is a meeting with your bankruptcy trustee, your legal representative if you choose to have one and your creditors (in some cases). While this may seem like a scary prospect, it is usually simple and often short, sometimes ending in under five minutes.

The purpose

The 341 meeting is just the process of making sure all of the necessary information is right, trying to spot out possible estate administration problems and identifying nonexempt property. The goal is for the trustee to review the details and check their accuracy. It is not a court hearing, and, in spite of its name, your creditors may not even be there. The meeting is not for them to pressure you. In most cases, they opt out since it is basically an information session.

The procedure

Your bankruptcy trustee puts you under oath to be honest and verifies your identity by asking to see your photo ID and a document showing your social security number. Said trustee then asks you required questions and may ask some discretionary questions. These may be about nonexempt assets (for Chapter 7), repayment plan setup (for Chapter 13), income, child support, spousal support or other factors.

The idea of a 341 meeting is intimidating to many. However, as long as you answer all questions truthfully, it usually is not as bad as you may think.

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3 benefits to filing bankruptcy

On Behalf of O’Brien Law Firm, LLC

Posted on: May 11, 2021

Bankruptcy allows you to wipe your debt clean to start over. It can help you rebuild your credit and learn to manage your money wisely.

There are also benefits to be had during the bankruptcy process.

1. Automatic stay

Once you file for bankruptcy, the courts send an order to all your creditors preventing them from starting or continuing to take action to collect debts. It suspends the proceedings until the completion of the bankruptcy process.

The automatic stay, however, does not have the power to stop: 

  • Criminal proceedings 
  • Tax audits
  • Child support or alimony 

Filing for bankruptcy a second time in the same year may give you the option of requesting an extension of the first automatic stay. 

2. Dischargeable debts

Bankruptcy gives you the ability to discharge debts to give you a fresh start. The discharge releases you from liability for the debt and keeps the creditors from going after you. Most Chapter 7 filers get the discharge after the completion of the bankruptcy process.

If you file a Chapter 13 bankruptcy, a discharge is not as easy to get. The courts may allow you to discharge non-priority unsecured debts. Some of these include credit card balances, personal loans and medical bills.

3. Bankruptcy exemptions

Bankruptcy law allows you to keep all or part of your property away from creditors. These exemptions may include your home, furniture and items you use for business.

Neither Mississippi nor Tennessee allows you to choose to take federal exemptions.

Bankruptcy is a means for you to begin again financially. Take the time to look over how the process can work for you.

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3 ways a bankruptcy attorney can facilitate a fresh start

On Behalf of O’Brien Law Firm, LLC

Posted on: March 13, 2021

For many Americans, debt has reached crisis levels. In fact, the average person in the U.S. owes roughly $93,000 to creditors. This figure includes about $5,000 in credit card debt and more than $16,000 in personal loans.

While having some debt usually makes good financial sense, accumulating too much may ruin both your credit score and mental health. Fortunately, a bankruptcy attorney may be able to help you make a fresh start in three critical ways.

1. Stop collections activities

There should be more to life than constantly struggling to pay monthly bills, credit card minimum payments, medical expenses, student loans and other debts. If you fall behind, though, you may experience anxiety every time the phone rings or you walk to the mailbox. Your bankruptcy attorney can probably stop collections activities in their tracks, at least temporarily.

2. Address outstanding debt

Your bankruptcy attorney should explain all your options for debt relief. Depending on the type of bankruptcy you choose, you may be able to discharge many of your outstanding debts. Alternatively, you may be able to come up with a repayment plan you can afford. Either way, you may be able to keep many of your assets.

3. Prepare a workable budget

After your bankruptcy process concludes, you are likely to have additional resources to devote to your remaining debts. Rather than constantly worrying about paying bills, you can prepare a workable budget.

If you stick to your budget, your credit score is likely to rise. Your bankruptcy attorney may recommend other ways to secure your financial future. Addressing your debt proactively, though, is likely the first step on your road to financial recovery.

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What if I miss or can’t pay Chapter 13 bankruptcy payments?

On Behalf of O’Brien Law Firm, LLC

Posted on: February 5, 2021

The repayment term for Chapter 13 bankruptcy is three to five years. During that time, it is not uncommon for some people to experience changes in finances that interfere with their ability to stay current on their bankruptcy obligations.

Job loss, serious illness, death, and divorce are some of the many reasons why some people encounter difficulty making their bankruptcy payments. Fortunately, the law offers the following solutions for people who are unable to pay their Chapter 13 bankruptcy payments.

Payment suspension

Chapter 13 bankruptcy allows eligible debtors to suspend payments for short-term financial emergencies. To qualify, trustee approval is necessary and the suspension term is three months or less.

Plan modification

Chapter 13 bankruptcy plan modification is an option for debtors who are experiencing a temporary setback in their ability to make on-time payments. The interruption must last longer than three months. Debtors must also maintain an income level that allows them to make ongoing Chapter 13 payments. Debtors who pursue dismissal do not retain the protection of the automatic stay and are subject to debt collection calls, wage garnishments and foreclosure or repossession.

  • Restructure payment terms for unsecured debts
  • Property surrender to lower payments
  • Dismissal

Changes in income like job loss, hospitalization, etc., that cause long-term income loss or an inability to pay are generally not eligible for modification. There are also circumstantial limitations to bankruptcy plan modifications.

Bankruptcy plan conversion

Depending on the cause of their current financial challenges and amount of income, debtors may not qualify for bankruptcy modification but qualify for Chapter 7 bankruptcy protection if their income passes the means test. Chapter 7 can help those experiencing long-term financial stress to start over when they are no longer able to meet Chapter 13 bankruptcy requirements.

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What filing for bankruptcy can stop

On Behalf of O’Brien Law Firm, LLC

Posted on: January 18, 2021

Bankruptcy is a federal court procedure that allows people to get rid of debt and repay creditors. The intent of bankruptcy is to give people a fresh start.

Bankruptcy is not a magic pass that allows you to erase your entire past, but it can make your present easier and your future possible.

Bankruptcy can ease some burdens

After filing for bankruptcy, bankruptcy court will protect you during the proceedings. The court will issue an automatic stay order that prevents many things from going forward. It will stop harassment from creditors and collections agents. It will temporarily stop foreclosures, repossessions or eviction. It will even stop wage garnishment.

Bankruptcy may erase some burdens 

Bankruptcy can wipe out unsecured credit card debt. It can also wipe out secured debts such as a mortgage, or a car payment, but you will have to give up the property. Bankruptcy can erase medical bills and unpaid utility bills. There are even some lawsuit judgments bankruptcy can wipe out.

Bankruptcy cannot erase all burdens 

While bankruptcy intends to give people a chance to start over, some debts will remain yours to pay. Student loans, income taxes owed, court ordered payments of child support or alimony, and court fines or penalties are exempt from the powers of bankruptcy.

There are two types of bankruptcy open to individuals. Which type of bankruptcy you file for is dependent on your debt, income and property. Chapter 7 bankruptcy involves the liquidation of your assets in order to repay debts. Chapter 13 bankruptcy involves working with the court to design a plan to repay your debts and creditors over a fixed number of years based on your income and the amount owed.

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Is it possible to protect your vehicle during bankruptcy?

On Behalf of O’Brien Law Firm, LLC

Posted on: November 17, 2020

Next to your home, your vehicle is likely the possession you are most afraid of losing during bankruptcy. It may be your lifeline, and without it you could have difficulty getting to and from work, as well as any other places you need to go. If you are afraid your vehicle will be sold to satisfy your creditors, it is important to understand the facts before panicking. Depending on your case, you may be able to keep it.

Protecting your vehicle during Chapter 7 bankruptcy

Your ability to protect your vehicle during Chapter 7 bankruptcy will depend on how much equity you have in it. Equity is the difference between your vehicle’s current market value and the remaining balance on your auto loan. Many states’ bankruptcy codes have motor vehicle exemptions, which protect equity up to a certain amount. Neither Mississippi nor Tennessee are among these states. Yet, both offer wildcard exemptions of $10,000 that you can use toward any property of your choosing. If you have this amount of equity – or less – in your vehicle, you can use the wildcard exemption to protect it after filing Chapter 7 bankruptcy, so long as you are current on your auto loan payments.

Protecting your vehicle during Chapter 13 bankruptcy

Protecting your vehicle during Chapter 13 bankruptcy is often easier than protecting it during Chapter 7 bankruptcy. For one, your auto loan will likely be part of your Chapter 13 repayment plan. So long as you stay current on your payments, then, you will be able to keep your vehicle. Furthermore, you may even qualify for an auto loan cramdown. This may happen if you have owned your vehicle for longer than 910 days and if your auto loan’s balance is higher than your vehicle’s current market value. If you have, and if it is, you will pay off the current market value instead.

While some people lose their vehicle during bankruptcy proceedings, you may be among those who can keep theirs. A legal professional can help you understand your options for protecting it.

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Will bankruptcy be beneficial to you?

On Behalf of O’Brien Law Firm, LLC

Posted on: November 12, 2020

Too many people consider bankruptcy a painful last resort. They explore unsavory alternatives such as risky loans, borrowing money from friends or family members, and other options to avoid complete financial ruin. The truth is, the Bankruptcy Code was developed to give people a chance to eliminate debt and get a fresh start.

The reality is that if you are seriously considering bankruptcy as an option, you probably should have already filed. Here are some questions, though, that might make it easier for you to recognize you’re ready for the benefits a bankruptcy can provide.

  • Are you facing home foreclosure or vehicle repossession?
  • Are your wages being garnished?
  • Are you facing a levy against your bank account?
  • Are you paying for everything – including utility bills – on your credit cards?
  • Are you using portions of your retirement funds to pay off debt?
  • Are you regularly sacrificing paying one bill to have enough money to pay a different bill?

While you might think these situations represent the life of a normal, hardworking American, they do not. You should not have to live in fear of phone calls from collection agencies. There is no shame in seeking debt relief from either Chapter 7 or Chapter 13 bankruptcy. Your financial issues only get worse when you continue to ignore the options provided for you. Financial peril can come as a result of numerous scenarios from medical emergencies to divorce to unexpected home repairs. Any of these situations can lead to disaster.

Every financial situation is unique, and it is wise to discuss your concerns and goals with an experienced bankruptcy attorney. It might be possible to stop your foreclosure, end creditor harassment and eliminate your unsecured debt. Do not hesitate to explore the sound financial options available to you.

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Assessing your bankruptcy risk

On Behalf of O’Brien Law Firm, LLC

Posted on: November 2, 2020

Bankruptcy filings are on the rise in the United States. If you do not have much disposable income, have little savings or carry significant credit card debt, you may have wondered if you are at risk for bankruptcy.

Spending time gaining a detailed understanding of your budget and the types of events that could drive you toward bankruptcy may help you better understand your risk.

Can you meet your monthly budget?

If you have not created a monthly budget yet, now is the time. Take the time to add up all your monthly expenses. Typical monthly expenses in your budget are items such as mortgage or rent, transportation, food, utilities, insurance and medical. Other categories beyond these include savings and personal spending, such as memberships, subscriptions, grooming and entertainment.

Beyond those, you need to account for any debt repayment, such as credit card payments. It is best to pay more than your minimum monthly payment to keep your credit card debt from multiplying out of control. Are you making enough money to meet your expenses and pay down your debt, or are you going further into debt each month? Do you have or are you putting money in savings to help you if your monthly income were to decrease abruptly?

How susceptible are your finances to an unexpected event?

Most bankruptcies are not a result of irresponsible spending but are instead a result of a low disposable income combined with some type of negative event, such as loss of employment or unexpected medical bills. Sometimes an unexpected medical event results in unexpected bills coupled with the loss of employment if the medical event renders you incapable of work for a period of time. Though you have little control over unexpected negative events such as medical emergencies, assess your risk with respect to what would happen if your income were to unexpectedly stop for a period of time.

How quickly can debt snowball?

If an unexpected life event occurs and you either do not have any emergency savings or exhaust what savings you do have, you may find you cannot pay your monthly expenses. Mortgage late fees are typically 3% to 6% of your monthly payment. Being late once enters you into the situation where you now must pay multiple months to become current.

Further, missing credit card minimum payments sometimes results in more than just late fees. Many credit cards have clauses in their terms and conditions that allow the credit card company to jump your interest rate, sometimes to very high amounts, if you make a late payment. If you were already struggling to meet your monthly expenses, your finances can quickly spiral beyond the point where you are able to reasonably get out of the red.

If you get into a situation where you cannot see a reasonable way out of debt, especially if you are in danger of foreclosure or are being harassed by bill collectors, bankruptcy may be a viable option and may help you protect some assets. Pursuing bankruptcy has pros and cons, but if you are in over your head, or expect to be over your head soon, exploring bankruptcy may be a good next step.

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Baby boomers face a variety of factors that lead to bankruptcy

On Behalf of O’Brien Law Firm, LLC

Posted on: August 23, 2020

Baby boomers hoping to transition into a comfortable retirement may find themselves held back or overwhelmed by outstanding debts. Although credit card bills often take up a large portion of a household’s monthly budget, medical issues often contribute to personal bankruptcies.

Medical bills can create an unmanageable debt load

Approximately 600,000 Americans filed for bankruptcy protection during 2018. As reported by NewsChannel 5, the majority of individuals surveyed could not afford to pay a $400 medical bill. An unexpected visit to an emergency room could leave a baby-boomer household with serious financial challenges.

A health insurance plan covered by an employer may have high deductibles for certain procedures or surgeries. Unplanned out-of-pocket costs for emergency health care could cause an individual to dip into a savings or retirement account. It could also lead to paying withdrawal and tax penalties.

Time off needed for recovery often means a loss of income

Medical treatment usually requires taking some time off from work to heal and recover. Many individuals, however, do not have sufficient vacation or sick pay that would cover an extended absence from work.

A sudden loss of income often causes families to begin using credit cards as a temporary way to cover necessities. The increase in borrowing, however, leads to higher monthly payments, which many out-of-work individuals cannot afford.

A lack of adequate financial resources may derail a retirement plan

Many baby boomers look forward to retirement, but a crushing debt load makes it impossible to leave their jobs. Bankruptcy may provide a way for age 50+ individuals and seniors to meet their personal financial needs and also create a workable retirement budget.

To afford living on a fixed income requires careful preparation. A fresh start through bankruptcy may help financially overwhelmed individuals restore their retirement hopes.

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Student loans, bankruptcy and undue hardship

On Behalf of O’Brien Law Firm, LLC

Posted on: July 2, 2020

If you have student loans, you are not alone. In fact, roughly 45 million Americans have outstanding education-related loans. The balance on these loans is an astounding $1.56 trillion, with the average borrower owing nearly $33,000.

Even though student loans were vital to meeting your educational goals, you may be having trouble making monthly payments. While you may have heard student loan debt is not dischargeable in bankruptcy, you should realize this notion is not absolute. If you can show paying your loans is an undue burden, you may be eligible for relief.

A three-part test

For your student loans to be unduly burdensome, each of the following must be true:

  1. You cannot afford both to pay your student loans and to maintain a minimal standard of living.
  2. Your income is not likely to increase during your student loan repayment period.
  3. You have made a good-faith effort to repay your student loans.

This three-part test, known as the Brunner test, may make discharging student loan debt difficult. It is not impossible, however. Accordingly, before exploring other options, you should certainly investigate whether your student loans qualify for discharge.

A tangential benefit of bankruptcy protection

If you decide you are ineligible to discharge your student loan debt, you may not want to give up on bankruptcy altogether. After all, your credit card balances, medical expenses and other outstanding debts are probably dischargeable in bankruptcy.

By filing for bankruptcy protection, you may free up enough funds to stay current with your student loan repayment plan. Furthermore, even if you cannot discharge all your student loans, some related loans may be dischargeable. For example, you may have taken an independent, non-student loan to pay for some education-related expenses.

A bankruptcy filing has both direct and tangential benefits. If you are looking to secure financial freedom, exploring your bankruptcy options probably makes good sense, regardless of what ultimately happens to your educational loans.

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Protecting your home from creditors with a homestead exemption

On Behalf of O’Brien Law Firm, LLC

Posted on: June 23, 2020

Many people consider their home a source of stability. Knowing that you have a comfortable place to return to after a long day and a space in which to safely store your belongings is undoubtedly a high priority for your family.

When you experience financial troubles that you cannot overcome and bankruptcy enters the picture, it can be an intimidating experience. Worrying that you may lose that source of stability your home provides can make it even harder to endure.

However, many states, including Mississippi, offer a method of protecting a portion of your home’s value during bankruptcy. The law refers to this protection as a homestead exemption.

What is a homestead exemption? 

The purpose of a homestead exemption is to insulate your primary residence from claims by creditors. Your primary residence is the home in which you currently live. In Mississippi, this exemption protects up to $75,000. Additionally, the property you wish to protect can be as large as 160 acres. 

How does a homestead exemption work? 

While the value may seem low given rising housing costs, it involves determining your equity after deducting mortgages, taxes and liens. As an example, if you have a home with a value of $350,000 but its mortgage is $300,000, the $50,000 equity you have in your home would be well within the monetary limit that the exemption laws may protect.

Furthermore, money you gain from the sale of an exempted home is likewise exempt. This provides the opportunity to move if you need to, such as to seek new employment opportunities, while still maintaining funds for the down payment your next home would require.

How do you receive a homestead exemption? 

Owning or living in a property does not automatically make it exempt. Instead, you must file a homestead declaration with the county tax assessor’s office. That said, you do not have to file the homestead declaration prior to the date you file for bankruptcy.

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Do you qualify for mortgage modification?

On Behalf of O’Brien Law Firm, LLC

Posted on: May 6, 2020

If you are struggling with unpaid debt and own a home, you have likely considered both mortgage modification and bankruptcy. In fact, individuals can file a bankruptcy case and apply for mortgage modification.

These are the factors your home loan provider will review when deciding whether to modify your mortgage.

Late payments

In general, you must already have past-due mortgage payments to apply for a loan modification. If you are delinquent on your mortgage or in danger of falling behind, call your mortgage company and ask about options to make your loan more affordable.

Change in life circumstances

You may need to show that issues beyond your control caused your inability to pay your mortgage. This could include:

  • Illness, injury, disability or other health problems 
  • Death of a family member 
  • Divorce 
  • Job loss 

Federal mortgage relief options

Some mortgage companies may offer a modification plan under the CARES Act. This law, passed in March 2020, includes the following provisions:

  • Delay on foreclosure proceedings for 60 days as of March 18, 2020 
  • Forbearance available for up to 180 days with a 180-day extension 

You can request this program directly from your mortgage company. The service may not charge additional fees, interest or penalties during this period. However, you will have to make up the skipped payments at a later date. This could be in graduated payments over time or as a balloon payment at the end of your mortgage. Make sure to read the loan agreement carefully for this type of modification.

Federally backed mortgage companies must offer these options. Other home loan providers can opt to offer modification but are under no requirement to do so.

When you receive a modification, the lender has discretion about how to adjust your loan to make it more affordable. This could include a lower monthly payment, a lower interest rate, a longer repayment term or a combination of those measures.

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5 tips for avoiding mistakes when filing for bankruptcy

On Behalf of O’Brien Law Firm, LLC

Posted on: March 19, 2020

Chances are you are not familiar with the bankruptcy process and all you want is for the whole event to go smoothly.

Here are five mistakes you can easily avoid to make that happen:

  1. Having an incomplete list of creditors

Remember that the law requires you to list all your creditors when filing for bankruptcy protection. Your trustee may not discharge a debt you fail to initially report.

  1. Repaying a family obligation prior to filing

If you owe money to a family member, do not make the repayment prior to filing bankruptcy. The trustee who administers your case may interpret this as a “preferential payment” and disallow it. Your family member will likely have to send your repayment to the trustee.

  1. Failing to mention all assets

Do not fail to list a second bank account. Do not try hiding a sum of cash by transferring it to the bank account of a relative or friend. If you attempt to hide assets prior to a bankruptcy filing, you could face fines plus time behind bars.

  1. Indulging in a spending spree

Do not fall into the trap of believing it is OK to go on a spending spree with your credit card before you file for bankruptcy. Your trustee will likely not discharge big-ticket items that show up just before the filing.

  1. Waiting too long to file

Finally, procrastinating is not a good idea. Every day you wait to file Chapter 7 or 13 only increases the amount of debt you are carrying. Delinquent bills may go to collection agencies and from there to your bank account in the form of wage garnishments. Your creditors will also hound you on the phone. Take the initiative. Learn more about the benefits of filing for bankruptcy and be proactive. The sooner you file, the sooner you can enjoy a brighter financial future.

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What do you gain from declaring bankruptcy?

On Behalf of O’Brien Law Firm, LLC

Posted on: February 28, 2020

Bankruptcy is a court decree that declares organizations or individuals unable to pay their bills or debts, thus legally eliminating their obligation to settle outstanding liabilities. The court arrives at the decision after the judge and court trustee carefully examine and weigh the individual’s or business’s assets and liabilities. However, the court may not grant every request for bankruptcy; there are strict qualifications that one must meet when filing for bankruptcy.

Declaring bankruptcy is often a good way of starting on a clean slate after running into some serious commercial or personal financial problems. But what does it really mean? What happens when the court grants your request for bankruptcy?

Automatic stay

Automatic stay is a preliminary court decree that protects you from creditors and debt collectors once you file for bankruptcy. This decree remains until the bankruptcy proceedings finalize, after which the court may or may not declare you bankrupt. As long as the automatic stay holds, creditors and collectors should not call, threaten or send notices regarding your debts.

Discharge

Once it declares you bankrupt, the court prevents creditors from collecting or claiming debts you previously incurred. The ruling clears unsecured liabilities such as credit card debts and other personal loans, but with a few exceptions. Personal discharge does not extend to some tax liabilities, child support, student loans, alimony and real estate loans. The court considers such debts too important to wipe clean, but in some cases, the court may provide opportunities for formulating feasible payment plans.

Clearing secured debt

Although you can wipe out secured debts through declaring bankruptcy, the court may require you to give up any assets securing such debts. For instance, if you secured a bank loan with your car, you may have to part with the vehicle as part or full settlement for the loan. In some cases, the court may order the liquidation of valuable assets that are not part of the collateral to clear secured debts.

Declaring bankruptcy is an effective way to get out of a personal financial crisis, particularly involving debts. However, you need to understand what you’re getting into when considering this move; there are many benefits and negative implications that may arise depending on the approach and timing.

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When should I file for bankruptcy protection?

On Behalf of O’Brien Law Firm, LLC

Posted on: January 14, 2020

Many people consider bankruptcy protection as the last resort. It remains on your credit report for up to 10 years, depending on which chapter you file. It can be a difficult yet wise decision if you are struggling to make ends meet.

Here are a few signs that may suggest filing bankruptcy is a good solution.

Decrease in monthly income

A permanent change in monthly income may be tough to adjust to. It could be the result of job loss, reduced hours, a job change or retirement. If you are unable to adapt to a permanent reduction in monthly income, bankruptcy may help. It could relieve reoccurring financial struggles, such as mounting credit card debt.

Increase in monthly debt

The stigma of bankruptcy often keeps consumers in a whirlpool of mounting debt. Many opt for overuse of credit cards to pay for necessities, such as groceries and utility bills. This can escalate into out-of-control debt. During challenging financial times, you may have to pay credit card payments late or skip them altogether. This gives the credit card companies the ability to raise your interest rate.

Bankruptcy may offer financial relief when struggling with medical expenses or student loan debt. Bankruptcy forgives most medical debts. Although it is rare for someone to have student loan debt discharged, filing bankruptcy may temporarily suspend payments. Additionally, you may be on a better track to make your student loan payments after bankruptcy has eliminated other debts.

Change in living arrangements

Changes in your living arrangements often affect monthly expenses. Death, divorce or a grown child moving back home are typical scenarios. If you own your home and have monthly mortgage payments, it is important to stay current. Falling behind by a few months will affect your ability to maintain regular payments and can lead to foreclosure.

Banks and mortgage companies must abide by the decision of the bankruptcy court. Do not hesitate to file bankruptcy to protect your most important asset – your home.

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Could filing bankruptcy be a good thing for your credit?

On Behalf of O’Brien Law Firm, LLC

Posted on: January 3, 2020

Deciding to file bankruptcy is a big decision. It is one you cannot make lightly without considering all the consequences and how filing for bankruptcy in Mississippi will affect you in the years to come. While filing may help you to take care of the problems you currently have with your credit, you may wonder what it will do to your credit afterward. 

The effect that a bankruptcy may have on your credit can actually be positive. To begin with, you will have the debts removed from your credit report, including any collections. This clean wipe can help quite a bit. However, you should note, you will have the bankruptcy show up on your credit report, which is still a negative. If you file Chapter 7, it stays on your credit report for 10 years. If you file Chapter 13, it stays on for seven years.

The impact

The impact of a bankruptcy on your credit depends on which one you file. With a Chapter 7, you may see a rebound in your score almost right away because you have so much removed from your report that is negative. With a Chapter 13, since you repay some or all of your debts, it takes a little more time for it to have a positive impact on your credit.

Future filings

Furthermore, once you file bankruptcy, you cannot file it again for eight years, which tells creditors that they do not have to worry about that. This makes you less of a risk because they know for sure that you will not be able to get rid of a debt with them through bankruptcy. Essentially, it means they will get any money you owe them.

Filing bankruptcy is something you should do only with serious consideration, but it can be a good way to get your credit back on the right track.

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Qualifying for lien stripping when filing for bankruptcy

On Behalf of O’Brien Law Firm, LLC

Posted on: January 2, 2020

Taking out a second mortgage may have seemed like a reasonable financial solution at the time, but as your debt level has risen, it may now represent an unmanageable burden. Bankruptcy may offer you an opportunity to eliminate your second mortgage through a process called lien stripping.

However, filing for bankruptcy does not automatically qualify you for lien stripping. There are requirements that you must meet to be eligible for elimination of your second mortgage.

Chapter 13

A handful of states allow filers to strip a second mortgage when filing Chapter 7 bankruptcy: Georgia, Florida and Alabama. However, in Mississippi, Tennessee and all other states, you can only eliminate a second mortgage when you file Chapter 13. You may qualify for Chapter 13 if you have a regular income, but your debt level is now beyond your control.

Home value
You can only eliminate a second mortgage through Chapter 13 bankruptcy if the current value of your home is less than what you still owe on the first mortgage. If this is the case, it means that your second mortgage represents unsecured debt, similar to medical bills or a credit card balance. Chapter 13 bankruptcy involves reorganizing your unsecured debt so that you pay it off gradually by making monthly payments over a period ranging from three to five years.

Lien stripping is only available if the value of your home has dropped since you took out the second mortgage. If you still have equity in your home, you cannot eliminate your second mortgage through bankruptcy because it does not qualify as an unsecured debt.

In addition to these requirements that pertain specifically to lien stripping, you must undergo credit counseling within 180 days before filing for bankruptcy. This is a requirement imposed by the Federal Trade Commission and, with a few exceptions, applies to all Chapter 7 and Chapter 13 bankruptcy filings.

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People have rights when dealing with debt collectors

On Behalf of O’Brien Law Firm, LLC

Posted on: November 6, 2019

Debt is a reality for millions of people living in Mississippi and across the country. According to the National Consumer Law Center and the Consumer Federal Protection Bureau, 70 million people nationwide interacted with a debt collector during the year 2017. One third of American adults had some type of debt in collections during 2016. It can be stressful for people who are struggling to pay their bills to have to speak with debt collection services, but there are some ways to make it easier.

First, it is important for the debtor to know his or her rights. Under the Fair Debt Collection Practices Act, creditors are prohibited from calling people outside of certain hours. They are also limited in the number of calls they can make and prohibited from harassing people. If a debt collector violates the FDCPA, there may be actionable claims for damages.

Second, it is important for people to verify that the debt collector is legitimate. There are a number of organizations in operation that are not the real owners of a debt but targeting people to scam them. It is simple to check the legitimacy of a debt collector with the Better Business Bureau or an online search.

Third, it is important to get the original paperwork associated with a particular debt. The contract that governs the debt can contain provisions that give a debtor rights, and it is generally necessary to show that a debt is legitimate.

People in Mississippi have options when it comes to dealing with debts and debt collectors. A lawyer may help people who are struggling to pay bills by suggesting avenues to reduce or eliminate debts, including filing for bankruptcy protection in some cases. A lawyer might be able to negotiate with creditors to reduce the amount of debts outstanding or arrange better payment terms.

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Financial management during bankruptcy

On Behalf of O’Brien Law Firm, LLC

Posted on: October 31, 2019

Bankruptcy can be a beneficial tool when you utilize it properly. Also, in order to reap the benefits, you must complete all necessary aspects of the process.

Therefore, it can be helpful to understand the key aspects of the bankruptcy process before you begin. There are certain financial requirements in particular that you must meet before, during and after filing for bankruptcy.

Credit counseling

Before filing for bankruptcy, you must complete a credit counseling course. This course must be through an approved credit counseling agency, and you must submit the certificate of completion with your bankruptcy application. The course completion and filing must be within six months of each other. There are certain instances where you may not have to complete the counseling course:

  • Military personnel in active war zones
  • Those mentally or physically unable
  • Those who petition to complete the course after filing

In all cases, the bankruptcy court must approve of the pardon.

Means test

If you desire to file for Chapter 7 bankruptcy, the means test is a requirement. The first step is to compare your average income over the past six months with the average income in the state. If your income falls under the average, no further calculations are necessary, and you may file for Chapter 7. On the other hand, if your income is higher than the average, you must submit additional information for further consideration. Depending upon the final numbers, you may still qualify for Chapter 7 or have to file for Chapter 13.

Financial management course

In order to encourage filers to budget better and prevent bankruptcy in the future, you must complete a debtor education course before receiving a full bankruptcy discharge. This course covers income responsibility, budgeting and other financial tools. Upon completion, you must submit the debtor education certificate to the court.

Along with understanding the requirements that you must complete, it is important to make sure you fulfill each one by completing all paperwork and submitting any additional material. Doing so may aid in avoiding a bankruptcy denial or cancellation.

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Credit card debt stands at about $900 billion

On Behalf of O’Brien Law Firm, LLC

Posted on: October 29, 2019

At the end of 2018, Americans owed credit card companies roughly $900 billion. However, the Consumer Financial Protection Board says that Mississippi residents and others throughout the country aren’t necessarily in a perilous financial situation. Currently, most of the credit card debt is being generated by people who have credit scores of at least 740. This means that they are more likely to pay their debts in full and on time.

Furthermore, interest rates for other debts such as mortgages and credit cards are lower by historical standards. This makes it easier for debtors to handle their overall debt loads. Finally, unemployment is reportedly at its lowest level in 50 years, and employers are expected to spend more money on worker salaries in 2020. Consumer confidence is also relatively high despite the fact that the United States and China have been engaged in a long-term trade battle.

However, there are some reasons to believe that increasing credit card debt could eventually become a problem. For example, those with lower credit scores are accumulating debt at a relatively high rate, and this has led to an increase in both late payments and charge-offs over the past two years. The CFPB also says that debtors have been increasingly seeking out debt settlements and other forms of relief in recent years.

Those who are seeking a fresh financial start may be able to obtain it by filing for bankruptcy. Doing so might make it possible to eliminate credit card and other debt balances. An attorney may be able to help a person learn more about the process of filing. In many cases, individuals who file are entitled to an automatic stay of creditor contact. This may prevent creditors from going through with a foreclosure or repossession until a case has been resolved.

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Filing for bankruptcy is not without costs

On Behalf of O’Brien Law Firm, LLC

Posted on: October 24, 2019

When a Mississippi resident is facing overwhelming debt, options start to dwindle. Financial problems may have a single cause, such as an illness or job loss, or might be the result of several years of financial bad luck or mismanagement. However, the associated costs of bankruptcy may prove burdensome for a debtor and may even make filing for bankruptcy protection difficult.

Financial counselors indicate there are three categories of costs an individual filing for bankruptcy must consider: court filing fees, mandatory education classes and attorney fees. The minimum total for these is a little under $1500 while the maximum can be closer to $4000, depending primarily on whether Chapter 7 or Chapter 13 bankruptcy is involved. It is possible to have fees on filing and classes waived based on income as compared to federal poverty guidelines, in consideration of family size and state of residence.

Legal representation is not a guaranteed right, and it is possible to represent oneself in a bankruptcy proceeding. There are legal clinics that do not offer representation but can be of assistance with filling out the appropriate paperwork and legal forms. The question becomes whether it is worth the risk to file in pro per, that is, acting as one’s own counsel. Statistically, it is extremely difficult to successfully discharge debt through self-representation as compared to the success rate when represented by legal counsel.

Bankruptcy is governed by federal law, and procedures must be followed precisely. A consultation with an experienced bankruptcy lawyer might be helpful in determining if either Chapter 7 liquidation or Chapter 13 reorganization is appropriate under the specific circumstances of the case.

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Heavy financial debt and filing for bankruptcy

On Behalf of O’Brien Law Firm, LLC

Posted on: October 14, 2019

Financial challenges and overwhelming debt are problems for many Mississippi residents. Struggling with debt may lead to physical and emotional exhaustion, especially if the person has to moonlight. Paying back creditors is a weary task. However, many people choose to go this route because they think filing for Chapter 7 bankruptcy or Chapter 13 bankruptcy may cause additional financial struggles.

Some debtors do not realize that choosing a route other than bankruptcy could mean losing funds in a retirement account because of the need to pay back creditors. In most cases, a bankruptcy filer does not need to relinquish assets held in an Individual Retirement Account (IRA) or a 401(k) plan. These types of funds are typically protected by bankruptcy regulations. Consulting with a bankruptcy attorney can help clarify the pros and cons.

Legal counsel may also help a client get a better settlement with creditors. It’s important to understand that debtors opting for debt settlements may need to pay taxes on the forgiven amounts. A debtor facing serious financial challenges may not have the money available to pay back the Internal Revenue Service. Furthermore, IRS debts generally cannot be forgiven in a bankruptcy. This makes obtaining good debt forgiveness terms all the more important.

An individual contemplating filing for Chapter 7 bankruptcy first needs to pass a means test. A bankruptcy attorney can help a client fill out the legal paperwork required to determine if the debtor qualifies. Setting up an appointment with a bankruptcy lawyer is the best way to make a wise decision.

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What to know about filing for bankruptcy

On Behalf of O’Brien Law Firm, LLC

Posted on: October 8, 2019

Consumers who are having trouble keeping up with their debts may want to think about filing for bankruptcy. This could be especially true for Mississippi residents who have no savings or assets to pay off their debts with. Those who want protection from creditors may be able to file for Chapter 7 bankruptcy. In a Chapter 7 case, an individual is allowed to sell assets and use the money to pay off their debts.

If there is a remaining balance on an unsecured debt after assets have been liquidated, it may still be discharged. To qualify for a liquidation bankruptcy, a debtor must have a household income less than the state median. It may also be necessary to pass a means test, which looks at a person’s disposable income to determine if he or she qualifies for a Chapter 7 bankruptcy.

Those who don’t qualify for a liquidation bankruptcy might want to file for Chapter 13 protection. In a Chapter 13 proceeding, a debtor will make payments to creditors over a predetermined period of time. To qualify for Chapter 13 bankruptcy, an individual must have no more than $419,275 in unsecured debt and no more than $1,257,850 in secured debts. Debtors must also be current on their federal tax returns and have enough money to make plan payments each month.

Individuals who are facing the threat of repossession or a foreclosure may want to consider filing for bankruptcy. Doing so may make it possible to obtain debt relief without the need to give up property like a home or a car. When a case is filed, creditors may be barred from filing lawsuits or calling a debtor about an outstanding balance. Legal counsel may further explain the potential benefits of a Chapter 7 or 13 proceeding.

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Planning for bankruptcy and divorce together

On Behalf of O’Brien Law Firm, LLC

Posted on: September 30, 2019

For many people in Mississippi, there can be a close relationship between divorce and financial problems. Existing financial difficulties can lead to tension and distress in a marriage. In addition, the extra challenge of property division can be devastating for people with little income and substantial debt. Therefore, a number of people decide to file for bankruptcy at the same time that they file for divorce. They may wonder whether it is better to make a bankruptcy filing before or after the divorce is finalized.

Some divorcing couples may want to file jointly for bankruptcy because they can discharge both of their debts before proceeding to the divorce. If they are filing for Chapter 7 bankruptcy, the entire process can be finalized in a few months. On the other hand, people filing for a Chapter 13 bankruptcy, often because they bring in over the median income in their area, may want to wait until after the divorce. This type of bankruptcy involves a years-long repayment plan, and it can be challenging to divorce while handling the plan as well. For example, the final property division outcome of a divorce can be delayed extensively.

Filing for bankruptcy jointly can help people deal with property like a home. When spouses file jointly, they have increased exemptions for property. People with income at or below their state median may benefit from a joint filing, especially if they are still on good terms. Those with high incomes, on the other hand, may wish to pursue bankruptcy separately.

The process for seeking debt relief and divorce can differ for each couple and each person. A bankruptcy attorney may provide detailed guidance and advice on how filing for personal bankruptcy might affect a divorce and potentially help people achieve a new financial future.

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Holiday debt solutions

On Behalf of O’Brien Law Firm, LLC

Posted on: September 27, 2019

Many people living in Mississippi and around the country struggle with being able to pay off holiday debt. However, experts do have some possible options for individuals who would like to pay off their debt more efficiently.

One suggestion is to simply reduce costs. Many families set limits on how much they will spend on gifts for immediate family and agree with friends and extended family to avoid gift exchanges and instead get together at each other’s homes for holiday snacks and well wishes.

For those who do opt to purchase gifts, there are several strategies for paying off holiday credit card debt. The first is the debt snowball or its variation, the avalanche. In a debt snowball, individuals pay off their smallest credit card and then apply the money saved on that payment toward the balance of another card. This provides debtors a sense of accomplishment as debts are erased.

The debt avalanche is a different approach, which involves prioritizing debts with the highest interest rate. While this requires debtors to put off the pleasure of eliminating a debt entirely, it is often a more fiscally prudent option and costs less money over time.

Other options include taking out a personal loan at a low interest rate to pay off all credit card balances. Similarly, it may be possible to find a low-interest credit card that allows the transfer of high-interest balances. In both cases, however, consumers must be able to manage their existing finances so that they do not create an even larger debt on the new credit card.

Individuals who are concerned about money issues may be able to find debt relief through these methods or bankruptcy. An experienced attorney may be able to review a client’s case and make recommendations as to the appropriateness of a specific strategy.

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Court rules against student loan discharge

On Behalf of O’Brien Law Firm, LLC

Posted on: September 25, 2019

Many people struggle to pay their debts and living expenses each month because of health issues. Missing days at work can mean a much smaller paycheck for those who do not have sick leave. In some cases, filing bankruptcy may be the answer to lowering the number of bills coming in so that a person can afford living expenses.

However, filing bankruptcy is not likely to eliminate student loan payments, according to a recent court ruling.

The Brunner test defines hardship

There is an undue hardship test known as the Brunner test which identifies whether the court may discharge student loans. To “pass” the test, a person must prove that repaying the student loans would keep him or her from achieving a minimal standard of living, that this financial situation is likely to continue during the repayment period and that he or she has tried to repay the student loans with a good faith effort before resorting to bankruptcy.

Health problems may cause hardship

The woman whose case the bankruptcy court denied suffered from diabetic neuropathy and was no longer able to work at jobs requiring her to stand. Three companies hired her, and she subsequently lost those jobs because of her physical challenges. She was receiving public assistance at the time she filed bankruptcy and sought discharge for her student loans.

Court rules woman may find suitable employment

The court noted that the woman could work at a sedentary job and that she was hirable based on her success at attaining three jobs in one year, even though she did not keep them. Further, according to the court, the fact that Congress is considering legislation options that would make student loans dischargeable implies that the courts cannot currently discharge them under the present circumstances.

Bankruptcy may benefit student loan borrowers

If proposed legislation does succeed, bankruptcy courts are likely to see a large influx of filers seeking to discharge student loans. Right now, the primary benefit a person with student loans may achieve is relief from other debts that frees up income to make student loan payments.

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Emergencies and daily expenses can drive people into debt

On Behalf of O’Brien Law Firm, LLC

Posted on: September 18, 2019

A medical emergency or a costly car repair can begin a Mississippi resident’s slide into debt. A survey from CreditCards.com showed that various emergencies, medical bills, auto repairs and daily expenses resulted in one-third of respondents leaning on their credit cards too much. On the whole, the nation has accumulated over $1 trillion in credit card debts according to WalletHub.

In the second quarter of 2019, consumers added another $35.6 billion to their card balances. Analysts at WalletHub expect consumers to incur a total of $70 billion in extra credit card debt by the end of the year.

The financial pressures evident in these figures have resulted in long-term debt for many people. According to CreditCards.com, over one-third of people carrying credit card balances have been doing so for a minimum of two years. Many of them owe more on their cards than they possess in savings.

Sometimes individuals manage to pay their credit card bills by reducing expenses and reforming their spending habits. In some cases, however, financial difficulties prove overwhelming. A person unable to increase income or reduce expenses might want legal advice about debt management. An attorney might provide information that might allow a client to renegotiate a loan payment or settle an outstanding debt for a lower amount. An attorney’s intervention might gain the client more time to pay a debt. This might prevent repossession or wage garnishment. Chapter 7 bankruptcy might also be a viable option. This involves the liquidation of the debtor’s non-exempt assets with the proceeds being used to pay off creditors. The remaining balance of most unsecured obligations would then generally be discharged.

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Why people don’t file for bankruptcy

On Behalf of O’Brien Law Firm, LLC

Posted on: September 12, 2019

Many people living in Mississippi are aware that bankruptcy is one option for debt relief. However, national statistics show a decline in bankruptcy cases in recent years.

While reasons for the decline are not entirely clear, many attorneys have put forth some ideas. Some have noted that the reasons why individuals file for bankruptcy in the first place have been mitigated. Unemployment numbers are down, which means people have more income they can apply toward debt. In addition, the Affordable Care Act has provided people with health insurance coverage, possibly reducing high levels of medical debt.

Other reasons for low bankruptcy rates may be less encouraging. Some debtors simply cannot afford the fees and court costs required to file for bankruptcy. Furthermore, many people carry student loan debt, which is very difficult to discharge in bankruptcy. As a result, individuals with significant debt burdens may feel as though there is no reason to bother filing for a discharge of their debts.

Still, bankruptcy remains an effective way for some people to cope with unmanageable debt. In cases where debt can’t be discharged, bankruptcy might provide some relief by granting automatic stays against collection activity. In a Chapter 13 bankruptcy, debts can be repaid as part of a three- or five-year repayment plan. This could make it easier for someone to regain their financial footing.

Individuals who are considering bankruptcy may benefit from consulting with an attorney. The lawyer could review the client’s circumstances and make suggestions regarding debt management options, including Chapter 7 and Chapter 13 bankruptcy.

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Bankruptcy rates double when health insurance is lost

On Behalf of O’Brien Law Firm, LLC

Posted on: September 3, 2019

Mississippi had the fourth highest per-capita rate of personal bankruptcies in the nation in 2018, and the data suggests that more than two-thirds of them were filed because of overwhelming doctor and hospital bills. Comprehensive health insurance provides protection against spiraling medical debt, but many Americans find themselves without this crucial coverage each year after going through a divorce or losing their jobs. A recent study conducted by University of Missouri and University of Denver researchers reveals that individuals are twice as likely to file a Chapter 7 or Chapter 13 bankruptcy after going without health insurance for just two years.

The researchers made this discovery after analyzing data on 12,500 bankruptcies from the Bureau of Labor Statistics. Millions of Americans currently have health insurance because of the Affordable Care Act, but the future of the landmark 2010 law is uncertain. Attorneys from 18 states filed a legal challenge to the ACA after Congress voted to eliminate the individual mandate. If the litigation is successful, up to 20 million Americans could lose their health insurance.

More than half of Americans polled by the Kaiser Family Foundation said that financial concerns had led them to cancel or put off a visit to a doctor or dentist in the last year, and many of them were enrolled in a health plan. More than a third of the insured respondents said that they had difficulty making copayments or meeting their deductibles.

The nation’s bankruptcy code was written to give people who are struggling to make ends meet the opportunity of a fresh start, but individuals with unmanageable financial situations are often reluctant to take action because of the myths surrounding debt relief. Attorneys with experience in this area may help dispel these myths and explain how Chapter 7 or Chapter 13 bankruptcy offers an escape from overwhelming debt. Attorneys ma also explain that the automatic stay issued when a bankruptcy is filed requires lenders to immediately cease their collection efforts.

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Different bankruptcy types have different credit impacts

On Behalf of O’Brien Law Firm, LLC

Posted on: August 28, 2019

One of the main concerns for people in Mississippi who are considering bankruptcy is how long the filings will stay on their credit report. Depending on the type of bankruptcy filed and the other specific facts of the case, the filing might be listed on a person’s credit report for up to 10 years. There are two main types of bankruptcy for individual filers, Chapter 7 and Chapter 13, and each of them has different impacts on the filer’s credit report.

Filing for bankruptcy under Chapter 7 will eliminate most personal debts, including those from medical bills, personal loans and credit cards. Any debts that are discharged via Chapter 7 bankruptcy will be noted on the person’s credit report, and the bankruptcy itself will be listed as well for a period of 10 years from the date of the filing. A Chapter 7 may negatively impact a person’s credit score by as much as 200 points, but it will also eliminate debts.

A Chapter 13 bankruptcy, also sometimes called a wage earner’s bankruptcy, will be listed on the person’s credit report for seven years. This type of bankruptcy is designed for people who have regular income and earn too much to file for Chapter 7. Over the course of three or five years, a Chapter 13 petitioner will pay back creditors according to a payment plan approved by the bankruptcy court.

People in Mississippi who are struggling to pay down debts might want to schedule a meeting with a lawyer. A lawyer who practices bankruptcy law may help by examining the client’s circumstances and suggesting options to reduce or eliminate debts. A lawyer may help the client complete pre-bankruptcy counseling and other requirements or represent the client during the meeting of creditors or other official proceedings before the bankruptcy trustee.

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3 mistakes too many people make before filing for bankruptcy

On Behalf of O’Brien Law Firm, LLC

Posted on: August 27, 2019

Many people will end up filing for bankruptcy before the end of 2019, and research suggests many of those will come from the South. Mississippi has one of the highest divorce rates in the country, with 4.25 bankruptcies occurring for every 10,000 residents, compared to the national average of 2.5 for every 10,000.

Bankruptcy can help you get your finances back on track in the long run, but there is no guarantee a court will approve your bankruptcy in the first place. You have to set yourself up for success, and that requires ensuring you avoid these common mistakes too many Mississippi residents make right before filing.

1. Paying friends or family members

You may think you will do the right thing by paying back loved ones who loaned you money in the past. However, this looks incredibly suspicious to judges. It comes across like you want to conceal certain assets by giving them to other people. While it is a noble thought, you should delay paying back people until the court approves your bankruptcy filing.

2. Taking money out of your 401(k)

You may think it is a good idea to take funds out of your retirement accounts to pay off some creditors before filing. There are two reasons why you should avoid this. First, the bankruptcy code forbids favoring one creditor over another. Additionally, your retirement accounts are exempt from bankruptcy proceedings. Therefore, you do not have to worry about losing any funds in these accounts when you file.

3. Running up credit card debt

When bankruptcy is on the horizon, many people do not see the harm in making some extravagant purchases on their credit cards. For the most part, you cannot discharge debt racked up in the previous 90 days before filing. Therefore, you will still owe the money once the bankruptcy is over. Additionally, creditors can contest such purchases, and it could jeopardize your ability to get a bankruptcy in the first place.

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Seniors increasingly in debt, filing bankruptcy

On Behalf of O’Brien Law Firm, LLC

Posted on: August 21, 2019

Statistics show that older people are filing for bankruptcy at higher rates than ever before, in Mississippi and across the country. According a 2018 report by the Consumer Bankruptcy Project, more than 10% of people who filed for bankruptcy protection in 2016 were 65 years old or older; this was a significant increase over the number in 1991.

The elderly population of the country also grew over that time span, but only by 2.3%. There are a number of economic and social factors contributing to the rise in elder bankruptcy. People are living longer, and they need more medical care in their later years. The cost of medical care has been increasing for decades.

Additionally, many people 65 and older have little or no personal savings and cannot rely on a company pension or 401(k) plan. They are also increasingly in debt, with nearly half of Americans at least 75 years of age carrying debt by 2016 compared to only about 20% in 1989, according to a survey of consumer finances by the U.S. Federal Reserve. Approximately 800,000 households made bankruptcy filings in 2016, including an estimated 133,000 senior citizens.

People in Mississippi who are struggling to pay for life necessities or pay down debts might want to schedule a consultation with an attorney. An attorney who practices bankruptcy law might be able to help by suggesting options to reduce or eliminate debt or by examining the client’s financial situation and negotiating settlements with creditors. An attorney might help themprepare for bankruptcy by guiding them through pre-bankruptcy counseling in advance of filing a petition.

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Incurring debt while in Chapter 13 bankruptcy

On Behalf of O’Brien Law Firm, LLC

Posted on: August 14, 2019

A person in Mississippi who has an open Chapter 13 bankruptcy may be able to get a vehicle loan, but there are several steps that must be taken to do this. Moving ahead without getting the approval of the court puts the bankruptcy itself in jeopardy. The person could also face a lawsuit from creditors, and the vehicle could be repossessed.

The first step is going to a dealership and talking to the special finance manager. If the manager agrees, the person can choose a car, and a sample buyer’s order is created. This form should include such information as the monthly payment, the interest rate and the maximum term. The form should say that the person will purchase this car or a similar one. The reason for this is that if the car sells before the process is complete with the court, the person would have to start the process all over again unless “or similar” is included on the form.

The next step is to take the form to the trustee. The trustee must agree that the person has a good reason for purchasing the vehicle and that it is within the debtor’s budget. The motion is sent to the court and creditors. If there are no objections, the person is allowed to proceed with the purchase.

As this process demonstrates, filing for bankruptcy does not mean a person is never able to take out a loan or build credit again. A bankruptcy filing can clear the way for a person to start fresh financially. A person who is struggling with debt may want to talk with an attorney about eligibility for a Chapter 13 bankruptcy. It is necessary to have an income above a certain level. The person must also be able to work out a repayment plan with creditors.

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Different circumstances call for different bankruptcy types

On Behalf of O’Brien Law Firm, LLC

Posted on: August 6, 2019

People in Mississippi who are struggling to pay off their debts might consider bankruptcy as an option to reduce or eliminate them. For most individual filers, there are two options when it comes to filing bankruptcy: Chapter 7 and Chapter 13. It is important to know the differences between the two options as one or the other may be better for the petitioner in a particular case.

Chapter 7 bankruptcy is sometimes referred to as liquidation bankruptcy because it involves the liquidation of the petitioner’s assets in order to pay off as much debt as possible. At the conclusion of a successful Chapter 7 bankruptcy, any unsecured debts will be wiped out, and the petitioner may be able to keep important assets like a home, vehicle or tools used for work. In order to qualify under Chapter 7, the person must pass the means test, which begins with a comparison of the person’s income to the state’s median income. If the person’s income is at or below the statewide median, he or she is free to file for Chapter 7. There are cases in which people with higher incomes may also be able to file for Chapter 7.

Those who are unable to file Chapter 7 bankruptcy may be able to file under Chapter 13. Chapter 13 bankruptcy is sometimes called reorganization bankruptcy as it involves the reorganization of debts so that the petitioner can afford to pay them over a period of three or five years.

An attorney with experience practicing bankruptcy law may help individuals who are having trouble keeping up with debts and expenses. An attorney might be able to negotiate with creditors or draft and file a petition to begin bankruptcy proceedings. An attorney may also help the client understand the means test for Chapter 7 or represent the client during the required meeting of creditors.

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Many feel as if they will die in debt

On Behalf of O’Brien Law Firm, LLC

Posted on: July 30, 2019

Research from CompareCards.com found that credit card debt may be a bigger problem than student loans for many millennials in Mississippi and around the country. Among those who participated in the study, 67% reported having credit card debt while only 36% had student loan debt. It found that among individuals in this age group who had credit cards, only 13% had no debt. Furthermore, about a quarter of respondents said that they would die in debt regardless of how old they currently were.

Among those who made such a claim, 16% had an annual household income of $100,000 or more. Women were more likely than men to say that they would likely pass away still owing money to creditors. However, the average millennial respondent said that he or she would be out of debt by age 49. Parents who had children under the age of 18 were more likely to have credit card debt compared to those who had no children at all.

Across all groups, 70% of respondents who owed money to a credit card company had at least one other debt. Financial professionals recommend that those who are in debt take any action necessary to pay it down. In many cases, putting even a few extra dollars a month toward a debt can make it more manageable in the long run.

Individuals who are experiencing financial difficulties related to credit card or other types of debt may want to consider bankruptcy. Filing for bankruptcy may entitle a person to an automatic stay of creditor contact. This means that a debtor won’t receive phone calls or letters related to an outstanding balance. Other benefits of bankruptcy could include extra leverage to negotiate new home or auto loan terms or the ability to discharge certain unsecured debts quickly.

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Bankruptcy during divorce

On Behalf of O’Brien Law Firm, LLC

Posted on: July 29, 2019

Studies show finances as a strong catalyst for divorce in today’s society. For those in severe financial strains, bankruptcy may be a beneficial consideration.

However, both divorce and bankruptcy have specific protocols that can affect each other. It is important to understand the implications of bankruptcy during divorce.

Filing type matters

Whether filing a Chapter 7 or a Chapter 13 bankruptcy, filing as a couple or as a single party is an important consideration. A joint filing is usually beneficial for those who share a large number of assets or have certain high-value assets. On the other hand, if a couple shares minimal or smaller assets, an individual filing may be sufficient. However, both parties must understand what the bankruptcy filing means for them. In certain cases, if one party files for bankruptcy as an individual, the filing may alleviate that party’s responsibility for a debt, but it does not eliminate the debt completely. Therefore, the other party may still have to pay the debt.

The timeline

The time at which the bankruptcy and divorce coincide play a strong party on either process; in fact, it can determine if either process is feasible. For example, if a couple is in the middle of a divorce, a bankruptcy must approve a request for bankruptcy. Should the party receive an approval, the divorce process must cease until the completion of the bankruptcy. In cases where a divorce decree is already in place, the bankruptcy process may require a modification to that decision, considering that the bankruptcy will alter the recipient’s income.

While these aspects play a major part in deciding if a bankruptcy during divorce is proper or feasible, they are not the only things to think about. Before embarking upon a bankruptcy, it is important to fully understand how it affects you and possibly those connected to you.

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Is debt settlement a good alternative to bankruptcy?

On Behalf of O’Brien Law Firm, LLC

Posted on: July 27, 2019

Despite its many benefits, bankruptcy, unfortunately, comes with a negative connotation, which may make you hesitant to file. You want to try to protect your reputation with both loved ones and future creditors. As you have explored other options, one you may have looked at is debt settlement.

Debt settlement services are very alluring because they promise to eliminate most of your debt, so you pay pennies on the dollar. They say they will talk to creditors and take care of everything for just a simple fee. Can you trust these services if you want to avoid bankruptcy?

The risk is high

The bad news is that in most cases, these promises are too good to be true. While there certainly are reputable debt settlement companies, most take advantage of your situation to put money in their pockets. You are more likely to go further into debt than to get out of it. Watch out for companies that do any of the following:

  • Ask you to stop paying and communicating with your creditors
  • Require you to open a new bank account to put money in
  • Charge you fees before delivering any services
  • Promise a specific amount of reduction in debt

Even legitimate companies may only be able to do so much. Creditors may not be willing to work with them and do not have to agree to any negotiations. Your credit will take a bigger hit, and you may even find yourself facing a lawsuit.

Other alternatives

Does this mean your only choice is to file for bankruptcy? Not necessarily. There may be other options that could work for you, such as credit counseling or debt consolidation. However, it is also important to remember that bankruptcy is not a bad route. It stops creditor harassment, protects certain assets, eliminates most debts and puts you back on the road to financial security.

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Women struggle with hefty credit card debt

On Behalf of O’Brien Law Firm, LLC

Posted on: July 24, 2019

Many women in Mississippi are struggling with costly credit card debt, even more than men in the state. Of course, people in general have accumulated significant debt associated with revolving consumer credit. According to one study, total credit card debt has hit its second-highest point following the financial crisis of 2008. In one quarter in 2018 alone, people accumulated another $30 billion in consumer debt. Still, women have shown more anxiety about their credit card balances than men. One study said that over one-fourth of women participants were not confident that they could pay off their cards compared to 14% of men.

One factor is the generally lower incomes that women have. Women have 80% of the median annual income of men, which means that women may have greater struggles in getting out of credit card debt. While the median salary for a woman is $41,554, the median for a man is $51,640. In addition, 20% of men said that they had only paid their credit card balances in full once or never in the last six months. Over 30% of women said the same, meaning that they are accumulating larger amounts of interest charges as a result.

Other experts drew attention to the number of single mothers providing for their children. Single moms may be more likely to turn to credit cards to cover expenses for their children and may also struggle to make up the money to pay off their bills. They may also be less able to take on additional work to make more money due to the cost of childcare.

People of all backgrounds are struggling with creditor calls, costly fees and other aspects of insurmountable credit card debt. They may wish to consult with an attorney about their options for debt relief, including credit counseling, debt consolidation or personal bankruptcy.

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Filing for bankruptcy may improve financial position

On Behalf of O’Brien Law Firm, LLC

Posted on: July 18, 2019

For many people in Mississippi who are struggling to pay down debts, filing for bankruptcy is a viable option to improve their financial position. During the peak of the recent financial downturn, almost 1.6 million bankruptcies were filed. The majority of those filings were made by consumers. The total number of annual filings dropped to under 800,000 by the time ten years had passed. People who have credit card debt may be able to get a fresh start via bankruptcy.

If the person is in a position where he or she has a lot of debt and does not own major assets like a home, a bankruptcy filing can clean the slate. As part of the bankruptcy process, petitioners are required to complete finance classes. These classes, which are taken both before and after the bankruptcy, can provide education, information and perspective that can be useful to the person going forward.

As many as two-thirds of all bankruptcies are filed because the person has medical debt. Going through divorce is also a common catalyst for bankruptcy filings. It’s a misconception that people who file for bankruptcy have to give up all of their assets. In a Chapter 7 bankruptcy, the filer may have the opportunity to reaffirm certain debts and keep assets like a home or a car.

Individuals who have questions about the bankruptcy process might want to schedule a meeting with a lawyer. A lawyer who has experience practicing bankruptcy law may be able to help by examining the client’s debts and income and suggesting options to reduce or eliminate outstanding debts. A lawyer may be able to help by drafting and filing the petition to begin the bankruptcy case, by communicating with the bankruptcy trustee on the client’s behalf or by ensuring the client completes necessary counseling and other requirements.

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Rights of debtors facing lawsuits from debt collectors

On Behalf of O’Brien Law Firm, LLC

Posted on: July 8, 2019

All types of people in Mississippi might experience financial hardship and fall behind on paying their debts. When debt collectors start to contact these people, they might use harsh tactics that inspire fear. The Consumer Financial Protection Bureau reports that 25% of debtors have felt intimidated by collection agencies. Although debt is a serious matter, people have legal rights that potentially give them the ability to limit aggressive collection practices.

Being served with papers for a lawsuit from a debt collector ranks high on debtors’ fears. Even when people feel helpless when confronted by lawsuits, they should never ignore them. They should supply their official answer to the court within the deadline stated in the lawsuit. When people fail to tell the court their side of the story, judges side with debt collectors. They issue judgments against debtors that could enable drastic actions like wage garnishment or asset seizure.

Debtors can demand that the parties suing them prove their right to collect the debt. Creditors often sell unpaid debts to collection agencies. Debts might pass through multiple hands before a collector files a lawsuit. Legally, the burden of proof falls on the collector. Collectors do not necessarily possess the documentation to support their demands for payment. If that party cannot provide documentation showing that the person signed a credit agreement, then the court could side with the debtor.

Before responding to a lawsuit, a conversation with an attorney might be informative. A lawyer could check on issues like the debt’s statute of limitations. A person experiencing financial difficulties could also learn about bankruptcy. A bankruptcy filing could temporarily halt collection actions or a foreclosure. A successful filing might discharge or restructure debts and give a person a fresh start on life.

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Filing for a Chapter 13 bankruptcy

On Behalf of O’Brien Law Firm, LLC

Posted on: July 5, 2019

Some people in Mississippi who are struggling with debt might want to consider filing for Chapter 13 bankruptcy. This can allow a person to keep some of his or her assets.

In a Chapter 13 bankruptcy, an individual works with the court to create a payment plan for paying off his or her debts over a period that lasts three to five years. People who are able to stick to the payment plan and make mortgage payments may be able to keep their homes. They might be able to keep other major assets as well as long as they can keep up with their payments. It may be possible to discharge the bankruptcy earlier if the payment plan is completed in less time than originally planned.

Some debts, including taxes, student loans and child support, must be paid in full and cannot be discharged in bankruptcy. The next level of debt includes any other major assets that can be repossessed if the debt is not paid. Finally, there are unsecured debts, such as medical and credit card debt. Most individuals who file for Chapter 13 might have to pay some of these debts, but the court may allow them to discharge them in part. A Chapter 13 bankruptcy only stays on a person’s record for seven years unlike Chapter 7, which remains on a credit report for 10 years.

A lawyer may explain a person’s options for debt relief and whether he or she qualifies for a Chapter 13 bankruptcy. It is necessary for someone to have an income that is high enough to make the necessary payments. Once the bankruptcy filing is made, foreclosure, creditor harassment and any other actions against the debtor must stop. However, a Chapter 13 bankruptcy can offer a person a fresh financial start, and a person can go on to rebuild his or her credit.

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Why Americans could be having issues with credit card debt

On Behalf of O’Brien Law Firm, LLC

Posted on: June 27, 2019

Americans owe a total of $1.4 trillion in student loan debt as of the first quarter of 2019. That figure was provided by Experian, and it represents a 116% increase in student loan debt over the past 10 years. While this has caused a financial burden for many young people, it is not the only form of debt that they have.

Research has indicated that individuals between the ages of 23 and 34 have more credit card debt than student loan debt. Collectively, Americans repaid $38.2 billion in credit card debt during the first three months of 2019. However, WalletHub says that individuals will put another $70 billion on credit cards during 2019 alone. Currently, Americans owe over $1 trillion to credit card companies. Financial professionals point to many reasons why individuals rely so heavily on credit cards and are struggling to repay their balances.

Monetary policy and a relatively weak dollar relative to inflation are popular theories as to why credit card debt is increasing. Low interest rates and more money in circulation generally results in prices going up and the value of the dollar staying flat. However, some believe that if Americans were better educated about the financial consequences of credit cards, they would be able to more effectively manage their debt.

Individuals who are facing financial challenges related to credit card or other types of debt may have ways to overcome them. One option may be to file for Chapter 7 bankruptcy. Doing so may make it possible to have certain unsecured debts discharged without making any payments. Other benefits of bankruptcy may include putting at least a temporary stop to creditor contact.

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How does preference law affect my bankruptcy case?

On Behalf of O’Brien Law Firm, LLC

Posted on: June 26, 2019

The decision to declare bankruptcy is not an easy one to make. Once you have chosen to commit to the process, it is normal to have a lot of questions about this unfamiliar undertaking.

You may already understand the difference between Chapter 7 and Chapter 13 bankruptcy, but something you may not have encountered before is preference law. If you are about to move forward with a Chapter 7 bankruptcy case, this policy may impact recent debt payments.

What is preference law?

Preference law refers to a period before you file for bankruptcy. During this time, if you make a payment on a debt, or the collector garnishes wages from your paycheck, that money may need to come back. By allocating precious funds from your existing assets, you give preference to one creditor over another.

The Chapter 7 bankruptcy process may involve liquidation of non-exempt assets. The money from this step can then go toward paying down some of your debt. Any payments you make 90 days prior to officially filing may be eligible for inclusion in this stage.

Why does it exist?

Creditors and debt collectors lose out when you declare bankruptcy. To remain fair to all those involved, the government put preference law into place to keep distribution of repayment even across the board. The idea is that each collector deserves repayment as much as the rest of them.

In some cases, preference law can work in your favor. Wage garnishment is often beyond your control. You will receive several paychecks within 90 days before filing, which adds up to a substantial amount of money. You can then distribute these funds across all your debts to minimize how much of the remaining balances become discharged.

You will likely have many questions about the process if you decide to file for bankruptcy. Keep this surprising law in mind as you prepare for the next steps.

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The role of student loan debt in bankruptcy filings

On Behalf of O’Brien Law Firm, LLC

Posted on: June 19, 2019

People in Mississippi who are struggling with debt may be among the nearly one-third of people who filed for Chapter 7 bankruptcy with student loan debt. This was one finding in a study by LendEDU. The same study also found that among that group, on average, almost half of their total debt constitutes student loans. These figures do not include people who filed for Chapter 13 bankruptcy, which involves creating a payment plan.

The cost of going to college, along with student loan debt, has skyrocketed in the past several years. While it would take baby boomers just over 300 hours at minimum wage to pay off a four-year college education, millennials would need to work more than 4,400 hours. Since student loans generally cannot be discharged in a bankruptcy, even after filing, people may be facing a significant debt burden. However, discharging credit card and other debt may allow them to free up income to pay off their loans.

All the same, the student loan debt situation is considered to be a growing crisis. Many millennials are unable to purchase homes or spend in any other significant way because of this. The national total has reached a record high of $1.5 trillion, and in 2018, the average debt for each person graduating with loans was $29,800.

People who are struggling with debt might want to talk to an attorney and discuss whether filing for bankruptcy is the best option. The two primary types for consumers are Chapter 7 and Chapter 13, and each has its own eligibility and other requirements that an attorney can outline.

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Credit card delinquencies on the rise among younger borrowers

On Behalf of O’Brien Law Firm, LLC

Posted on: June 10, 2019

Young people in Mississippi and around the country are finding it increasingly difficult to manage their revolving debt according to the New York Federal Reserve’s most recent Quarterly Report on Household Debt and Credit. The report reveals that more than 8% of the credit card balances owed by Americans between 18 and 29 years of age are 90 days or longer past due. This is the highest rate of delinquency since 2011 when the economy was still recovering from the Great Recession.

Financial experts say that rising interest rates are likely responsible. The Federal Reserve raised the cost of borrowing several times in 2018, and the average credit card interest rate for consumers with good credit is now 18%. Those with troubled credit histories often pay as much as 25% interest on their revolving debt. Higher interest rates also make it more difficult to escape the credit card debt trap. Six out of 10 Americans with credit cards carry a balance, and more than half of them have done so for a year or longer.

The figures also reveal that more Gen Z and millennial Americans are applying for credit cards. Between 2008 and 2012, only about four out of 10 Americans in their 20s had one or more credit cards. That figure has now risen to more than 50%. Younger borrowers also tend to sign up for credit cards that offer reward points or travel perks rather than low introductory interest rates.

Young borrowers are sometimes reluctant to seek bankruptcy relief because they are worried about ruining their credit. Attorneys with debt relief experience could explain that a discharged bankruptcy often increases the credit scores of individuals with a history of late payments. This is because bankruptcy reduces the amount of debt they owe and improves their debt-to-income ratios.

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Supreme Court ruling upholds creditor responsibilities

On Behalf of O’Brien Law Firm, LLC

Posted on: June 5, 2019

People in Mississippi may be aided in finding relief from overzealous creditors by a U.S. Supreme Court ruling. The high court ruled on June 3 that creditors can be held in contempt of court if they continue to pursue debts that were clearly discharged in a bankruptcy. Previously, the Ninth Circuit court had found that creditors should be cleared of sanctions in these cases, even if they should have reasonably known that the bankruptcy discharge applied to their debt.

The Supreme Court said that other courts can use civil contempt penalties against creditors that fail to follow a bankruptcy discharge order if it can be shown that the creditor should not have had any doubts that the order barred their activities. The case came about after the Sherwood Park Business Center continued to attempt to collect debts from a man who had filed for Chapter 7 bankruptcy, eliminating the debt. The bankruptcy court imposed sanctions on the creditor, saying that it was aware of the man’s bankruptcy order and the debt’s discharge. However, other courts overturned the contempt order on the basis of the creditor’s statement of its good faith in the legitimacy of its collection attempt.

Bankruptcy lawyers said that the high court’s ruling provides a higher level of protection for debtors. It uses an objective standard of reasonableness to assess a creditor’s actions and beliefs rather than relying on a subjective assessment of good faith. They said that the bankruptcy code provides detailed provisions and that creditors should generally be very clear on whether the bankruptcy discharge applies.

One reason why many people file for bankruptcy is to put an end to phone calls, letters and other forms of ongoing creditor demands. People who are facing an insurmountable debt burden might opt to consult with a bankruptcy attorney about their options for relief.

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Understanding the consequences of Chapter 7 bankruptcy

On Behalf of O’Brien Law Firm, LLC

Posted on: May 29, 2019

Lots of Mississippi residents are facing an ever-growing amount of debt. As credit card bills, auto loans, personal loans and medical bills start to mount, it can be difficult to find a way to pay everything back. This is especially true for those who have had a significant change in financial circumstances due to job loss, divorce or other factors. Personal bankruptcy can be an important method for eliminating debts and moving forward toward a new financial future.

There are both advantages and disadvantages to pursuing Chapter 7 bankruptcy. On the one hand, many people hesitate before filing because they are concerned that they will see their credit rating destroyed. After all, the bankruptcy remains on a credit report for 10 years. However, some individuals who file for bankruptcy already have severely damaged credit. When one is unable to pay their bills, waiting to declare bankruptcy may actually lead to a longer period of bad credit.

Similarly, debtors will need to give up their credit cards. They can continue to use debit and prepaid cards for online purchases, however, and they will begin to be eligible for regular credit cards within three years of their initial filing.

Others are concerned about losing property that will be put up for sale by the bankruptcy trustee. While people with luxury items, second properties or inheritances may find that Chapter 7 bankruptcy is a bad fit, many key personal assets are exempted under state law. In addition, it’s possible to keep wages and new properties obtained after filing for bankruptcy.

There are many other considerations to be taken into account before filing for personal bankruptcy. An attorney can provide advice and guidance on the proper steps to take when seeking debt relief.

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2 common reasons people procrastinate on bankruptcy

On Behalf of O’Brien Law Firm, LLC

Posted on: May 27, 2019

Making the decision to file for bankruptcy in Mississippi is not one you should make lightly. Nor should you wait too long to file. Though you may have ambivalent feelings about your financial situation and at times feel that things are not as bad as they may seem, waiting too long to take action can make your circumstances more challenging to manage in the short- and long-term.

No one enjoys struggling with debt and receiving constant demands for payment from creditors. Unfortunately, it is a reality for many households across the country. The sooner you seek professional intervention and consider bankruptcy as a solution, the less likely you will fall prey to the pitfalls of delayed action. Here are some common reasons people procrastinate about filing for bankruptcy.

Not enough income

When struggling to make ends meet because of debt, filing for bankruptcy may seem like an additional expense you cannot afford. Though the cost of bankruptcy varies, it is possible to have the costs structured into several payments during your filing. The courts take into consideration the unique circumstances of each filer’s case and use discretion to determine if an installment agreement is beneficial. In cases of extreme financial hardship, they may waive the fees.

Denial of financial circumstances

Pretending like your debts are going to disappear may seem like a good idea because it allows you to stop stressing and enables you to sleep at night. The reality is denial about your finances can make a tough situation extremely worse. Your creditors will continue their collection attempts, which can escalate into collection lawsuits that include wage garnishment, bank account levies, foreclosures and vehicle repossessions. The only way to put an end to debt is to take action, even if that action involves making arrangements to pay your debts or filing bankruptcy to make your circumstances more manageable.

Do not let the shame or embarrassment of debt keep you from doing what is necessary to make things right and get your finances back on track. Many people experience financial issues at some point in their lives. Remember, even some celebrities and the rich and famous are not immune to the pitfalls of debt and have taken advantage of the benefits and protections that bankruptcy offers.

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Medical issues most common reason for bankruptcy filings

On Behalf of O’Brien Law Firm, LLC

Posted on: May 23, 2019

Readers in Mississippi who are struggling to pay down debts might turn to bankruptcy protection for help. Increasingly, people are filing Chapter 7 or Chapter 13 bankruptcy due to medical debts. According to a study by academic researchers, 66.5% of bankruptcy filings occurred for medical reasons. The filers either could not afford to pay high medical bills, or they missed work for medical issues. Approximately 530,000 families file for bankruptcy annually because of medical expenses, illness or injury, according to the research.

There were several other common reasons for bankruptcy filings cited by the study. Foreclosures and unaffordable mortgages were factors in 45% of filings. Living beyond one’s means or spending excessively were factors in 44.4% of filings. Helping relatives or friends contributed to bankruptcy in 28.4% of the instances, student loan debt was a factor in 25.4% of the cases and separation or divorce contributed to 24.4% of the filings.

The percentage of filers who said medical issues contributed to their bankruptcy actually increased following the passage of the Affordable Care Act from 65.5% to 67.5%. One of the co-authors of the research said the reason for the lack of improvement was insufficient health care insurance coverage.

There are as many reasons for filing for bankruptcy as there are those who file for it. People in Mississippi who have debts they cannot repay might want to schedule a consultation with an attorney. A lawyer with experience practicing bankruptcy law might be able to help by examining a client’s financial situation and suggesting options to reduce or eliminate outstanding debts. A Chapter 7 bankruptcy filing may get rid of the person’s debts and still allow him or her to keep important assets. A Chapter 13 filing may result in the restructuring of debts, so a person can pay them down over time.

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Lawmakers propose bill to discharge student loans in bankruptcy

On Behalf of O’Brien Law Firm, LLC

Posted on: May 15, 2019

For many people in Mississippi, student loans have offered a pathway to future career success. Excessive student loan debts, however, have proven burdensome for many people in recent years. Nationwide, outstanding student loan balances will likely hit $2 trillion by 2020. Delinquency or outright default afflicts over one-quarter of student loan borrowers today. Due to the inescapability of these debts, a group of lawmakers has proposed the Student Borrower Bankruptcy Relief Act of 2019.

If passed, the law would clarify the conditions that qualify a borrower for bankruptcy discharge of student loans. A previous reform to federal bankruptcy law installed a vague standard known as undue hardship that could allow someone to gain relief from student loan debt through bankruptcy. The law failed to create a clear definition of undue hardship, which has been left to the whims of judges. Without a clear definition, judges have made inconsistent decisions. In this unpredictable environment, debtors have few options for dealing with student loans that they cannot repay.

The Federal Reserve System chairman has acknowledged that the growing debts among so many people could hobble economic growth. The chairman said they could think of no reason why bankruptcy law should view student loans differently than other consumer debts. Critics of the proposed reform worry that it would make lenders raise interest rates on student loans. Advocates for debtors have countered that a viable bankruptcy option could make lenders more willing to work with debtors trying to catch up their payments.

When debts overwhelm a person, it starts a downward cycle that could result in wage garnishment, repossession and foreclosure. A person confronted by excessive debts may want to ask an attorney for advice. An attorney may help manage a bankruptcy filing for a qualifying debtor and take action to stop harassment by creditors.

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CFPB seeks to change rule about debt collector contact

On Behalf of O’Brien Law Firm, LLC

Posted on: May 8, 2019

If a proposed rule by the Consumer Financial Protection Bureau takes effect, debtors in Mississippi and elsewhere may be hearing a lot less from creditors. The rule would amend the Fair Debt Collection Practices Act to limit debt collectors to seven phone calls to a debtor per week. Debt collectors would also be required to send a written notice containing information about a debt balance and how to dispute it.

There are already a number of limitations placed on debt collectors under the terms of the FDCPA. For instance, they are only allowed to contact debtors during certain hours of the day, and they cannot threaten to sue a person after the statute of limitations to collect the debt has ended.

There will be a public comment period of 90 days regarding the proposed rule. If the rule is passed, it will go into effect a year after it is published.

Filing for bankruptcy may be one way to deal with financial challenges that a person is facing. Doing so may put an end to phone calls from creditors or debt collectors. It may also put an end to collection letters and other attempts to contact a debtor. In many cases, individuals will not lose their property simply for filing a case, and it might be possible to keep it throughout the duration of the case.

An attorney may help a person fill out paperwork and take other steps necessary to file a bankruptcy petition. In addition to filing paperwork, a debtor will likely need to take a credit counseling class. If an individual files for Chapter 13 bankruptcy, he or she will make payments to creditors for up to five years. Any balances remaining at the end of the repayment period may be discharged.

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How bankruptcy affects credit scores

On Behalf of O’Brien Law Firm, LLC

Posted on: May 2, 2019

Mississippi residents who are coping difficult financial situations are often reluctant to pursue debt relief because they are worried about what a bankruptcy will do to their credit ratings. While a Chapter 13 bankruptcy will appear on credit reports for seven years and a Chapter 7 bankruptcy will show up for 10 years, how they actually affect borrowing is more influenced by the actions taken after a bankruptcy has been discharged.

Many people are surprised to learn that filing for bankruptcy actually improves credit ratings in many cases. It is widely believed that credit ratings are based solely on payment histories. However, the amount of debt an individual has is another crucial factor in calculating credit scores. When bankruptcies are discharged, the amount of debt is usually reduced and credit scores may actually go up.

Consumers tend to wait until their situations are quite dire and bill collectors are hounding them every day before pursuing bankruptcy. This means that their credit scores are often already badly damaged when they do take action. Bankruptcy offers a fresh start, and lenders may be more willing to extend credit to an individual who has a discharged bankruptcy and fewer obligations than they would to someone who is struggling to bring delinquent accounts up to date.

Attorneys familiar with the nation’s bankruptcy laws could answer questions about debt relief and explain how credit ratings can be rebuilt following financial setbacks. Legal counsel may also point out the differences between Chapter 7 and Chapter 13 personal bankruptcies and dispel many of the debt relief myths that prevent individuals with unmanageable financial situations from taking advantage of debt forgiveness.

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How to reduce credit card costs

On Behalf of O’Brien Law Firm, LLC

Posted on: April 29, 2019

Credit card debt is one of the most pervasive forms of debt in American society. In 2017, the total amount of credit card debt in the country exceeded $1 trillion. The average adult in the United States has over $6,000 in debt from credit cards.

Filing for bankruptcy is available to those unable to pay off such debts. However, before that happens, you should do everything in your power to get your debt under control, so the court will see you actively attempted to pay it off on your own. You may want to consider performing the following actions prior to bankruptcy to see if they will help you.

Call to get your interest rate reduced

Many people do not realize that if they simply called their credit card company, they could probably get some leeway. Many companies have no problem reducing the interest rate for people who have trouble paying. You should not expect a major reduction with this instance. For example, if your current interest rate is at 20%, then it likely will not go down to 3%. However, even if it only goes down a little bit, it still helps.

Pay off high interest cards first

Many people have credit card debt spread across several different cards. A good strategy is to pay off the card with the higher interest rate. If you delay paying off this card, then the interest rate will only grow larger over time, forcing you to pay off a higher amount. Once you pay off that card, you can turn your attention toward cards with lower rates.

Stash your credit cards for the time being

If you continue to purchase items on your credit cards, then you will just have more interest to pay off. You should stick with a debit card or cash until you pay off the debt. Only after exhausting all options should you look into bankruptcy.

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Mortgage modifications during Chapter 13 bankruptcy

On Behalf of O’Brien Law Firm, LLC

Posted on: April 27, 2019

Filing for bankruptcy can be a powerful tool to aid people in gaining a firm financial standing. For this reason, more people are considering this option.

For those who own a home, there are a few ways that a chapter 13 bankruptcy may affect you. In particular, your mortgage lender may offer you a mortgage modification. There are a few important things to know about this option.

Mortgage modification

In short, a mortgage modification occurs when a lender, or mortgagee, works with a mortgagor to restructure a mortgage loan to fit within the mortgagor’s financial restraints. It is important to understand that a mortgage modification is not a refinance. The focus of a refinance is to allow mortgagors to finance the loan again, usually at a lower interest rate. On the other hand, a mortgage modification is a change to the current mortgage repayment, to make it easier for the mortgagor to meet the terms of the mortgage. During this process, the monthly premium may go down, but the lifetime of the loan will increase.

Possible benefits

Particularly in the case of bankruptcy, a modification can help the mortgagor in his or her financial adjustment after the bankruptcy process and allow the party to maintain the home. This tends to be the greatest draw of the option. Depending upon the terms of the modification, the interest rate of the loan may be low for a few years, and when it does increase, it will not rise above the rate that was set before the modification. The process is usually smooth and quick, seeing as it involves a loan that is already in place.

The cost

Loan modifications come with some possible setbacks. The greatest possible disadvantage is the length of the loan. Many people do not realize that the restructuring of the loan comes with a new loan term. This increases the length of the loan, which in turn increases the amount the party will have to pay back. It is important to weigh the possible pros and cons as they apply to your situation.

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Bankruptcy reform proposals highlight student loan debt

On Behalf of O’Brien Law Firm, LLC

Posted on: April 23, 2019

Many Mississippi residents are struggling under piles of insurmountable debt. The sources of these debts may include everything from credit cards and auto loans to medical bills and student loans. While many of these debts can be discharged through personal bankruptcy, people struggling with significant student loan debt have faced particular difficulties. In the past, the bankruptcy code was amended on multiple occasions to make it harder for borrowers to find relief from their student loans. At the same time, the cost of university has gone up dramatically, leaving Americans with $1.5 trillion in student loan payments.

A new report by prominent bankruptcy judges, lawyers and academics is urging changes to the law to make it easier for people to find relief from crushing student loan obligations. The report aims to address issues that are preventing people in debt from filing for bankruptcy. There are two main types of personal bankruptcy options: Chapter 7, where assets are sold off and a person’s debts discharged, and Chapter 13, which aims to restructure debts through a payment plan. Bankruptcy filings hit their lowest point since 2007 in 2018. However, many note that people are still struggling with insurmountable debt but do not file for bankruptcy due to other concerns.

The commission offered a range of proposals, including allowing student loans to be discharged in bankruptcy seven years after they became payable. While student loans can currently be discharged in cases of “undue hardship,” this has been a difficult barrier to reach. Some say that judges could interpret the law differently to help people find relief.

Of course, many people are struggling with credit card bills and medical debt, both of which can be discharged normally through personal bankruptcy. An individual who is struggling with excessive debt could consult with a bankruptcy attorney about their options to seek relief.

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How to rebuild credit after filing for bankruptcy

On Behalf of O’Brien Law Firm, LLC

Posted on: April 17, 2019

After Mississippi consumers have filed for bankruptcy, they may be concerned about rebuilding their credit. However, they should be wary of companies called credit repair agencies that offer to help with this.

Under the Credit Repair Organizations Act, it is not legal for a company to charge for this type of service until the repair has been done. Some credit repair agencies will send out letters to people who have filed for bankruptcy, while others will advertise online or on TV. The companies claim to be able to establish a new credit identity for people who have filed for bankruptcy, but some of them suggest applying to the IRS for an Employer Identification Number. People are then instructed to use this number in place of their Social Security number. However, this number is intended for business use, and using it in this way can be illegal.

A bankruptcy can remain on a credit report for up to 10 years, but there are other steps people can take to repair their credit. One is applying for a secured credit card. This allows a person to deposit a certain amount to cover the credit offered and establish a regular payment record. The person can then transition to regular credit cards. Another way is to apply for a bad credit car loan.

How to reestablish credit is one of several concerns people may have when considering bankruptcy, but being unable to keep up payments for debt also hurts a person’s credit. An attorney may be able to outline debt relief options, including bankruptcy. Depending on a person’s income and other factors, it may be possible to file for either Chapter 7 or Chapter 13 bankruptcy.

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How to deal with debt collection tactics

On Behalf of O’Brien Law Firm, LLC

Posted on: April 11, 2019

Mississippi residents with mounting debts often get phone calls from debt collectors. Some of these threatening callers may not be following regulations on debt collection procedures. In fact, debt collectors are sometimes accused of harassing debtors. According to the Fair Debt Collection Practices Act (FDCPA), collectors have limitations as to what they are permitted to do when attempting to collect debts. The same regulations apply to credit card debts, missed payments on mortgages, vehicle loans and medical bills.

The Consumer Financial Protection Bureau (CFPB) states that the FDCPA forbids debt collectors from using unjust methods to collect debts. For example, debt collectors aren’t allowed to use foul language during calls. The FDCPA covers calls made by lawyers and third parties. However, legal regulations do not enforce these rules on the original creditors. Per the official FDCPA guidelines, debt collectors aren’t legally permitted to call debtors prior to 8 a.m. or later than 9 p.m.

Debt collectors cannot call people at their jobs about missed payments if the debtors previously requested them to refrain from calling. Furthermore, debt collectors aren’t allowed to harass debtors. Harassment includes making several phone calls within a 24-hour period. Debt collectors must honor written requests asking that they cease making phone calls and sending texts regarding the payment of debts.

Debt collectors aren’t allowed to divulge confidential information to other people (except for a spouse) about a person’s debts. In addition, a debt collector is not permitted to make a threat of repossession. If a debtor has hired a lawyer, collectors must contact this attorney instead of the debtor. Bankruptcy offers a legal solution to a pressing problem.

Sometimes, even the best intentions to pay back debts involve severe financial repercussions. That’s why an individual facing heavy debts may want to consult with a bankruptcy attorney.

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Hospital patients often hit with surprise out-of-network bills

On Behalf of O’Brien Law Firm, LLC

Posted on: April 1, 2019

Most people in Mississippi choose hospitals within their insurance networks to avoid higher medical bills. Despite their best efforts, they still might end up paying surprise out-of-network fees. A nationwide study from the Health Care Cost Institute has revealed that patients using in-network hospitals frequently get unexpected charges from out-of-network physicians and laboratories.

Health care consumers have no way to protect themselves from out-of-network services even when they seek care at in-network facilities. Even if patients make inquiries in advance of an admission, the hospital likely has no ability to give a clear answer about the network status of all service providers involved in the care. The increasing complication of insurance contracts and tiered networks creates an opaque environment where consumers cannot have certainty about coverage.

The study found that anesthesiologists were a large source of out-of-network charges from medical professionals. This medical specialty represented 16.5 percent of surprise bills. Independent laboratories, however, took the top spot by producing 22.1 percent of all surprise medical bills.

A medical crisis can inflict financial hardship through both loss of income and high medical bills. A person might fall behind on utility bills and house payments while trying to pay hospital bills. Under these circumstances, debts can pile up quickly. At this point, a legal consultation regarding debt relief could reveal strategies for coping with the problem. An attorney might recommend actions like negotiating a manageable repayment plan. If a court needs to be involved, then an attorney could prepare legal paperwork and strive to protect the client from creditors.

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What can bankruptcy’s “automatic stay” protect you against?

On Behalf of O’Brien Law Firm, LLC

Posted on: March 28, 2019

As someone who has decided to file for bankruptcy, you may have done so in an attempt to stop the seemingly constant onslaught of phone calls from debt collectors. Such calls can prove, at best, a nuisance, and you may also have concerns about how it looks to have debt collectors calling you up at your place of business.

By filing for bankruptcy, though, you can put a stop to these persistent phone calls, and this happens because of something called “automatic stay.” Just what is automatic stay? Once you initiate bankruptcy proceedings, the automatic stay takes effect, and your creditors can no longer attempt to collect on certain debts during this timeframe. Just what can bankruptcy’s automatic stay protect you against, in addition to creditor harassment?

Foreclosure

Typically, filing for bankruptcy will, at least temporarily, put a stop to a foreclosure against your house. If you do not stay current on your mortgage payments, though, your creditor may file to have the automatic stay removed, so you still need to keep up with your payments during this time.

Eviction

If you are renting your home and your landlord filed to have you evicted, but he or she is not yet in possession of the eviction judgment from the housing court, bankruptcy’s automatic stay should stop the eviction process. As is the case with mortgage payments, though, your landlord may still be able to evict you if you fail to keep up with your rent.

Wage garnishment

If you are experiencing one of your creditors taking some of your wages at work, bankruptcy’s automatic stay can also put a stop to the garnishment.

While these are some of the things the automatic stay can protect you against, it is important to note that there are certain debts, such as child support obligations and evictions with judgments, that it typically will not cover.

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Chapter 13 bankruptcy is an option for wage earners

On Behalf of O’Brien Law Firm, LLC

Posted on: March 27, 2019

Mississippi residents who are having trouble paying off debts might look to the bankruptcy system for relief. For most individual filers, there are two options, Chapter 7 and Chapter 13. There is a limit on how much debt a filer can have if they want to file bankruptcy under Chapter 13. Specifically, the filer cannot have more than $1,184,200 in secured debts or more than $394,725 in unsecured debts.

Chapter 13 bankruptcy, which is sometimes called wage earner’s bankruptcy, involves the filer paying down debts for a period of between three and five years, pursuant to the terms of a repayment plan approved by the bankruptcy court. There is no maximum income limit for people filing Chapter 13, and it does not matter where the filer’s income comes from. Chapter 13 bankruptcy is a good solution for people who have regular income. Typically, the filer is allowed to keep important assets like a car or house.

Prior to filing, the debtor must go through credit counseling. After the bankruptcy petition and other required documents are filed, the bankruptcy trustee will work with the debtor to create a repayment plan. It is not up to the debtor how long the repayment plan will last. Rather, the period of repayment is determined based on the filer’s level of income.

Those who are considering bankruptcy as a means to relieve financial stress and reduce or eliminate debts might want to speak with a lawyer. Legal counsel with experience practicing bankruptcy law might help a client file the petition to begin the process. If necessary, the lawyer could fight for the client’s best interests during official proceedings.

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How some employers help with debt relief

On Behalf of O’Brien Law Firm, LLC

Posted on: March 20, 2019

Many working people living in Mississippi struggle with their finances. Living paycheck to paycheck, they find it difficult to get ahead of crippling debt. If an emergency strikes, such as a family illness or job loss, they may have difficulty affording food, utilities and shelter.

Some employers are aware of the situation and are working to offer financial planning benefits to their workers. These companies have contracted with third-party companies to provide benefits such as financial counseling, student loan repayment options, emergency loans and medical bill advocacy.

In many cases, these services offer real help. If financial counselors determine that a loan is a good idea, they can provide education to employees about the risks and benefits of borrowing. In some cases, these programs also offer paycheck deduction options that can help ensure on-time repayment and lower the risk of credit damage and late repayments.

However, there are limits to how effective financial assistance programs can be. While they may represent a solid alternative to bankruptcy, there are situations in which a person’s debt is simply out of control. Unless the employee receives a significant wage increase or comes into a large amount of cash, he or she is unlikely to ever complete paying off the debt.

In such cases, bankruptcy might be a good option. Both Chapter 7 and Chapter 13 offer ways for financially insolvent individuals to resolve their debts and move forward in reestablishing their finances. Someone considering bankruptcy might benefit from consulting with an experienced attorney who could explain various debt relief options.

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Filing for Chapter 7 bankruptcy

On Behalf of O’Brien Law Firm, LLC

Posted on: March 13, 2019

Debtors in Mississippi who have significant debt and who have a lower income or no income may benefit from a Chapter 7 bankruptcy. However, they should carefully consider their financial situation and the impact that bankruptcy will have on their credit before filing.

Chapter 7 bankruptcy, which is the most frequently filed bankruptcy, is a liquidation bankruptcy as it uses the proceeds from the sale of secured property, such as a vehicle or home, that exceeds the exemption threshold to pay back creditors. Filing and being discharged from a Chapter 7 bankruptcy is a process that can take only three to six months; in comparison, a Chapter 13 bankruptcy will take three to five years to be completed.

Debtors who are considering Chapter 7 bankruptcy should be aware that the bankruptcy will remain on their credit report for as long as a decade from the time they file. Filing for bankruptcy will also lower their credit score; however, they may find that the negative effect on the credit score will lessen as time goes on.

A means test has to be conducted in order for debtors to qualify for a Chapter 7 bankruptcy. Debtors will use this test to determine if their income is low enough for them to file. Their household income will have to be less than their state’s median income for a household of an equal size. The means test will deduct certain monthly expenses, like a vehicle or mortgage payments, from any current monthly income to determine the disposable income.

A bankruptcy attorney may assist clients with financial challenges and determining if a Chapter 7 bankruptcy is the best option to resolve their financial situation. Assistance may be provided for completing the means test and filing the necessary legal paperwork to begin the bankruptcy process.

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Consumer debt tops $13 trillion

On Behalf of O’Brien Law Firm, LLC

Posted on: March 6, 2019

Data published by credit reporting agency Equifax indicates that people in Mississippi and across the country owe $13.5 trillion in total consumer debt. Of that debt, more than $1 trillion is owed by people between the ages of 18 and 29. This debt is primarily made up of student loans, but it also includes credit card debt, mortgage debt, auto loans and other types of consumer debt. The last time people in this demographic owed over $1 trillion was just before the 2008 financial crisis during the fourth quarter of 2007.

The data was gathered and put out by Equifax and the Fed Consumer Credit Panel of New York. People between the ages of 30 and 39 owe $2.9 trillion. The demographic owing the most in consumer debt is people between 40 and 49, who owe a total of $3.4 trillion. Those between the ages of 50 and 59 are not far behind, owing $3.2 trillion, according to the data.

People over 70 years of age have roughly the same amount of outstanding debt as young people between 18 and 29 at $1 trillion. People between 60 and 69 owe around $2 trillion. The type of debt affecting the most borrowers is student loan debt, which more than 44 million people carry. The U.S. Secretary of Education has said there is a student loan debt crisis. Some research indicates that 40 percent of those with student loan debt might default by the year 2023.

Individuals who are struggling to pay their debts might want to schedule a consultation with a lawyer. An attorney with experience practicing bankruptcy law may examine the facts of the person’s situation and suggesting options to reduce or eliminate debt. Filing for Chapter 7 or Chapter 13 bankruptcy triggers an automatic stay, suspending collections efforts by creditors.

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Rebuilding credit after bankruptcy

On Behalf of O’Brien Law Firm, LLC

Posted on: February 28, 2019

Many people across Mississippi struggle to support themselves and their families financially, and if you count yourself among them, you may be sorting through your options and trying to figure out if a bankruptcy filing might give you the fresh start you desire. While, in many cases, filing for bankruptcy can be a great way to get your affairs in order so you can start to dig your way out of debt, your credit will most definitely take a hit after doing so.

There are, however, certain efforts you can make to help rebuild your credit after bankruptcy, which, over time, can help you raise your credit score and otherwise get back on your feet financially. Just what types of actions can you take after a bankruptcy filing to help raise your credit score?

Consider a secured loan

A secured loan is something you may be able to obtain through a local bank or credit union, and it can help boost your credit score if you stay current on all necessary payments associated with it. There are two primary kinds of secured loans. The first involves putting down a deposit and then borrowing against that money you have on deposit, while the second type involves placing money in a savings account you can access once you have made all required payments.

Consider a secured credit card

A secured credit card, meanwhile, can help you build your credit in a manner similar to a traditional credit card, but you need to fund the credit card yourself by putting down a deposit. There are typically high fees and interest rates associated with secured credit cards, though, so view this option as a temporary fix, rather than a long-term solution.

While these are two effective methods of rebuilding your credit on your own, you may also be able to do so through other methods that involve enlisting the help of others. For example, you may be able to have a close friend or family member co-sign on a loan or credit card to help you rebuild credit after bankruptcy.

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When to file for bankruptcy

On Behalf of O’Brien Law Firm, LLC

Posted on: February 25, 2019

Bankruptcy may be an option for Mississippi residents who have been overwhelmed by substantial debt. However, filing for bankruptcy can have a long-term impact on their credit. Before filing, they should consider several factors to decide whether it is the best option for them.

Debtors may want to try to negotiate a settlement with their creditors, who generally prefer obtaining a settlement rather than having the debt discharged in bankruptcy. Debtors may find it easier to negotiate a settlement if they are a few months behind on their payments, as creditors might not be inclined to reduce a debt if the payments are current.

Some debtors may benefit from credit counseling, particularly if they have been unable to reach a settlement with their creditors. With the assistance of credit counselors, it may be possible to get lower monthly payments and interest rates.

Lenders and creditors who have received judgements against debtors can be begin garnishing the wages of those debtors. If this occurs, filing for bankruptcy stop the wage garnishment and can even help debtors get some of the money that was garnished returned to them.

Medical bills that are not covered by insurance is another factor to consider in determining whether bankruptcy is the best way to resolve debt. Medical bills are the one of the main causes of bankruptcy because even with health insurance, people find it very difficult to pay those bills. By filing bankruptcy, people with substantial medical bills can pay them off using a 3-to-5-year payment plan or have them completely discharged.

A bankruptcy attorney may evaluate the financial circumstances of a client’s situation and may recommend filing a certain type of bankruptcy to stop wage garnishment. Assistance might be provided with developing a multi-year payment plan to resolve credit card debts and medical bills.

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Two-thirds of all U.S. bankruptcies related to medical bills

On Behalf of O’Brien Law Firm, LLC

Posted on: February 19, 2019

Mississippi residents who have had health emergencies likely can appreciate that medical bills are a factor in approximately two-thirds of all bankruptcy filings across the country. A study that contained this information was published in the American Journal of Public Health on Feb. 6.

For the study, a research team surveyed 910 random U.S. citizens who filed for personal bankruptcy between 2013 and 2016. They found that medical expenses ruin the finances of around 530,000 American families every year. They also found that around 66.5 percent of all bankruptcy filings were at least partially attributed to unpaid medical bills. The study is the first to explore the association between bankruptcy and medical bills since Congress passed the Affordable Care Act nearly nine years ago.

According to the lead author of the study, who is on the faculty at both the Harvard Medical School and the City University of New York’s Hunter College, the findings show that most Americans could be forced into the poorhouse after suffering just one major illness. He also said that health insurance provides inadequate protection because of co-payments, deductibles and other loopholes that push health costs back onto patients. The authors concluded that, while bankruptcy can help bail people out, the best long-term solution would involve changing the way Americans pay for health care.

Individuals who face overwhelming medical bills and other types of debt could help themselves by consulting with a bankruptcy attorney about their situation. The attorney could carefully assess the details of the case and suggest ways to stop creditor harassment and obtain debt relief. One possible solution could be to file a Chapter 7 bankruptcy petition, which could lead to the discharge of several types of unsecured obligations.

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Bankruptcy offers protection from foreclosure

On Behalf of O’Brien Law Firm, LLC

Posted on: February 14, 2019

People in Mississippi who have fallen behind on their mortgage payments face the possibility of foreclosure. While some lenders are open to loan modifications or short sales to satisfy the debt, many are not. Many lenders will begin foreclosure proceedings, which can end with the lender taking possession of the house and selling it at auction. The proceeds of the auction are then used to pay down the mortgage as well as the legal costs associated with foreclosure.

Where the lender is not willing to work with the borrower and forecloses on the property, filing for bankruptcy can protect the borrower. Once a person files for Chapter 13 or Chapter 7 bankruptcy, the court issues an Order for Relief that includes an automatic stay of collections actions. Creditors are then not allowed to attempt debt collection efforts until bankruptcy proceedings are complete. There are exceptions to the automatic stay in cases where the lender has already filed the foreclosure notice and lenders can file motions to lift the automatic stay.

Individuals who file for Chapter 13 bankruptcy set up a repayment plan as part of the bankruptcy process. The plan distributes the filer’s income to creditors, and the filer must account for current and past-due mortgage payments. If the person meets the requirements of the bankruptcy court for the length of the plan, he or she will usually avoid foreclosure and keep the home.

People who are struggling to pay down debts in Mississippi might want to speak with a lawyer. A lawyer with experience practicing bankruptcy law might be able to help by examining the facts of the case and suggesting a Chapter 13 or Chapter 7 bankruptcy filing to restructure or eliminate debts. A lawyer may be able to negotiate new payment terms with creditors or draft and file a bankruptcy petition to trigger the automatic stay.

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Second bankruptcy possible but waiting periods apply

On Behalf of O’Brien Law Firm, LLC

Posted on: February 6, 2019

Bankruptcy law recognizes that debts might overwhelm Mississippi consumers. When individuals file for bankruptcy protection, they generally do so under either Chapter 7 or Chapter 13. The form of bankruptcy determines whether eligible debts will be discharged or if the person must continue to pay creditors under a court-mandated payment plan. The chapter under which people file also establishes waiting periods before they can file for bankruptcy again.

Under a Chapter 7 bankruptcy, the court relieves a person of financial burdens by discharging many unsecured debts. After people complete this process, the law requires that they wait eight years before seeking Chapter 7 protection again. If they want to file for Chapter 13 protection, however, they only need to wait four years after completing a Chapter 7 case.

Chapter 13 bankruptcy helps people overcome financial stress by creating a manageable payment plan. This protection can help someone catch up on bills over three or five years and avoid foreclosure or wage garnishment. Someone who took advantage of Chapter 13 protection could file for Chapter 7 after waiting six years. Only two years must pass, however, if a person wants to file a second Chapter 13 petition.

A person needs to consider many factors when filing for bankruptcy a first or second time. The action stays on a credit report for many years and can endanger future employment opportunities or access to credit. A consultation with an attorney could inform a person about the pros and cons of pursuing bankruptcy relief. An attorney could determine if a person could pass a means test and describe which assets might be exempt from liquidation.

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Tips for paying off credit card debt

On Behalf of O’Brien Law Firm, LLC

Posted on: January 29, 2019

Mississippi residents have helped Americans as a whole generate a total of over $1 trillion in credit card debt. Those who want to pay off that debt have several options to do so. However, the best option may be to start with the credit card that has the highest interest rate. This is because reducing the principal balance on that card also reduces the amount of interest paid to a lender.

Ultimately, people will be able to pay their debt down faster if more of each payment goes toward the principal instead of interest. Once a credit card balance is paid off, a debtor will then start paying down the balance with the next highest interest rate. While it may take longer to pay down a debt using this method, it will save a person money in the long run.

To speed up the process of paying down credit card balances, they should be transferred to a card that has a zero percent introductory interest rate. This will result in all of a given payment going toward the principal balance. Another way to pay down debt faster is to make payments every two weeks instead of once a month. Doing so means making the equivalent to 13 monthly payments, and that can also result in more money going to the principal balance.

Individuals who are looking to eliminate debt may do so by filing for Chapter 7 bankruptcy. Credit card debt can often be discharged without a debtor paying any of the outstanding balance. Once a debt is discharged, a debtor has no obligation to repay it. In most cases, a debtor is entitled to an automatic stay of creditor contact after filing for bankruptcy.

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Signs you have too much debt

On Behalf of O’Brien Law Firm, LLC

Posted on: January 29, 2019

Going into debt is a normal part of life for most Americans. Significant purchases such as a house or car usually require loans. Emergencies happen, medical or otherwise, and you may have to max out your credit cards. The causes of debt are numerous.

As the numbers rise, you may wonder if you should start to worry about the debt you are in. When can you tell your debt has become a problem? When should you start considering filing for bankruptcy?

Signs of too much debt

A simple calculation you can do is to compare how much debt you pay each month to how much you make each month to find your debt-to-income ratio. Add up your recurring monthly debts and divide it by your gross monthly income. Multiply the answer by 100 to get a percentage. The cutoff of what is bad differs between financial institutions and experts, but generally speaking, a number above 43 percent is a red flag.

This ratio is not solid proof, however. Other signs include:

  • Only paying the minimum amount due for months
  • Going through your savings and not being able to replenish the account
  • Having trouble with daily expenses, such as gas and groceries
  • Using one credit card to pay off another
  • Racking up fees for late payments and over-the-limit charges
  • Not being able to pay off the debt in a reasonable time frame (ex: one year for credit cards, five for cars)
  • Utilizing cash advances and payday loans

Low credit scores and high interest rates may also reflect your financial state.

When to file for bankruptcy

Not every debt situation requires bankruptcy. Another option may be better for your circumstances. Bankruptcy may be best for long-lasting financial troubles, there exists a risk of losing assets or a lender is garnishing your wages. Also, most of your debt needs to be eligible for bankruptcy.

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The 341 meeting is a major step toward a debt-free future

On Behalf of O’Brien Law Firm, LLC

Posted on: January 26, 2019

Perhaps you are about to petition for either Chapter 7 or Chapter 13 bankruptcy protection. Within a few weeks of your filing date, you must attend the 341 meeting.

This is sometimes called the meeting of creditors, but there is another aspect to it: The 341 meeting is a major stop on your bankruptcy journey because you will meet your trustee.

Acting under the U.S. Bankruptcy Code

The United States Bankruptcy Code requires you, as the debtor, to attend the 341 meeting, the initial meeting of creditors. The name comes from Section 341 of the Code. The trustee assigned to your case from the Office of the United States Trustee will conduct the hearing. He or she will want information that makes your bankruptcy administration go as smoothly as possible. Therefore, you must truthfully answer questions under oath. The trustee will also want to ensure you understand both the positive and negative effects of a bankruptcy filing.

Inviting creditors

The Office of the U.S. Trustee will notify your creditors of the time and place for your 341 meeting. Creditors may attend and ask you questions concerning your bankruptcy; for example, they can inquire about the type and location of your assets. However, creditors rarely come to these meetings. They do not waive their rights if they choose not to appear.

What to bring

Your attorney will accompany you to the 341 meeting and provide documents the trustee needs. Every bankruptcy proceeding is different, but, among other items, trustees usually expect to receive federal and state tax returns, payroll information, bank statements and perhaps a property tax card for any real estate owned. The only items you must bring with you are your Social Security card and a government-issued photo ID, such as your passport or driver’s license. Keep in mind that the 341 meeting is held outside of court and no judge will be present. Despite the fact that the hearing usually only lasts a few minutes, it is an important stop on your journey to a debt-free future.

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How student loans might be discharged in bankruptcy

On Behalf of O’Brien Law Firm, LLC

Posted on: January 22, 2019

In most circumstances, it is not possible to discharge student loans through bankruptcy. However, some Mississippi debtors may be able to discharge them if a few factors are in place. These rules apply to both private and federal loans.

The borrower must be able to demonstrate that repaying the loans will lead to “undue hardship”. What constitutes undue hardship has never been defined by Congress, but nearly all federal circuit courts use a standard called the Brunner test. The Brunner test requires that there be extenuating circumstances and that extreme hardship will result from paying back the loan that will not allow the person to keep up a minimum living standard. It also requires that the circumstances are unlikely to change for the term of the loan and that the person has made an effort to repay the loan. This does not necessarily mean the person has already made one or more payments. It can mean that the person has attempted to set up a payment plan or taken other steps. The 8th Circuit uses a similar standard while the 1st Circuit does not have a set standard.

There are alternatives to trying to discharge these loans in bankruptcy. A person might be eligible for income-driven replacement. Paying off other debt or getting a loan with a lower interest rate could also help.

A person who is struggling to pay student loans or other obligations might want to talk to an attorney about the types of debt relief that might be available. If the debtor’s income is below a certain level, Chapter 7 bankruptcy might be a possibility. Getting rid of credit card debt could allow the person to pay off student loans or other debts that cannot be discharged, such as child support.

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Mortgages and bankruptcy

On Behalf of O’Brien Law Firm, LLC

Posted on: January 16, 2019

Various problems, like job loss, a medical crisis or a death in the family, could motivate Mississippi consumers to pursue bankruptcy when their income cannot keep up with debt payments. About two-thirds of the non-business bankruptcies filed by individuals fall under Chapter 7 bankruptcy rules. A Chapter 7 bankruptcy requires the sale of assets to recover money for creditors before a judge typically discharges remaining debts. Certain assets are usually exempt from liquidation, like the family home, but the mortgage on the family home might still remain a burden if not included in a bankruptcy.

About one-quarter of Chapter 7 bankruptcies involve real estate mortgages that have not been paid for 120 days. Often these properties qualify for the homestead exemption, and borrowers choose to apply the exemption. They hope to save the home after bringing their other debts under control, but this choice removes the home mortgage from the bankruptcy process and sometimes leaves them exposed to foreclosure if they still cannot make payments.

In some cases, a lender has already initiated a foreclosure action when the borrower files for bankruptcy. Borrowers might still choose to ask the court to remove the mortgage from consideration because they hope to avoid the complications involved in selling the property under the supervision of a trustee. This decision, however, might still leave a borrower exposed to the negative effects of foreclosure, like a bad credit history.

A person concerned about mounting debts that threaten to cause foreclosure or wage garnishment could learn about legal options for debt management from an attorney. An evaluation of debts and income by an attorney could reveal that the person qualifies for fling under Chapter 7.

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Baby boomer bankruptcy is on the rise

On Behalf of O’Brien Law Firm, LLC

Posted on: January 8, 2019

Overall, the nation’s economy is in relatively good shape. This means that unemployment rates are down throughout much of Mississippi and the rest of the United States. However, there is a somewhat new phenomenon that is showing a darker financial picture for some Americans — there is a notable increase in bankruptcy filings for older individuals, particularly for baby boomers.

Anything that impacts the baby boomer generation, which represents approximately one-quarter of the population, is certain to have rippling effects throughout the entire economy. Economic researchers report that in the last 25 years, the rate of baby boomer bankruptcy filings has increased sixfold. The overall trend shows bankruptcy rates declining for those 54 and under yet dramatically increasing for the 55-plus group.

While any age group can be hit by major economic events, such as job loss or a family split, older people are unique in finding themselves transitioning into retirement. The combination of living longer, dealing with a decrease in social security benefits, less or non-existent pension plan benefits and far higher medical costs across the board places boomers and those nearing retirement at greater risk. Nothing occurring currently in the economy seems likely to change these trends in the near future.

Financial challenges can arise at any time in any one’s life. A fresh financial start may be possible with debt relief or a manageable payment plan. A bankruptcy lawyer can provide guidance and counsel in determining whether Chapter 13 relief would be appropriate under the specific facts and circumstances.

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Credit card debt is rising in the U.S.

On Behalf of O’Brien Law Firm, LLC

Posted on: January 3, 2019

Many people living in Mississippi have concerns about credit card debt. While credit cards can be a useful tool in managing personal finances, consumers will sometimes run up balances that can be difficult to manage or pay off. In fact, a recent study has shown that the average household credit card debt in the United States is $8,284.

In many cases, consumers do not intend to run up significant debts. They use credit cards responsibly, and either pay their balances each month or make reasonable monthly payments. However, circumstances can affect an individual’s ability to pay their credit card bills. For example, someone may become ill, unemployed or face a major, unexpected expense such as a medical bill or home repair.

When people can’t pay their credit card bills or can only pay a minimum amount, balances will balloon due to interest rates and late fees. It can be very difficult to catch up, particularly if one is attempting to cope with a diminished income or other urgent financial obligations. Over time, the stress of trying to deal with creditors and pay bills can take a significant toll on a debtor’s health, marriage and family life.

Fortunately, people living in Mississippi have several debt relief options. These include bankruptcy as well as negotiating installment payments and debt consolidation. Homeowners who are concerned about making mortgage payments may also be able to avoid foreclosure through some similar strategies.

Debtors could benefit from speaking with an experienced attorney. The lawyer might be able to review the client’s current financial situation and make suggestions regarding debt relief options like bankruptcy and possible ways of avoiding foreclosure.

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Tips for handling large medical bills

On Behalf of O’Brien Law Firm, LLC

Posted on: December 28, 2018

According to an article in Health Affairs, medical debt in collections peaks when individuals are in their late 20s. This is because younger people tend to make less money than those in their 50s or 60s. Furthermore, younger people are more likely to not have insurance. Even if a person has insurance, the policy likely comes with a deductible that an individual could have trouble paying. However, there are ways that those dealing with such debt in Mississippi and throughout the country can better manage it.

For instance, it could be possible to negotiate with a care provider to reduce the bill. This may work best for those who can provide detailed income and other financial information to demonstrate their ability to pay. A medical bill advocate may be able to negotiate on a patient’s behalf. In some cases, a substantial portion of the balance could be forgiven when going this route.

If that doesn’t work, a doctor or hospital may allow an individual to make payments each month. In the event that a bill is already in collections, there is a chance that the debt collector will take less than the amount owed to resolve the matter. Individuals who are searching for a way to pay down a medical debt could try to crowdfund the money or ask family members for a loan.

Those who are struggling to pay off a medical debt might benefit by filing for either liquidation or reorganization bankruptcy. Doing so may make it possible to put an end to creditor phone calls or other debt collection activities. This might mean keeping a home, car or other property that is secured with collateral. It may also mean that a creditor lawsuit could be postponed until the bankruptcy case has been resolved.

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What to avoid before filing for Chapter 7

On Behalf of O’Brien Law Firm, LLC

Posted on: December 26, 2018

Bankruptcy is a scary reality for many people living in Mississippi. Fortunately, the rate of people filing for bankruptcy appears to decrease around the country. In particular, many older Americans over the age 65 no longer have to seek out bankruptcy.

It is vital to realize filing for bankruptcy is not the end. In some cases, it is the only way to take control of your financial future. However, you need to go through your bankruptcy the right way. Many people doom themselves from the start by making one of the following mistakes before or during the bankruptcy.

Avoid using your credit card

When you suffer from extreme credit card debt, it may seem like a good idea to rack up more debt in the months before you file. This is a poor decision because a judge may still require you to pay off a large portion of the debt if it looks like you tried to get recent purchases discharged from the bankruptcy. You should stick to making purchases through your debit card in the few months before you file.

Avoid transferring assets

A lot of people think they can protect some of their assets by giving them to family members and friends. Concealing assets is not a good idea, and you should assume a judge will learn of such actions eventually. A typical example of this involves transferring the title of your car to another person’s name.

Avoid suing anyone

When there is someone you want to sue, you should wait until you resolve your bankruptcy first. Any legal claim you currently have in process can become an asset taken into consideration by the bankruptcy court. Even claims you have filed with others but have not gone to court yet can still come into play. It is a good idea to seek out sound financial advice before pursuing any type of legal claim.

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Chapter 13 bankruptcy and payment plans

On Behalf of O’Brien Law Firm, LLC

Posted on: December 19, 2018

A Mississippi debtor who successfully files for Chapter 13 bankruptcy will go on a payment plan that lasts for three or five years. Payments are made to a trustee, and the trustee then distributes the payments to creditors.

How much that has to be paid is based on the person’s income and expenses. It is necessary to submit expenses for six months. The income can be from a number of sources including employment, alimony or a pension plan. If it varies from month to month, the amount the person must pay can vary as well. For some expenses, such as rent, the filer can use the actual amount owed, but there is a government-set amount that is used for utilities.

Priority debts include things such as child support, taxes and alimony and generally must be paid in full. If a person wants to keep a piece of property, such as a home, the payments have to be caught up with. For unsecured debt, such as medical and credit card bills, the person has to pay as much as the nonexempt assets are worth. However, a person does not necessarily have to pay off all debts. At the end of the payment period, if the person has followed the bankruptcy agreement, many of the remaining unsecured debts will be discharged.

People who are struggling with debt and considering bankruptcy may want to discuss options with an attorney. Some people may hesitate to file for bankruptcy because they think they will be unable to afford the payments or that their credit will be ruined for decades. However, bankruptcy gives a person an opportunity to make a fresh start while avoiding creditor harassment.

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Income plays a role in determining credit card debt burden

On Behalf of O’Brien Law Firm, LLC

Posted on: December 12, 2018

To properly assess the impact of credit card debt in Mississippi, it’s important to compare debt levels with income levels. There is often a disparity in the American South. According to a study by CreditCards.com, however, New Mexico is the state most burdened by credit card debt. Massachusetts residents were the least burdened by such debt. The median income in New Mexico is $46,744 while the median income in Massachusetts was $77,385.

Residents in both states owed roughly the same to credit card companies, but New Mexico residents took nearly twice as long to pay down their balances. It took roughly 18 months for households to repay an average balance of $8,323. Households in Massachusetts took about nine months to repay an average balance of about $8,000. This assumes that a family was putting aside 15 percent of its earnings to repay money owed to creditors.

Differences in income also meant that the states such as Maryland or Virginia with the highest overall balances were not among those with the heaviest debt burden. American households as a whole average about $7,000 in credit card debt, according to a report from NerdWallet. To keep debt in check, individuals can choose to use a debit card or pay for items with cash. It may also be possible to transfer balances to a credit card with 0 percent interest.

Individuals who are going through financial challenges may find relief through bankruptcy. Bankruptcy could allow a person to retain assets or avoid having them liquidated as part of the debt repayment process. This means that a debtor may keep a home or equity in a home until a bankruptcy case is over. Furthermore, creditors may generally not engage in a repossession or a foreclosure until a case is closed.

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What can you do if you owe taxes?

On Behalf of O’Brien Law Firm, LLC

Posted on: December 5, 2018

Often, difficult financial situations seem to snowball. Various types of debt accumulate and become increasingly harder to get rid of.

If you owe federal or Mississippi state taxes, it is important to know ways to handle them. Some people assume tax debt just goes away after filing for bankruptcy, while others may have heard bankruptcy can never discharge tax debt. Both of these assumptions are wrong. The best way to handle tax debt can vary depending on your situation.

How bankruptcy handles taxes

Your bankruptcy may discharge income tax debt you owe on returns due at least three years or filed at least two years prior to your bankruptcy filing. Generally, you need to file a return before your tax debt can qualify for a discharge; sometimes, filing a late return may help in this regard.

As a rule, bankruptcy will not address tax debt you incurred through fraud or evasion. It will also not eliminate any taxes other than income taxes.

If you do obtain a discharge for tax debt, it will mean you will no longer need to repay it (other than what is part of a Chapter 13 plan). The IRS will not be able to garnish your wages or take other actions. However, if the IRS or state tax authorities placed a tax lien on your property prior to your bankruptcy, the lien will remain in place. The only way you will be able to sell that property would be to pay the tax debt that underlies the lien.

Other options

You may also consider some other ways to manage your tax debt. Both the IRS and the Mississippi Department of Revenue may allow you to make a repayment plan. You can also ask for the reduction or elimination of some penalties.

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Consumer debt up significantly in the past five years

On Behalf of O’Brien Law Firm, LLC

Posted on: December 5, 2018

Mississippi residents and others are on pace to amass $4 trillion in collective consumer debt by the conclusion of 2018. That would be an increase of $1 trillion over the past five years alone. The increase is attributed to both revolving debts and others like student and auto loans that have a fixed end date. Revolving debt has increased 22 percent since 2013 while student and auto loan debt has increased by 30 percent in the same time period.

Credit card interest rates are hovering between 16 and 17 percent on average, and that number could go up. This is because the Federal Reserve is planning on increasing interest rates up to four times in 2019. In 2018, Americans who have credit card balances have paid more than $100 billion in interest and other fees. Cumulatively, Americans owe $1.04 trillion in credit card debt, and this figure is expected to rise 5 percent in the last month of 2018.

The 5 percent increase was an estimate by LendingTree based on holiday sales figures. Americans have $2.9 trillion in non-revolving debts, but that figure does not account for outstanding mortgage balances. Those who are struggling to repay their credit card or other debts may be able to get help from a credit counseling service.

Those who are in the midst of financial challenges may be able to overcome them by filing for bankruptcy. In some cases, individuals may keep property like a house or car while they follow through with a repayment plan. In others, nonexempt assets may be liquidated in an effort to repay creditors. In either scenario, debtors are generally given a stay of creditor contact. This means that creditors are prohibited from taking steps to repossess an asset or contact a debtor about it.

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The ins and outs of filing for bankruptcy protection again

On Behalf of O’Brien Law Firm, LLC

Posted on: December 3, 2018

Anyone in Mississippi or any other state must wait for eight years before filing for Chapter 7 bankruptcy again. This means it’s not possible to file for this same type of bankruptcy, which is popular because it wipes out most debt within months of the initial filing and approval, until the eight year period is up. Technically, there aren’t limits on how many bankruptcy cases someone can file, but there are limitations on when this type of protection can be sought after a previous bankruptcy was successfully filed and completed.

With Chapter 7, the eight-year limit between filings is pretty much set in stone. If a debt holder wishes to go from Chapter 7 to Chapter 13, however, it’s possible to file for Chapter 13 bankruptcy after Chapter 7 is discharged. The stipulation is that four years from the initial Chapter 7 filing date must have passed first. Going from Chapter 13 to Chapter 7 requires a six-year wait after a Chapter 13 debt is discharged.

However, it is possible for a debtor that started off with Chapter 13 to file for Chapter 7 earlier if they’ve paid off 70 to 100 percent of their unsecured debt. The debtor must also prove they’ve made their best effort to stick to their repayment plan. In some instances, the court may extend the period that another bankruptcy can be filed by an individual if a previous bankruptcy was “dismissed” but not “discharged.” A court may also issue what’s termed a 180-bar to prevent refiling if a debtor fails to follow court orders or commits bankruptcy fraud.

An attorney generally recommends that debtors consider a fresh financial start with bankruptcy only as a last resort. If a Chapter 7 filing was already completed and debt issues still exist, a lawyer may suggest considering Chapter 13 if a client isn’t able to wait eight years to file for Chapter 7 again. An attorney may also be able to help a debtor in the middle of a Chapter 13 bankruptcy convert to Chapter 7 if they aren’t able to keep up with the repayment plan.

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Credit card debt is on the rise

On Behalf of O’Brien Law Firm, LLC

Posted on: November 27, 2018

In Mississippi and throughout the nation, fewer people are defaulting on their credit card debt balances. This is according to the S&P/Experian Consumer Credit Default Composite Index. However, debt levels for U.S. consumers are increasing. If a cardholder does not make payments on a card balance for six months or more, the debt may be charged-off. This can have a profound impact on a person’s credit score as well as on his or her ability to get another card in the future.

Damage to a credit score begins as soon as the first payment is missed. Missing a single payment could make it harder to get a loan because it will result in a lower credit score. Of course, having a poor credit score or history doesn’t mean that a person can’t get a credit card. As economic conditions improve and defaults drop, lenders tend to allow a wider range of people to obtain credit.

The interest rates of credit cards tend to be higher than those charged by home and auto lenders. The average interest rate is 17 percent, but it could go up to 30 percent after a missed payment. Generally speaking, those with better credit scores get better interest rates. To avoid a credit default, it is important to not charge more than what can be repaid at the end of the month.

Filing for bankruptcy may be ideal for those looking to overcome financial challenges. For instance, it may be possible to have credit card and other unsecured debt balances discharged. This could happen in a matter of weeks in a Chapter 7 case. Those looking to retain property during a bankruptcy may benefit from a Chapter 13 debt reorganization. During the repayment period, creditors are barred from taking most collection actions.

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Careful borrowing can mitigate the consequences of a bankruptcy

On Behalf of O’Brien Law Firm, LLC

Posted on: November 15, 2018

Mississippi residents sometimes put off pursuing bankruptcy because they believe that filing a Chapter 7 or Chapter 13 petition damages credit ratings for many years, but a Lending Tree study reveals that four out of 10 bankruptcy filers have credit scores of 640 or higher after just one year. The figures also suggest that a few years of careful borrowing can counteract the impact of a bankruptcy.

Bankruptcies appear on credit scores for up to 10 years, but that does not mean that they significantly affect borrowing for this amount of time. Recency is a crucial factor when credit is evaluated, and consumers who avoid falling into the traps that led to their financial problems in the first place can expect to be offered similar interest rates to individuals who have never filed for bankruptcy within a few years.

However, consumers who have filed a bankruptcy petition may be wise to wait at least two years before applying for a major loan. The additional borrowing costs on a $15,000 automobile loan taken out less than a year after a bankruptcy are $2,171 according to the Lending Tree study, but this figure falls to just $799 a year or so later.

Attorneys with debt relief experience may be familiar with the many misunderstandings and myths surrounding bankruptcy, and they could point out to individuals with unmanageable financial situations that their outlooks are unlikely to improve without some sort of action. Attorneys could also explain to their clients that the nation’s bankruptcy laws were written to give consumers the opportunity for a fresh start and not to only protect the interests of lenders.

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There can be a way out of debt

On Behalf of O’Brien Law Firm, LLC

Posted on: November 6, 2018

Debt for many residents of Mississippi is a way of life. However, when it continues to increase and cannot be whittled down, debt becomes burdensome. It is not only the economic strangle-hold of paying interest without seeing the principal go down; there is a stigma to carrying debt that may not be deserved. While some people acquire debt through irresponsible lifestyle choices, many others do so only when there is no other option.

Financial experts recommend a thorough understanding of debt and why it was acquired before a plan to get out of it can be contemplated. If debt continues to grow, a major lifestyle change may be in order. If the debt was the result of a past incident or necessity, such as a medical emergency or student loans, there may be a way to climb out of the hole. In either case, a realistic cash flow appraisal of how much money is coming in and where it goes must be made.

The bottom line is that there must be disposable or discretionary income remaining after all minimal bills are paid each month to have a chance to pay off the debt. If there is simply no way to come up with the money to pay down the existing debt, it may be possible to negotiate a reduction with creditors through a debt relief plan.

If that is not possible, considering a personal bankruptcy may be appropriate. Bankruptcy laws were enacted under the U.S. Constitution guidelines to provide debtors with a chance at a fresh start. A bankruptcy lawyer may help explain whether a Chapter 13 or Chapter 7 filing is appropriate under the circumstances of the case.

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How bankruptcy impacts your savings and checking accounts

On Behalf of O’Brien Law Firm, LLC

Posted on: October 30, 2018

Numerous people throughout Mississippi file for bankruptcy every year. Many of their stories remain untold because most of the time, bankruptcies with larger companies end up making headlines. For example, three Mississippi hospitals, along with a parent company in Tennessee, have had to file for bankruptcy recently, citing over $70 million in debts.

In the event you ever need to file for bankruptcy, you will undoubtedly have some questions. It is natural to feel concerned, particularly about how this action will affect your bank accounts. There may still be quite a bit of money in your checking and savings accounts, and you can rest assured that money will remain safe.

There is a chance your bank may not hear about the bankruptcy

You should not experience any issues banking with the same institution as long as your debt did not come from the bank. If you defaulted on a loan or racked up massive amounts of credit card debt from a bank card, then your bank will receive a notice from the court about you filing for bankruptcy. When this occurs, the bank will most often “set off” any accounts you have with it. This is legal because those funds are already within the bank’s possession. It is vital to remember that not all banks do this. This is why you need to inform your lawyer of all bank accounts you have so you can take action to try to protect all funds.

However, when your debt did not come from your bank, there is a chance the institution will not even hear about your bankruptcy. In this case, no notice will go out to your bank. Additionally, customers who only have simple checking and savings accounts typically do not receive credit checks from the bank. You will be able to retain all your bank accounts and the money in them.

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Gender income disparity also evident in debt disparity

On Behalf of O’Brien Law Firm, LLC

Posted on: October 30, 2018

Debt can be a significant source of stress for both men and women in Mississippi. However, data collected by Comet Financial show that women carry higher debt loads than men on average. The average student loan balance for women was $30,716 while men owed amounts that averaged $24,323. Car loans produced another disparity, with women owing an average of $12,183 compared to $10,371 for men.

Credit card debts followed the same pattern. While women carried an average outstanding balance of $6,559, men’s credit card debts averaged $5,163. Medical bills hit women harder as well. Their average medical debts were $1,110 more than that for men. The gender wage gap presents itself as the likely contributor of higher debts for women. In general, female workers only earn $0.72 to $0.82 for every $1 paid to male workers.

Regardless of gender, people have a strong interest in paying down their burdensome debts. To accomplish this, they might scrutinize their budgets for expenses that can be cut so that money can be redirected to debt balances. For many people, a second job has the potential to bring in hundreds of extra dollars per month that could go toward paying off loans.

When circumstances have forced a person so far into debt that keeping up with loan payments and living expenses appears impossible, speaking with an attorney about bankruptcy might reveal a solution. After reviewing someone’s financial situation, an attorney might recommend filing for Chapter 13 bankruptcy. This action might result in an adjusted payment plan that a debtor can keep up with every month. An attorney could prepare the financial disclosures necessary for petitioning the court. Legal support could allow a person to halt creditor harassment and potentially convince a court to discharge a portion of debts after the completion of a payment plan.

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Women and credit card debt

On Behalf of O’Brien Law Firm, LLC

Posted on: October 27, 2018

Some women who are living in Mississippi may struggle more than men to pay off credit card debt. A study found that more than one-quarter of women around the country said they were not confident they would be able to pay all their bills in a month compared to 14 percent of men. Furthermore, just under one-third of women who had credit cards said they had paid the balance in full one time or less in the past six months compared to 20 percent of men.

There are a number of reasons for this. A major problem is that their median wages are 80 percent of what men make, so it takes them longer to get out of debt. Single mothers in particular struggle because they often do not make enough to make ends meet and must rely on credit. This is the case even in a time when the economy is strong and unemployment is low. Many women may also be less informed about finances than men. Women’s magazines do not tend to write about financial literacy as much as magazines aimed at men, and women’s clothing stores may encourage using credit to get discounts.

However, credit card debt is on the rise for everyone. WalletHub reports it has reached its second-highest point since the 2008 financial crisis ended.

People who are struggling with credit card debt might want to discuss debt relief options, including bankruptcy, with an attorney. Credit card debt can be discharged in a bankruptcy, but other types of debt such as student loans and child support generally cannot be. It might be possible to create a budget that helps pay off debt, or a person may be able to get a loan or consolidate the debt.

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Things you should not do before filing bankruptcy

On Behalf of O’Brien Law Firm, LLC

Posted on: October 27, 2018

Credit card debt leads to numerous people filing for bankruptcy every year. Mississippi has one of the highest bankruptcy rates in the United States, with roughly 361 people out of every 100,000 having to file for bankruptcy every year.

Filing for bankruptcy can be a viable option for many people to get their lives in order. However, there are actions many take directly before filing that significantly jeopardize the process. Therefore, before applying for bankruptcy, you should make sure you have not recently done the following.

Running up credit card debt even more

When some people decide they will file for bankruptcy, they figure they have nothing left to lose. They make a ton of purchases on their credit cards because they assume the courts will instantly forgive the debt. Most of the time, any credit card purchases made within 90 days of filing will not qualify for forgiveness. The court may then require you to pay off a significant portion of the debt even after the bankruptcy is over.

Transferring property to friends and family

Bankruptcy may require you to relinquish certain assets. In an attempt to avoid this, some people transfer certain items over to friends and family members so the court does not find them. This is illegal. It can derail the bankruptcy process, so make sure to be completely transparent with all the assets and debts you own.

Taking money out of your retirement accounts

Some try to take money out of their 401(k)s or other retirement accounts to either pay off creditors or stash some of it away. The bankruptcy code states you cannot pay off a creditor because it shows you favor one over another. If the plan is to hide the funds, then it is an unfounded fear. Bankruptcy does not impact retirement accounts, so you do not have to worry about losing those funds.

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Some traps can increase credit card debt

On Behalf of O’Brien Law Firm, LLC

Posted on: October 22, 2018

Far too many people in Mississippi struggle with credit card debt on an ongoing basis. When it is difficult to make ends meet, many people turn to credit cards to cover the gaps. Of course, it can then be even harder to keep up with existing expenses while trying to pay back the credit card bills. Credit card companies also urge customers to take on more debt. However, by keeping some tips in mind, people can help to resist these advances.

Across the country, consumer revolving debt, including credit card debt, stands at $1.037 trillion. Many credit card companies’ tactics inspire people to increase their debt burden, but that can come with a significant cost to consumers. Credit card rewards programs bill themselves as ways to benefit consumers for using the card. Sometimes, they can be a good choice, so long as people have the money to pay off the bill at the end of the month. But some programs can help people rack up debt; for example, one program allows people to buy a plane ticket now, but obtain the miles to cover it later through card purchases. If a customer doesn’t rack up miles, however, he or she will have to pay to buy the miles on credit.

In other cases, people may get in trouble due to late payments. After someone is more than 60 days late on a payment, a credit card issuer can apply a penalty rate to that person’s entire balance. This means that an APR can skyrocket to 29.99 percent across the board, making the debt even more difficult to surmount.

Consumers are often looking for debt relief, especially when their financial situation becomes unsustainable. A bankruptcy lawyer might be able to help people to review their options to move forward toward a new financial future, including personal bankruptcy or other negotiated alternatives.

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Strategic use of credit cards contributes to good credit rating

On Behalf of O’Brien Law Firm, LLC

Posted on: October 12, 2018

People paying off debts in Mississippi often stop using credit cards and switch to making purchases with cash. Although this is an appropriate way to tackle debt, careful use of credit cards does help people maintain their credit ratings. Credit cards that offer reward points provide consumers with multiple advantages when paid in full every month.

An active credit card account that’s in good standing could help a person secure a low interest rate when financing a car or home. This benefit emerges after cultivating an excellent credit history on the same account over the long term.

To build a good credit history, a person should take care to not use over 30 percent of the available credit at any time. The full balance also needs to be paid on time every month. The development of a budget could help someone prevent overspending that would interfere with paying off his or her bill every month. Once a budget has been mastered, a person could then route regular expenses through the credit account in order to earn rewards. This regular monthly activity would also promote a good credit score because credit bureaus calculate scores based on the use of credit as well as the length of credit history.

A job loss or medical crisis, however, could undermine the budget of even a very careful person with good credit history. When bills start to go unpaid, interest rates and penalties add up quickly. If a resolution to financial challenges does not appear possible in the future, a person could consider tackling the problem head-on with a bankruptcy filing. An attorney could supply specific information to a person about qualifications and protection from creditors. A lawyer could also prepare the lengthy financial disclosures for the court to pursue the discharge of debts.

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Credit card debt settlement an option for some consumers

On Behalf of O’Brien Law Firm, LLC

Posted on: October 3, 2018

Part of a credit card agreement is that the Mississippi cardholder will pay back charges, plus fees and interest. In some cases, though, credit card companies have incentives to lower the amount outstanding, or they realize it won’t be worth it to pursue the cardholder with collections efforts. For people who are going through serious financial hardship, it may seem impossible to get out. If it is approached correctly, debt settlement can be a way to satisfy these types of obligations.

Some debt settlement companies give poor advice at times, though, like advising clients not to communicate, pay or work with creditors. This can be a dangerous tactic, and most cardholders will get more out of calling their credit card companies directly or asking an attorney to communicate with creditors on their behalf.

Debt settlement can harm a person’s credit score, because the credit reporting agencies are notified that the obligation has been settled for less than the amount owed. The cardholder’s credit score suffers for up to seven years before the note comes off. In some cases, the Internal Revenue Service may demand that taxes are paid on the amount of credit card debt forgiven. If the amount forgiven is at least $600, the taxpayer will usually be required to pay taxes. Tax liability may be reduced, though, if the debtor is insolvent.

An attorney might be able to help people in Mississippi who are struggling to pay down debts. Debt settlement may be an option for some. Debt restructuring, consolidation or filing for bankruptcy may make sense for others. An attorney might be able to provide advice regarding the different debt reduction or elimination options available.

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Financial scammers could target your elderly loved ones

On Behalf of O’Brien Law Firm, LLC

Posted on: October 2, 2018

Your parents worked hard all their lives to save for a retirement that would ensure their comfort in their golden years, as well as to build a nice nest egg for their children and grandchildren to enjoy after they are gone. It would break your heart to discover they were victims of scammers who are determined to separate them from the assets they spent a lifetime building. Unfortunately for many residents of Mississippi and elsewhere, there are many financial scams that target the elderly and the vulnerable.

According to the National Adult Protective Services Association, about one out of every 20 senior citizens in the U.S. is a victim of financial scams or of people they know and trust. Your parents may have been intelligent and financially savvy throughout their lives, but sophisticated cons and declining mental acuity can make them easier targets in their senior years. The following scams are common against the elderly and the mentally vulnerable:

  • Fake calls by scammers pretending to be IRS agents or utility companies, demanding immediate payment and saying the victim faces fines or arrest if he or she doesn’t comply
  • A trusted caregiver, sometimes a family member, who has the elderly person sign over control of the finances or makes him or her the sole beneficiary of a will
  • Emails falsely claiming to be a relative or friend who is in desperate need of money
  • Viruses that shut down a computer and direct the user to a con artist who says he or she can fix the computer for a fee
  • False sweepstakes or lottery notifications that require an upfront fee before the “winnings” will be paid

Sadly, many of these cons can drain your parents’ savings and retirement accounts before you can intervene. If you worry that your parents may become targets of financial scammers or dishonest relatives, you may wish to explore legal options.

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Small medical debt can cause big trouble

On Behalf of O’Brien Law Firm, LLC

Posted on: September 25, 2018

Most Mississippians know that large medical bills can cause serious financial problems. However, even small bills of less than $1,000 can be sent to collection agencies and end up as negative entries on credit reports. In fact, a recent study published in Health Affairs found that more than half of medical collections in any given year are for less than $600. More than 2 percent of adults also had medical collections of less than $200 on their credit reports in 2016.

Even though older people have more medical problems, young people are more affected by medical debt, according to the study. Men and women in their late 20s are three times as likely to have a medical bill sent to collections than people in their late 60s. One cause of this is Medicare, but research also shows that medical debt declines as adults get older before being eligible for Medicare.

Advisers recommend that people take action with their medical bills when they first arrive to avoid a negative impact on their credit reports. Billing departments are often willing to work with patients to get bills paid in full before they go to collections. They can provide flexible payment plans or connect patients with sources of discounts or charity.

Individuals facing medical debt can experience a lot of financial stress, but relief is available. A law firm that focuses on giving fresh starts to people with financial challenges related to medical care may be able to provide a variety of solutions. There are counseling services, repayment plans, debt consolidation and even loans. In some cases, it may be in the best interest of a client to take advantage of bankruptcy protection.

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Millennials in major cities struggle with debt

On Behalf of O’Brien Law Firm, LLC

Posted on: September 21, 2018

Debt is a problem for most millennials in Mississippi and in other states. In 50 large cities across the United States, millennials are carrying an average of over $23,000 in personal debt excluding mortgages. San Antonio is the area with the largest average non-mortgage debt for millennials at $27,122 followed by Pittsburgh and Austin.

Student loans account for the largest proportion of debt in the U.S. for individuals age 22 to 37 followed by credit cards. Car loans are another major source of debt for millennials. One problem faced by many is that even in areas where the cost of living is low, wages are also lower.

Another problem that many young adults face when they are taking out loans is that their credit histories are not usually very extensive. Loans may end up costing them more because of a low credit score.

Some loans may be difficult to avoid. For example, most people need a car to get to and from work, so taking on a car loan may seem like a necessity. When juggled with student debt, credit cards and other personal loans, millennials in most major cities are finding debt difficult to manage.

Many debtors are turning to bankruptcy in order to stop repossession, creditor calls and wage garnishment. A bankruptcy attorney may be able to assist debtors who have fallen behind on their payments by filling out paperwork, providing legal advice and attending a meeting of creditors with the debtor prior to the final discharge of debt.

Most individual debtors choose to file a Chapter 7 bankruptcy, which can wipe out unsecured debts. Debtors who do not qualify to file a Chapter 7 may be able to file a Chapter 13 bankruptcy, which requires that payments be made for several years. An attorney may be able to help clients who are contemplating bankruptcy decide if it is a good solution for them.

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Baby boomers find that retirement dreams don’t always come true

On Behalf of O’Brien Law Firm, LLC

Posted on: September 13, 2018

Baby boomers in Mississippi who always dreamed of early retirement might have to get used to the idea of late retirement or no retirement at all. At least that it is what statistics suggest. More people 55 and older are still working these days, and many who have retired from full time jobs are turning to freelance work to supplement their retirement income. As of 2017, 23 percent of the American workforce was aged 55 or older. The Bureau of Labor Statistics estimates that the figure will be a solid 25 percent by 2024.

The 2008 recession didn’t help baby boomers who were planning on a timely retirement, but poor planning could be another reason they are working longer. According to a survey by Bankrate, 58 percent of Americans don’t even know how much money they will need to retire. People are healthier and live longer than previous generations, but that means they need more money in retirement. To supplement their incomes, many people who have retired are doing freelance work. In 2016, more than 25 percent of the self-employed workforce was aged 55 or older, and more than half of those people were 65 or older.

Experts say that saving without knowing how much will really be needed for retirement is not a good idea. They advise workers to plan for retirement by doing the math first. To achieve their goals, some people may need to consider working part time or freelance to supplement their income once they’ve retired.

Older people who are overwhelmed by debt might wind up filing for bankruptcy; in fact, one in seven bankruptcy filers today is 65 or older. Though bankruptcy is the right solution for debt relief for many people, for others, alternative solutions might be better choices. Loan consolidation, an application to pay in installments or defensive litigation are some of the other options.People who are struggling with debt could consult an attorney to advise them on their options.

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Financial mistakes and bankruptcy

On Behalf of O’Brien Law Firm, LLC

Posted on: September 5, 2018

In the 2017 fiscal year, individuals in the United States filed a total of 767,721 personal bankruptcies in the federal courts. Residents of Mississippi may benefit from learning about some common mistakes people make that may lead them to file for bankruptcy.

For example, overspending with credit cards is a major culprit as many individuals do not have an updated budget that is based on what they really need. Not having a well-developed budget means that individuals are unaware of how much disposable income they have and what they can buy without having to incur any debt. It also means that they are unaware of how much money they can actually borrow and repay within a sensible amount of time.

Another mistake people may make that can lead them into bankruptcy is spending money on certain unnecessary things, such as expensive vacations. Many people may be swayed by peer pressure or constant marketing to make these purchases without determining if they are actually able to afford them.

It is not uncommon for financial institutions to solicit individuals for credit cards. However, many people make the mistake of believing that because they have been solicited for credit they can actually afford to take on the debt and pay back the entire amount. They may also mistakenly believe that simply paying the minimum owed on a credit card debt is sufficient.

bankruptcy attorney may evaluate the financial circumstances of a client and advise them of the differences between Chapter 7 and 13. In many cases, filing for bankruptcy can give a debtor a new financial start and allow them to retain their personal property.

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Senior citizens are particularly vulnerable to bankruptcy

On Behalf of O’Brien Law Firm, LLC

Posted on: September 4, 2018

One of the most vulnerable groups in society when it comes to filing for bankruptcy is senior citizens. This group is increasingly filing for bankruptcy due to a variety of factors, including mounting credit card debt, high medical expenses, and insufficient savings and retirement funds.

Senior citizens facing these debilitating debts and expenses must make a choice about how to overcome their financial struggles. Often without employment to help aid their income, they have few options. However, bankruptcy is a viable choice for many of these people.

Senior citizens and bankruptcy filings

A recent study revealed that since 1991, bankruptcy filings among people age 65 and older have increased threefold. The study suggests that one of the main reasons for this is due to the fact that the government and employers have increasingly shifted responsibility for financial well-being to individuals. That means senior citizens are now facing a range of financial responsibilities that once were covered by social “safety nets” that no longer exist or exist only in part compared to decades ago.

Options for bankruptcy

Although many people view bankruptcy through a negative lens, the truth is that this option can be one of the most effective choices for a senior citizen facing overwhelming medical debt, credit card debt or other financial hardships without recourse. Two types of bankruptcy are available to individuals: Chapter 13 and Chapter 7. Each type has different requirements, and the one a person chooses depends on her or his individual situation.

In a Chapter 7 bankruptcy, the individual does not have to file a repayment plan, as with Chapter 13. Chapter 7 discharges unsecured debt such as credit card debt. A Chapter 13 bankruptcy is suitable when a person has the ability to repay through debt reorganization. In Chapter 13, an individual can save his or her home from foreclosure because the repayment plan gives the individual an opportunity to catch up on missed mortgage payments.

If you are a senior citizen facing unmanageable debt, you should not ignore your situation, nor should you feel shame about it. The important thing is to know that you have options and that you can take proactive steps to begin building a stronger financial future.

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What to do when facing foreclosure

On Behalf of O’Brien Law Firm, LLC

Posted on: August 28, 2018

When Mississippi homeowners fail to make mortgage payments, they could face foreclosure. This means that the lender has decided to take possession of the home. However, there are ways that a person can end or delay the process. The first step in the process is to read any letters that the lender sends as they may offer information about avoiding a foreclosure.

Ideally, a homeowner facing foreclosure will talk to the lender as soon as possible. In many cases, the lender would rather work out an alternate payment plan as opposed to actually going through with a foreclosure. It may be possible to have the loan refinanced or have late payments rolled back into the loan. Depending on a person’s financial situation, it may be worth looking into bankruptcy to stop or delay the foreclosure process.

However, those who file for bankruptcy should be aware that it could significantly reduce their credit scores. The benefit to doing so is that a debtor will obtain an automatic stay against creditor collection actions. This means that the lender cannot follow through with a foreclosure while the bankruptcy case is open. If that isn’t an ideal option for a homeowner, a short sale may be a viable alternative to avoid the negative consequences of a foreclosure.

By filing for bankruptcy, an individual could receive a fresh financial start. He or she may also be able to postpone a foreclosure or the repossession of other property. In some cases, it might be possible to have debts fully discharged in a bankruptcy case. Those who own a home may be able to use an automatic stay as leverage to negotiate new loan terms with their lenders.

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Things to consider before filing for personal bankruptcy

On Behalf of O’Brien Law Firm, LLC

Posted on: August 20, 2018

While bankruptcy cases have been decreasing in Mississippi and across the U.S. since the end of the Great Recession, many consumers still need to file for bankruptcy protections each year. However, experts say that people need to understand a few key points before deciding to file for personal bankruptcy.

First, in order to get maximum debt relief, consumers need to make sure they declare all their debts in their bankruptcy filing. This means that they need to carefully review their financial situation and make sure they understand what types of debt they owe and who they owe it to. Second, consumers need to realize that bankruptcy filings are long, complicated and easy to mess up. For example, many people fail to provide all the necessary documents, such as bankruptcy schedules, or fail to complete federal requirements, such as attending debtor education classes. Unfortunately, these types of mistakes can significantly delay a case.

Speaking of delays, experts say that, in most cases, consumers shouldn’t postpone filing for personal bankruptcy. Filing can eliminate certain monthly debt payments, which could provide extra funds for essentials, including food and gas. A bankruptcy filing also puts an end to debt collection efforts and harassing phone calls, which can reduce anxiety and stress. Finally, consumers should realize that bankruptcy is permanent. This means that, while it may only stay on their credit report for seven to 10 years, it will remain on their record for the rest of their lives. As a result, it could prevent them from getting certain jobs or loans.

Individuals considering bankruptcy could learn more about their legal options by contacting an attorney. An attorney could review a client’s case and recommend the best way to obtain financial relief.

Source: Born2Invest, “Personal bankruptcy: 4 things to know before filing one,” Christopher Elliott, Aug. 10, 2018

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Bankruptcies among elderly population rising rapidly

On Behalf of O’Brien Law Firm, LLC

Posted on: August 13, 2018

Researchers have identified a startling new trend in bankruptcy filings. They have gone up significantly for elderly people in Mississippi and nationwide. Since 1991, the number of filings from people over the age of 65 went up by 480 percent by 2016. When looking at the filings from people over 75, the increase during that period approached 1,000 percent.

Insufficient income and medical expenses represent the primary forces overwhelming older people and retirees. Drawing upon survey data collected by the Consumer Bankruptcy Project, researchers found that almost 70 percent of elderly bankruptcy filers cited job loss, income decline or inadequate retirement savings as the cause of their financial troubles. Medical bills or problems interfering with work came in a close second with 62 percent of people responding that health care issues motivated their filings. Some people experienced a financial hardship because of changing eligibility for Social Security and the shift away from pensions to 401(k) savings plans.

The majority of people tried to repay their debts for two or more years before seeking debt relief. Although the rise of seniors going bankrupt has emerged as a new trend, young and middle-aged people still account for the majority of bankruptcy filers.

When debt overwhelms a person, threats of repossession, foreclosure or wage garnishment could add to the stress. A conversation with an attorney about bankruptcy could inform someone about the potential for debt relief. A lawyer could analyze an individual’s income and debts and explain how a Chapter 7 or Chapter 13 bankruptcy might resolve the problem. If a person decides to file, then an attorney could prepare financial disclosures for the court and assume communications with creditors. The advocacy of a lawyer might enable a person to start over with a manageable payment plan or discharge of debts.

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Consumer debt is creeping up on many households

On Behalf of O’Brien Law Firm, LLC

Posted on: August 9, 2018

A cautionary tale is being given to consumers after some in the financial world are looking backward to 2008. Those in Mississippi and elsewhere in the country may want to pay heed to the warning.

During the housing and financial crisis of 2008 and the subsequent recession many not only had a larger housing debt than practical, but consumer debt was also higher than ideal. With the recession, nearly 10 percent of credit cards had at least one missed payment.

But while the recession was ongoing, nearly one half of consumers with credit cards were making an effort to pay down their credit card debt. Either by force or by choice, American consumers became more frugal. Better times often lead people to return to bad habits. Some feel Americans are returning to bad credit habits. The beginning of 2018 showed that consumer debt has reached an all time high.Though credit cards are a part of this debt, the new household debt focuses more on vehicle and student loans. Payments on each of these debts have an effect on the household budget. The fear isn’t so much the present ability to pay as most are meeting obligations.

The fear is that should a downturn in the economy take place, Americans have not left themselves enough of a cushion to weather a storm. A re-evaluation of spending habits as they apply to consumer debt is warranted. Cutting back on spending by 10 percent, avoiding revolving debt for nonessential items and always making more than the minimum payment are some suggestions.

An interruption of household income, even briefly, can have a substantial effect on household finances. In some cases, the situation may not be recoverable without assistance. In these instances, a consultation with an experienced bankruptcy attorney may open up options the debtor has not considered.

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How to recognize debt settlement scams

On Behalf of O’Brien Law Firm, LLC

Posted on: August 5, 2018

If you, like so many others, have found that overwhelming debt has become a fixture in your life, you may be exploring your options and trying to figure out how to get your finances back under your control. People in your circumstances often feel hopeless, but the good news is, there are a variety of options that may meet your needs. Regrettably, however, some companies tend to prey on those struggling with seemingly insurmountable debt, and they do not always engage in ethical tactics when doing so.

For example, if you are facing massive amounts of, say, credit card debt, you may start receiving offers from so-called debt settlement agencies that attest that they can resolve your debts for only a small fraction of what you owe. Sounds great, right? Keep in mind, however, that, as with many things in life, if something seems too good to be true, it just well might be.

Why you should be wary

Typically, debt settlement companies will tell you they can negotiate with your creditors and argue down the amount of debt you owe. The problem is, however, your creditors have absolutely no obligation to follow along with the debt settlement agency’s proposal, so what your debt settlement representative tells you may be far from the truth. A debt settlement company may also avoid telling you about other potential risks associated with the process, which might include your credit taking a serious hit, debt collectors continuing to blow you up, and so on.

Spotting potential scams

While debt settlement agencies may prey on your stress and desire for a fast solution, there are key signs to be on alert for that should serve as red flags. More specifically, think twice before signing on with a debt settlement company that charges upfront fees, or one that instructs you to cease all communications with your creditors without explaining the potential risks involved in doing so. Similarly, avoid signing on with any company that makes guarantees about eliminating your debt, as again, your creditors have no obligation whatsoever to comply.

Despite what debt settlement companies tell you, signing on with one is rarely your best option. Consider alternatives before signing on with a company with unethical intentions.

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Finding debt relief with Chapter 13 bankruptcy

On Behalf of O’Brien Law Firm, LLC

Posted on: August 4, 2018

Many people in Mississippi feel like they are drowning under the weight of credit card bills, medical expenses and other forms of debt. When the pressure of debt becomes too great to bear, people can look for options to find relief and forge a path to a new financial future. Personal bankruptcy, including Chapter 13 bankruptcy, is one such option that can allow a person to keep their property and pay back their creditors over a set period with a court-approved repayment plan.

In general, if the monthly income of the person filing for bankruptcy exceeds the state’s median income, he or she must pay back the debt over a five-year period. On the other hand, if his or her income is equal to or less than the state’s median income, the debt can be addressed with a three-year repayment plan. At the end of the repayment period, debtors can find significant relief or eradication of the bills that have overwhelmed their lives.

In order to file for Chapter 13 bankruptcy, people in debt must follow the proper legal procedure, including providing proof of income, a list of creditors, an inventory of property and monthly living expenses. Filers must produce their most recent tax returns in addition to proof of tax filings as well as submitting a repayment plan. Debtors must adhere to the plan and continue to make child support payments, repayments to creditors and tax filings. The repayment plan must include full payments for certain types of debts and lesser payments for other types of unsecured debts.

Chapter 13 bankruptcy may be an important road out of debt for many people, especially those with too much income to qualify for Chapter 7 bankruptcy. Throughout the process, a bankruptcy lawyer may represent a debtor to advocate for a fair repayment plan that puts the client on a path to success.

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Should I apply for a home loan modification?

On Behalf of O’Brien Law Firm, LLC

Posted on: August 3, 2018

When you are experiencing financial difficulties, you would do almost anything to keep from losing your home. The thought of foreclosure is enough to cause chronic stress and fear in any Mississippi resident. Fortunately, you have options that may allow you to keep your home and make your debt more manageable, such as Chapter 13 bankruptcy. You may also have been advised to apply for a loan modification, but you might hesitate before you learn more about this option.

U.S. News & World Report explains that there are positive and negative aspects to getting a mortgage modification. The immediate benefit to a modification is that the lender lowers your payments, which can help your mortgage payments fit nicely into your monthly expenses. However, the numerous downsides to a loan modification can include the following:

  • A loan modification can significantly raise your interest rate and add years to the length of your repayment schedule.
  • The lender may mislead you on the terms of your loan and other options that could better fit your situation.
  • The lender may tell you that it will forgive a portion of your loan with the modification, only to add the “forgiven” amount to the end of the loan without your knowledge.
  • A loan modification can involve lots of paperwork, hassle and time.
  • Scammers posing as legitimate lenders often target people desperate for help, and they may ask for up-front processing fees, which are illegal.

When you file for Chapter 13 or you are having difficulty keeping up with your mortgage payments, companies may contact you offering a loan modification to “solve your problems.” A legitimate modification may help you temporarily while you rebuild your credit if you plan on refinancing later to get better interest rates. It helps to understand your other options if you are unwilling to accept the downsides to a loan modification.

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How do I dispute a debt that isn’t mine?

On Behalf of O’Brien Law Firm, LLC

Posted on: August 2, 2018

Like many Mississippi residents, you have some debt. It can be challenging enough taking care of your usual bills every month. The last thing you need is another debt added to the pile. However, one day you get a collection notice in the mail for a debt you don’t recognize. You are sure you didn’t make this purchase, so why are you receiving a bill for it? Even worse, why are you being taken to collections for it?

This is, unfortunately, not an uncommon scenario. Countless people receive bills for unfamiliar purchases, which can spark uncertainty and panic when they start receiving collection notices or harassing phone calls. Can you get this debt taken off your record? Will it affect your credit score? How can you get the harassment to stop?

The U.S. Federal Trade Commission explains that an unfamiliar debt may be a case of mistaken identity, or you could be the unwitting target of a scammer who is hoping you won’t question the charges and will pay up. Regardless of the reason, you can take the following steps to protect your credit and dispute a debt you don’t believe is yours:

  • Send the collector a written letter explaining why you believe the debt is not yours and state that you want the calls and letters to stop.
  • If you’re getting phone calls, ask for the caller’s name, company, address and contact information. Don’t discuss the debt over the phone until the company sends you details in writing.
  • Don’t volunteer any personal information or correct wrong information with the correct details, even if you don’t believe you owe the debt.
  • Check your credit report and dispute any discrepancies in writing.

You might feel tempted to just throw away collection notices for a debt you’re sure doesn’t belong to you. However, if you fail to address the issue, the harassment is unlikely to stop, and even a false debt may impact your credit score.

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Student loans could become easier to discharge

On Behalf of O’Brien Law Firm, LLC

Posted on: July 25, 2018

At the end of March 2018, there was a total of $1.4 trillion in student loan debt, according to the New York Fed. Across America, there are 44 million people – many of whom live in Mississippi – who have student loan debt, and it is highly unlikely that it can be discharged according to current bankruptcy laws. However, there is support for new rules that may make it easier to get rid of this type of an obligation in a bankruptcy proceeding.

Under proposed legislation, the definition of undue hardship would be broadened. To have student loan debt discharged, the borrower must show that being required to make payments would constitute an undue hardship. The Department of Education has asked for public comment about this issue as it believes that current rules are discouraging some debtors from filing for bankruptcy. There is no set definition of what an undue hardship is, which means that criteria are applied on a case-by-case basis.

Generally speaking, a person must pass the Brunner test to determine if he or she faces an undue hardship. To pass, an individual must show that paying the debt precludes him or her from maintaining a basic lifestyle for the next several years. The applicant must also show that an effort was made to make student loan payments prior to filing for bankruptcy.

Those who are experiencing overwhelming debt that can’t be repaid quickly may benefit from filing for bankruptcy. Doing so may allow a person to get a stay from creditor collection calls and letters. It may also make it possible to have student loan or other debts discharged in part or in full.

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Automatic stay in bankruptcy halts creditor collection efforts

On Behalf of O’Brien Law Firm, LLC

Posted on: July 17, 2018

When people in Mississippi file for bankruptcy, the court issues an automatic stay that prohibits creditors from continuing to seek payment. Although issues like multiple bankruptcy filings could interfere with the immediate issuance of an automatic stay, the court order typically becomes effective as soon as debtors file their bankruptcy paperwork and lasts until the discharge of debts. Creditors might initially violate the stay in the first couple of weeks after a filing because they have not yet processed the notice about a bankruptcy. Unless evidence shows that creditors willfully violated a stay, they will likely avoid legal consequences unless they persist with collection efforts.

Since debtors could expect to receive letters and telephone calls right away a bankruptcy filing, they should be ready to provide their case number and bankruptcy court information. Debtors should keep records of contact with creditors so that they can show that they provided notice to creditors about the stay. The court also mails official notices to all creditors, and attorneys can alert creditors to the stay for their clients as well.

Creditors that might repossess a vehicle or advance a foreclosure case could be held liable by a court if they seize property during a bankruptcy. A court will require the return of repossessed property and the payment of damages to the debtor if applicable.

A person concerned about mounting debts and missed payments could seek out the representation of a bankruptcy attorney. A legal review of the person’s debts and income could provide insights about which chapter of bankruptcy to file. A lawyer could take action to inform creditors about a filing as soon as possible and challenge those that defy the automatic stay. With legal support, a person might prepare bankruptcy disclosures completely and stop repossession.

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The myth of building credit by carrying a balance

On Behalf of O’Brien Law Firm, LLC

Posted on: July 10, 2018

Some Mississippi consumers may be paying more than they have to in credit card interest rates because of a prevalent myth. Many people believe that carrying a balance is a way to build credit, but financial experts say this is not the case.

A report from Creditcards.com found that more than one-fifth of cardholders carried a balance as a way to build their credit. However, this is not one of the criteria used to determine a credit score. In fact, carrying a balance can hurt a person’s credit if the balance is creeping up toward the card’s limit.

A balance on a credit card can damage an individual’s finances in other ways as well. Interest rates may be 16 percent or higher, so some experts say that even if the belief that carrying the balance were true, the additional costs would not offset the benefit of the boost. Paying a bill on time is much more important although more than 40 percent of people reported that they had made a late payment. The most common reason for a late payment is forgetfulness followed by a lack of money to make it. Experts say the best way to use a credit card is to pay it off in full on time each month.

Unfortunately, some people may be carrying a credit card balance not because they hope to build their credit but because they are unable to pay it off. People who are struggling may want to talk to an attorney about debt relief and whether it might be time to file for bankruptcy. While bankruptcy does damage a credit score, so does falling more and more behind on bills, and once the bankruptcy is discharged, a person can begin rebuilding credit once more.

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How a bankruptcy filing can actually improve your finances

On Behalf of O’Brien Law Firm, LLC

Posted on: July 5, 2018

When many people think about the prospect of filing for bankruptcy, one of their primary concerns may be how the filing will affect their financial future. There are many tales of bankruptcy causing financial ruin and the difficulty of rebuilding a solid financial foundation.

Many of the stories that circulate about bankruptcy ruining your finances are actually not based in fact. The truth is that a bankruptcy filing may actually be the most positive step you can make, depending on your particular situation.

How a bankruptcy filing can help

If your debt is overwhelming you and you cannot make your monthly payments on various obligations, your accounts are likely in the hands of collection agencies. The collection agencies’ job is to pursue you aggressively in order to collect on the debts. In addition to this persistent hassle, your credit rating continues to decline for each payment you miss. Ignoring the problem of severe debt does not make it go away, and in fact, worsens the situation.

At this point, it might seem like a bankruptcy filing can only make a bad situation worse. However, filing for bankruptcy can do several things to get the process moving for an improved financial picture. Filing for bankruptcy prevents collection agencies from continuing to contact you for payments. In addition, it halts the late payments on your accounts as you move through the filing process, so your credit record does not continue to deteriorate. In short, a bankruptcy filing signals that you are taking action to resolve the issue.

How to take action

One of the first steps towards taking action to resolve your debt situation is to begin to inform yourself about your options. There are two types of bankruptcy filings that you may consider: Chapter 7 and Chapter 13. The right kind of debt relief for your particular situation depends on the types of debt you currently hold. Consumers typically have loans for cars and homes, and debt also comes in the form of medical bills, taxes and student loans. Not all types of debt are eligible for discharge under a bankruptcy, so it is important to understand what debts you can actually get rid of in a bankruptcy filing.

Taking the first step towards a brighter financial future will likely require some difficult decisions and some hard work. However, the benefits of getting the process started will pay off in the long run, so you can start rebuilding a debt-free life.

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Bankruptcy and alternative options

On Behalf of O’Brien Law Firm, LLC

Posted on: July 4, 2018

If you are struggling with overwhelming debt, you may be wondering what options you have. Bankruptcy is often a viable choice for people who have no other way to free themselves from their debt obligations. Bankruptcy can provide a much needed fresh financial start in order to begin financial rebuilding.

There are some options, however, that may be available to you before you reach the point of needing to file for bankruptcy. It can be important to consider these possibilities because bankruptcy, although a very useful solution for many, can bring with it some consequences that are better to avoid.

Negotiating with creditors

One option to consider before you file for bankruptcy is to contact your creditors or debt collectors and ask to work with them to restructure your payments into a plan and schedule that you can afford. Many creditors would prefer to get something rather than nothing, and therefore are often willing to work with clients to help them reorganize their payments. This type of solution works best if you have a steady income and can still realistically devote some of that income to paying off your bills.

Debt consolidation

Another possibility for reorganizing your debt is consolidation. In this option, your debts are combined into a consolidated one with a lower overall interest rate, so that you can begin to pay off your debt more effectively. There are several different ways to do this, and not all the solutions you see advertised are actually advisable. It is in your best interest to fully inform yourself about the conditions and parameters of a debt consolidation plan so that you can be sure you are actually getting a good deal and not further complicating your financial situation.

With some research and planning, you may be able to take advantage of a bankruptcy alternative to help you get back on track and get out of debt. Remember, however, that if your debt is spiraling out of control, ignoring the problem will not make it go away. Take action to get control of the situation and plan for your future.

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Student loans could become easier to discharge

On Behalf of O’Brien Law Firm, LLC

Posted on: July 2, 2018

Generally speaking, those who have student loan debt in Mississippi and any other state are unlikely to have it discharged in bankruptcy. However, recent trends have seen bankruptcy judges reduce the amounts that debtors are asked to repay. Furthermore, lenders themselves have been increasingly open to the idea of settling student loan debt for less than the full balance owed. Judges may be more sympathetic to student loan debtors because they see the impact it has on their own children.

They may also see the impact it has on their law clerks or others close to them. Typically, student loan debt can only be discharged if a person can show that being forced to pay the debt would constitute an undue hardship. In 2017, only 473 people tried to use bankruptcy to obtain student loan relief according to the Wall Street Journal.

Overall, there are 45 million Americans with student loan debt, and the average law student graduates with a balance of $119,000. While the standard to get such debt canceled or reduced is a high one, some judges believe that it is too high. In 2017, an individual had $50,000 in student loans canceled because health issues made it difficult to find employment. Those who don’t want to seek debt relief through bankruptcy may wish to contact their lender for other options.

Individuals who are facing financial challenges because of student loan or other types of debt may benefit from bankruptcy. It may be possible to have debts discharged or reorganized, which may make them easier to repay. An attorney may explain the benefits of bankruptcy such as a stay from foreclosure or repossession of assets. He or she may also help a person show that paying student loan debts could constitute an undue burden.

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Study looks at the timing of bankruptcy filings

On Behalf of O’Brien Law Firm, LLC

Posted on: June 25, 2018

For some debtors in Mississippi, waiting to file for bankruptcy could lead to many more financial issues. The Notre Dame Law Review released a report that found that the longer people waited, the more likely their assets would be depleted.

People may want to delay a bankruptcy filing because they feel obligated to pay off their debts or want to avoid what they see as a stigma. The report identified a point at which people began to struggle to afford basic necessities or faced things such as debt collection lawsuits. It found that those who waited at least two years past that point to file bankruptcy had a median debt to income ratio that was 40 percent higher compared to those who filed earlier.

Experts advise that there are several points that may indicate it is time to file. For example, it’s a problem when one is paying off debt with more debt. Another indicator is when a person’s debts reach 40 percent or more of their income. People who are foregoing basics such as medical care to pay off debts may also want to consider bankruptcy.

It’s important to note that not all debts can be discharged in bankruptcy. While medical and credit card debts can be discharged, student loans and some other types of debts are not eligible.

An attorney may be able to discuss various debt relief options with a client. Chapter 7 bankruptcy is generally for debtors whose income is below a certain level. People might be able to exempt certain necessary assets in a Chapter 7 bankruptcy. On the other hand, Chapter 13 bankruptcy allows debtors to pay creditors over a period of several years while keeping some important assets.

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Getting a handle on debt

On Behalf of O’Brien Law Firm, LLC

Posted on: June 20, 2018

It is not uncommon for individuals in Mississippi and other states to have debt. In 2018, Americans held more than $1 trillion in combined credit card debt balances. Individuals may also have personal loan, payday loan or medical debt to contend with in addition to mortgages or student loan balances to pay down. To help a person better handle his or her finances, it can be a good idea to list all the debts he or she has.

Ideally, a person will list the balances on those debts, the interest rate charged by a creditor and when each payment is due. This can make it possible to develop a strategy to pay down the debt in a timely manner. Listing the interest rates for each debt can help debtors figure out how much it is truly costing them. By knowing the due date of each payment, it reduces the odds that payments are made late.

Late payments can have negative consequences on a person’s credit score and history. There could be options for those who can’t make a payment on time such as deferring a student loan payment. Other lenders may be amenable to alternate payment arrangements as they would rather get some of their money now as opposed to getting nothing.

Debtors who are having financial challenges may be able to overcome them by filing for bankruptcy. This may put a stop to a foreclosure or repossession as well as postpone a lawsuit or other collection actions. An attorney may explain the process of filing and inform a person whether they are eligible for a Chapter 7 bankruptcy. Chapter 7 may be preferable for those with few or no assets as debts may be discharged in a matter of weeks.

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Steps to purchasing a car during Chapter 13 bankruptcy

On Behalf of O’Brien Law Firm, LLC

Posted on: June 14, 2018

It is possible for Mississippi residents to get financing for a car while in Chapter 13 bankruptcy. However, the process may take longer and be more difficult than for people who are not in bankruptcy. The first step is to find a lender and dealer. If finding a lender is not possible, the next step is to look for a subprime dealership. They specifically work with lenders whose specialty is people with bad credit.

The dealer will create a buyer’s order once the terms of the loan have been agreed upon and the vehicle has been chosen. This must then be submitted to the trustee along with paperwork that includes an explanation of why the vehicle is needed. A trustee is not likely to approve a luxury vehicle, so making the right choice is important.

The information in the Motion to Incur Additional Debt that the trustee files with the court will also be sent to creditors. Creditors have the option to object, but this is not an automatic rejection. The debtor would have to attend a hearing. A debtor receives an Order to Incur Additional Debt if the court approves the loan. This then must be taken to the dealer. If the loan is not approved, a debtor can try with a different car or try again later.

Some people may be reluctant to file for bankruptcy because they are afraid it will ruin their credit. However, this is not necessarily the case. Bankruptcy does damage a person’s credit, but so does unmanageable debt, and it is possible to rebuild credit after a bankruptcy. Furthermore, a Chapter 13 bankruptcy, which involves creating a payment plan to repay creditors over several years, can make it possible to keep some assets such as a house.

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Understanding Chapter 7 and Chapter 13 bankruptcy

On Behalf of O’Brien Law Firm, LLC

Posted on: June 8, 2018

For people in Mississippi struggling with unrepayable debt, bankruptcy can be a way out from financial disaster. However, the types of debt that can be wiped away in bankruptcy vary depending on the type of bankruptcy a person pursues. In addition, some types of debts are almost always dischargeable while some types of debt are notoriously difficult to discharge.

Most consumers who file for bankruptcy pursue either Chapter 7 or Chapter 13 bankruptcy, both of which help people to find a new financial lease on life after debt. Only people who make below a certain income, usually the state median, can file for Chapter 7 bankruptcy. Under this type of filing, a person’s assets are liquidated while the funds are distributed to creditors to satisfy the debt. Some assets are exempt from liquidation, including those necessary for life such as a car or tools used on the job. After this process, remaining debt that is qualified for discharge will be fully released, and creditors will need to stop their attempts to collect these debts.

Chapter 13 bankruptcy is different because debt is restructured rather than instantly discharged. People enter a new period of repayment of the restructured debt, and after that payment period is over, qualifying debt could also be discharged. In general, mortgages, auto loans, personal loans, medical bills, credit card debts, unpaid utility bills and similar debts can be discharged in bankruptcy. Student loans are the most difficult type of debt to discharge along with child support and spousal support or government fines.

People struggling with debt can often be eligible for Chapter 13 bankruptcy regardless of their income level. When considering options to escape from the spiral of personal debt, people may consult with a bankruptcy lawyer for advice on the type of bankruptcy that is best to pursue in each individual circumstance.

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The top 5 things you should do after bankruptcy

On Behalf of O’Brien Law Firm, LLC

Posted on: June 2, 2018

Your Mississippi bankruptcy is over and the court gave you your discharge papers. Congratulations! Now that you have your financial feet on the ground, it is time for you to begin your post-bankruptcy life. You likely learned so much during the past months that you can start afresh to establish and build your credit and responsibly manage it.

Reestablishing your credit, however, is the final of five things you should do. Here are all five.

1. Keep your bankruptcy paperwork

Do not be tempted to discard all the paperwork you collected during your bankruptcy. At the very least, you will need the following documents in the future:

  • Your bankruptcy petition
  • Your notice of filing
  • Your discharge order

Keep these and your other bankruptcy documents in a safe place. Even better, scan them and put them in a file folder on your computer desktop. That way you have electronic copies whenever you need them.

2. Get your credit reports

You may not be aware of it, but all three major credit reporting agencies give you a free report each year. Get all three after about three months to give your bankruptcy dust time to settle. Review each one carefully, making sure that none of your discharged debts appear on any of them. Likewise check to see that no collection agency now has one or more of your discharged debts. The last thing you need is to once again begin receiving harassing phone calls, emails or snail mails demanding payment for debts that your bankruptcy discharged.

3. Establish a budget

Before you roll your eyes at the thought of budgeting, you need to recognize that establishing a budget and sticking to it are two of the most important things you can do for yourself in your post-bankruptcy life. This is the only way you can ensure that your monthly household income can cover your monthly bills.

Unless you are one of those unusual people who keeps your hardcopy bills after you pay them, you probably will need to estimate the amount of at least some of your monthly bills at first. On the other hand, if you have online accounts or do online banking, you can find out how much you paid on each bill each month. If you can discover this, total each bill’s last six payments and divide by six. This will give you a realistic average of how much you spend each month for each bill. Do not forget to determine a monthly average for those bills, such as insurance, for which you pay an annual or semiannual premium.

4. Establish an emergency savings account

While budgeting is one of the most important things you can do, even the best budget seldom makes provision for those emergency situations that invariably arise when you can least afford them. If your air conditioner stops working or your car needs its transmission fixed, you need cash to pay for the repairs. Open a new emergency savings account into which you place any money left over at the end of each month, no matter how small the amount.

5. Begin rebuilding your credit

Once you have your monthly bills in hand, it is time to start reestablishing your credit. Not only does a credit card come in very handy when even your emergency savings account cannot cover an unexpected expense, some businesses, particularly online businesses, refuse to take anything other than a credit card.

Now that your bankruptcy wiped out virtually all your debts, you can apply for a new credit card. Admittedly, you may have to settle for a prepaid one or one with a low credit limit. In addition, you likely will pay a higher than usual interest rate. Nevertheless, getting one credit card and paying it off each month is a great way to reestablish your credit.

For all practical purposes, your bankruptcy gives you the opportunity for a financial “do over.” By following the above five steps, you undoubtedly will discover that this time you can face and overcome whatever financial issues arise in the future.

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How to tell when you should file bankruptcy

On Behalf of O’Brien Law Firm, LLC

Posted on: June 1, 2018

If you are a Mississippi resident whose monthly bills exceed your monthly income, you likely are in a quandary over what to do. You may be considering bankruptcy as a last resort, but are confused about which type is best for you. In addition, you may fear that you will lose everything if you file bankruptcy. Set your mind at rest. You do not lose everything in a bankruptcy. In fact, many of your assets are exempt in a Chapter 7 bankruptcy.

While bankruptcy admittedly is a drastic solution to your financial problems, sometimes it not only is your best option, but also your best strategy. If you have reached the point where one of the following red flags applies to you, you may wish to seriously consider bankruptcy.

You truly cannot pay your bills

If you recently got laid off from your job or you or one of your family members suffered an unexpected injury or illness resulting in huge medical expenses, you may be on the brink of financial disaster through no fault of your own. While buying your groceries and paying your other living expenses via credit cards may be a short-term solution, your credit card debt will quickly balloon and your minimum payments alone may well become more than you can handle.

In addition, as your credit card balances increase, so does the portion of your payments going for interest instead of debt reduction. Not only do the interest payments eat you alive, you quickly reach your credit limits. Now you really are in trouble and Chapter 7 bankruptcy may be your only answer. Its whole purpose is to discharge your overwhelming debts, particularly your credit card debt.

You start getting harassing phone calls

Once you begin making late payments or no payments at all, your phone starts ringing incessantly. This is especially true if your creditors start turning your accounts over to collection agencies. These debt collectors are notorious for the lengths to which they will go to collect debts. Not only will they deluge you with nasty phone calls, they may also contact your relatives and/or show up at your door or those of your neighbors. Again, Chapter 7 bankruptcy can rescue you. Its automatic stay provision prohibits your creditors from attempting to collect their debts during the pendency of your bankruptcy.

Your wages become garnished

Assuming you are still working, you may receive a nasty surprise when your paycheck amount is considerably less than what you expected. When this happens, it likely is because one of your creditors sued you and obtained a court order allowing it to garnish your wages. When presented with such a court order, your employer by law must abide by it and withhold the designated amount from your paycheck each pay period until you pay your debt in full. This is another way in which Chapter 7 bankruptcy can come to your aid. It stops the garnishment. Be aware, however, that it cannot stop a garnishment related to child support or alimony payments a court ordered you to make.

Your home is in danger of foreclosure

If you own your own home and are behind on your mortgage payments, your mortgage lender may threaten to foreclose or even have started foreclosure proceedings against you. In this situation, a Chapter 13 bankruptcy protects your home much better than a Chapter 7. While Chapter 7 can forestall a foreclosure, it seldom prevents one altogether. You stand a much better chance of saving your home by filing for Chapter 13 instead.

Unlike Chapter 7, which discharges most of your debts, a Chapter 13 bankruptcy is a reorganization. Under your reorganization plan, you not only have the opportunity to renegotiate the terms of your mortgage, you also have a relatively long period, generally between three and five years, to get caught up on your mortgage payments under their new rates.

There is no denying that deciding to file bankruptcy is a life-changing decision that you should not make lightly. Having said this, however, bankruptcy is not the end of the world. In fact, it is a new financial beginning for you and your family.

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Save money on healthcare cost to reduce debt in retirement

On Behalf of O’Brien Law Firm, LLC

Posted on: May 30, 2018

Healthcare costs are among the most significant financial concerns for senior citizens. When Mississippi seniors retire, they typically lose their employer-sponsored health insurance and depend on Medicare to cover healthcare costs. Although Medicare covers many of the medical expenses seniors face, it also includes deductibles for inpatient care and coinsurance for outpatient treatment. Fortunately, there are some things seniors can do to minimize their out-of-pocket costs and avoid excessive medical debt.

One way to avoid bankruptcy due to medical debt is to reduce expenses. Seniors can do this by keeping their employer health plan as long as possible to delay signing up for Medicare parts B and D. After they retire, seniors could reduce expenses by purchasing a Medicare gap policy. This kind of private insurance covers coinsurance and deductibles that the senior would be responsible for if they only had Medicare coverage.

Another option is to contribute money to a health savings account. The funds in these accounts are either pre-tax or tax-deductible and may be used after retirement to pay for health-related expenses. While seniors cannot add to the account after they enroll in Medicare, the funds they add prior to retirement will be available to them until they’re exhausted.

Seniors may use these strategies to avoid using credit cards to pay for medical expenses. Healthcare costs could lead to excessive debt and lower a senior’s credit score at a time when they have limited income to repay the lenders. Doctors and hospitals may allow seniors to pay their bills directly to the provider over time if they request this kind of arrangement. Seniors who have excessive medical debt may wish to work with an experienced bankruptcy attorney to get debt relief. This may help them lower, or even eliminate, their medical debts.

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Understanding the ramifications of Chapter 7 bankruptcy

On Behalf of O’Brien Law Firm, LLC

Posted on: May 17, 2018

Filing for bankruptcy is not a decision that those in Mississippi or anywhere else in the country can take lightly. While many debts could be eliminated in a Chapter 7 filing, it could also result in a person’s credit score dropping by about 200 points. This may make it harder to borrow money, and lenders who are willing to work with a person after bankruptcy will likely charge high interest rates.

Chapter 7 bankruptcy is ideal for those who either don’t have a lot of money or don’t have any income at all. A trustee will be appointed to liquidate a debtor’s non-exempt assets and use the money raised to repay creditors. If a debtor also has secured debts like a home or car payment, he or she could choose to continue making those payments in a Chapter 7 filing.

As a general rule, this type of bankruptcy will stay on a credit report for up to 10 years. However, individuals are urged to continue making payments on their remaining debts to show that they can be trusted with debt again. Those who don’t have a job are encouraged to find employment as having an income generally makes it easier to save money or pay existing debts.

A person who has overwhelming debt might benefit from filing for Chapter 7 bankruptcy in a variety of ways. For instance, he or she may get a stay from creditor contact or collection activities such as a lawsuit. Bankruptcy might also result in debt balances being reduced or eliminated in a short period of time, allowing debtors to better manage their finances. An attorney may be able to describe other benefits of bankruptcy or whether it is in a person’s best interest to file for such protection.

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Credit repair strategies after filing for bankruptcy

On Behalf of O’Brien Law Firm, LLC

Posted on: May 9, 2018

People in Mississippi with bankruptcies on their records naturally await the day when their credit reports no longer show their defaults. The Fair Credit Reporting Act allows credit bureaus to report bankruptcies for up to 10 years from the date of filing. Until then, former debtors can take steps to improve their credit ratings and potentially remove bankruptcies from their records.

A certified financial planner said that Chapter 7 bankruptcies remain on record for 10 years, but Chapter 13 cases can come off records after only 7 years. People might have the ability to remove these events from their credit reports if the credit agencies have recorded them inaccurately. To begin, a person would examine credit reports from all three major credit reporting companies. If any errors are present, then the person could dispute the entry. A credit agency’s inability to verify a bankruptcy might enable a person to have the record removed. Another tactic involves contacting the court house where the bankruptcy filing took place. If the court did not verify the bankruptcy for the credit agencies, then it would be an unverified entry. After obtaining a written statement about this, a person could ask the credit bureaus to erase unverified entries.

Whether a bankruptcy remains on record or not, people have the ability to improve their credit ratings by paying bills on time or early. Avoiding new debts could also help people keep their records clean.

A person contemplating bankruptcy may wish to consult an attorney. A legal evaluation of the person’s finances might show that a Chapter 13 filing could pave the way to a fresh financial start. The attorney may help the person create a manageable payment plan that repays creditors at least partially before the court dismisses remaining debts.

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4 tips for preparing for bankruptcy

On Behalf of O’Brien Law Firm, LLC

Posted on: May 6, 2018

If you are accumulating too much debt, you may think about filing for bankruptcy. While it may sound intimidating to go bankrupt, it may be a good option for you. It can help you get free from crippling debts and start over.

However, before you rush into filing for bankruptcy, there are some things to handle. Here are some steps you should take before declaring bankruptcy.

1. Review your finances

You should have a clear picture of your financial situation before filing. At the very least, you should understand your income, expenses and total debts. Figure out what is causing your debt. You should also request your credit report for free before filing for bankruptcy. Not only will your credit report be an indication of your financial troubles, but it will also give you a good list of the creditors you owe.

2. Avoid racking up more debt

If you gather too much debt too close to your filing, the creditor may claim you are committing fraud. Do not spend frivolously on luxury items if you are considering bankruptcy. If you take on new debt, make sure it is for necessities such as food, utilities or medical bills.

3. Stop automatic payments

You may have settings on your credit cards or bank accounts to make automatic payments. Whether you have these for utilities or monthly subscriptions, you should freeze them before you declare bankruptcy.

4. Get legal help

According to CreditCards.com, talking to an attorney is essential before moving forward with bankruptcy. It is risky to attempt to handle it by yourself because the laws are so complex. Not only do you need assistance understanding bankruptcy laws, but you need someone who will steer you on the right path and tell you about your best options.

You do not need to feel fear or shame when it comes to bankruptcy – just make sure it is the right decision and you are ready for it.

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Different ways to obtain debt relief

On Behalf of O’Brien Law Firm, LLC

Posted on: May 4, 2018

Up to 80 percent of Americans living in Mississippi and throughout the country have some form of debt. However, for some, that debt may become too large to manage in an effective manner. To start the process of lowering credit card and other balances, it is important to understand the different options available to achieve that goal. One such option is to apply for a personal loan.

Personal loans allow individuals to consolidate a variety of different debt balances into one payment. Typically, these loans come at a lower interest rate than credit card companies charge. This results in lower monthly payments and the ability for an individual to improve his or her credit score. Another option for those with credit card debt is to transfer balances to to a new credit card with a lower interest rate.

It is important to understand that zero percent interest offers only apply for a limited time. After about 12 to 14 months, the interest rate on a remaining balance could be up to 15 percent. Individuals who can’t or don’t want to make use of those options could choose to work with a debt relief company that will negotiate with lenders on a debtor’s behalf. Instead of sending payments directly to creditors, payments are made to the debt relief company instead.

There are many ways in which a person may be able to overcome financial challenges. In addition to debt consolidation or working with a debt relief company, it may be possible to file for bankruptcy. Depending on a person’s income and asset levels, debts can either be discharged immediately or discharged over a series of three or five years. An attorney may describe the pros and cons of using bankruptcy or other debt relief options.

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3 common causes of debt struggles

On Behalf of O’Brien Law Firm, LLC

Posted on: May 2, 2018

Debt is something that almost everyone experiences at one point or another. According to Goldman Sachs, the average amount of credit card debt is $5,700 for families. It is such a prevalent issue that you may feel like having debt problems is normal, or you simply ignore it.

Now, the path into debt struggles is often complex. If you understand some of the most common reasons people go into high levels of debt, you may be able to better protect yourself and know when taking action to address debt issues can be particularly important. Here are some causes of debt problems.

1. Health care expenses

Medical costs are on the rise and are crippling for too many Americans. You may fall into medical debt even if you have health insurance. Injuries, illnesses and other health conditions can suddenly cause bills to pile up. It is impossible to predict when a sudden medical problem will strike.

2. Losing income

If a primary source of income goes away, your bottom line will suffer. Examples of losing income include the following:

  • Your business suffering a decline in revenue
  • Your boss terminating you
  • Your employer laying you off
  • Losing time from work because of an illness or injury
  • Taking time off work to care for an older family member or child

Whenever any of these things happen to you, you may face an overwhelming number of expenses and bills with no way to cover them.

3. Sudden emergencies

You may end up in debt when something bad and expensive occurs. Here are some costly emergencies you may encounter:

  • A car accident
  • A home appliance malfunction
  • A serious illness

Without a substantial emergency fund, these kinds of occurrences may leave you facing significant financial difficulties.

No matter how you end up with high debt levels, you may think it is impossible to get out. However, in some circumstances, filing for bankruptcy may give you the relief you need to start over.

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What to consider before filing for bankruptcy

On Behalf of O’Brien Law Firm, LLC

Posted on: April 23, 2018

If a Mississippi resident is having trouble paying down his or her debt, it may make sense to think about filing for bankruptcy. By taking this step, an individual can obtain a stay of creditor contact and certain actions such as wage garnishment. However, the bankruptcy will be noted on a credit report and stay there for up to 10 years for those who file Chapter 7 bankruptcy.

An upside to filing for Chapter 7 bankruptcy is that individuals will likely have most of their debts wiped away in a short period of time. If a person files for Chapter 13 bankruptcy, he or she will have three to five years to repay their debts. Debtors who don’t qualify for Chapter 13 because they have too much debt may qualify for Chapter 11 bankruptcy instead. Regardless of what type of bankruptcy a person files for, the effects of that decision should decrease over time.

Individuals who file for Chapter 7 bankruptcy may be able to get a mortgage within four years of filing. Prior to filing for bankruptcy, it could be worthwhile to meet with an attorney. A consultation might be free, and individuals may find out about alternatives to filing for bankruptcy protection. Debtors may get help putting financial records together to present to a bankruptcy court.

Those who are facing financial challenges may find that filing for bankruptcy is an effective way to handle debts. Bankruptcy may allow debtors more time to renegotiate loan terms or have existing debts discharged in a reasonable amount of time. Taking this action might also put an end to wage garnishment or prevent it from happening at all. Debtors may generally keep property such as a house or car as their bankruptcy case unfolds.

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Tax debt and bankruptcy

On Behalf of O’Brien Law Firm, LLC

Posted on: April 20, 2018

Mississippi residents who find themselves with debts they cannot afford to pay have the option of voluntary bankruptcy. A voluntary filing means that a debtor chooses to file for bankruptcy without being petitioned to do so by a creditor. While bankruptcy can wipe out many types of debt, some debts are excluded. For example, taxes owed are often not allowed to be dismissed in bankruptcy. It all depends on what type of taxes, what type of bankruptcy and whether or not the taxes in question meet some very specific criteria.

For individuals and couples, there are generally two types of bankruptcy. Chapter 7 dismisses allowable debt and liquidates some assets to pay creditors. On the other hand, Chapter 13 requires making payments to creditors for a period of time under an affordable payment plan. When the payment plan is completed, remaining debt is dismissed.

Taxes can sometimes be eliminated by bankruptcy, but there are very stringent rules about this. Generally, taxes can be discharged if they are associated with a tax return that was due at least three years before the bankruptcy was initiated and filed at least two years before the bankruptcy. If an associated return was never filed, the taxes cannot be discharged. The taxes must also have been assessed at least 240 days before bankruptcy was filed.

This is only a partial list of the criteria that must be met for taxes to be dischargeable. Additionally, the rules could be different if the bankruptcy is involuntary.

When someone is considering bankruptcy, they might not have the option of filing for Chapter 7 if they do not meet the income requirements. Chapter 13 is considered to be bankruptcy for wage earners who have steady income and can make payments under a payment plan. A lawyer could help a debtor decide which type of bankruptcy to file.

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Medical debt is a growing problem among younger people

On Behalf of O’Brien Law Firm, LLC

Posted on: April 10, 2018

Injuries and illnesses too often impose financial hardship on people in Mississippi. In addition to the physical pain, medical bills quickly absorb savings and force people to use their credit cards. The Commonwealth Fund reported that about one-third of consumers used credit cards for medical bills in 2014. For 44 percent of these people, that act produced a negative result on their credit scores. Younger people in the Millennial generation have begun to feel the pinch as well. A survey of Millennials in 2016 found that 74 percent of respondents had unpaid medical bills.

Between 2008 and 2018, the percentage of medical debts among young people that went to collections rose sharply from 10 percent to 30 percent. Possessing health insurance does not insulate people from medical bills. A study sponsored by the Kaiser Family Foundation revealed that 20 percent of people with insurance still struggled to pay for health care.

Bankruptcy represents one approach to managing debts that become insurmountable. Another strategy for controlling health care costs involves debtors negotiating their bills with hospitals. This effort could result in an arrangement that lets people pay their debts with interest-free installment payments.

When a person wants to know more about debt relief, an attorney could provide helpful insights. For example, one may prevent a home foreclosure by selling the property through a short sale or negotiating a new mortgage with the lender. Other types of creditors might accept a debt management proposal or settlement offer prepared with assistance from an attorney. This strategy might gain someone a lower payment that relieves pressure on the monthly budget. In situations that involve disputed charges, an attorney could take the creditor to court and strive to resolve the debt.

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5 common reasons people file for bankruptcy

On Behalf of O’Brien Law Firm, LLC

Posted on: April 3, 2018

Financial calamity is sometimes unavoidable. Unfortunately, something may happen in your life that leaves you struggling to make ends meet. If you are racking up debt and are considering filing for bankruptcy, you are not alone. Millions of people declare bankruptcy in America every year.

But why is bankruptcy such a prevalent issue? What brings so many people to the brink? Here are some common reasons that Americans file for consumer bankruptcy.

1. Medical bills

According to USA Today, the majority of U.S. bankruptcy filings occur due to medical bills. Health care debt is the leading cause of bankruptcy. Even if you have health care insurance you may fall victim to huge medical costs. A sudden injury or illness may drain your savings, making bankruptcy your best option.

2. Job loss

Whether it is because of a layoff, firing or resignation, losing income can be devastating. If you are lucky enough to get severance pay, you may be able to survive for a little bit until you find a new occupation. But even then, there is no guarantee when you will find a new job. Not having a job may quickly make your savings and assets go down the drain.

3. Dissolution of marriage

Divorces create a significant amount of financial stress on both people. Dividing marital assets, paying legal fees, living on a single income and making support payments may make it difficult for you to pay your bills.

4. Credit card debt

Credit is a useful tool. However, it may sometimes rack up your debt. While overspending is one issue, you may also accumulate credit debt if you use your card to cover a disability, job loss or emergency expense.

5. Foreclosure

If you have financial troubles and are not able to make your mortgage payments, you may be at risk of losing your home. Filing for bankruptcy may be one way to avoid a home foreclosure.

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How to make a financial recovery from bankruptcy

On Behalf of O’Brien Law Firm, LLC

Posted on: April 2, 2018

People in Mississippi who are considering bankruptcy might wonder if they will be able to recover financially. One study by Lending Tree found that three years after a bankruptcy, people applying for a mortgage without a bankruptcy on average only paid about 19 bps less than those with a bankruptcy. Two years after a bankruptcy, around 65 percent of people had brought their credit score up to 640 or more.

Once a bankruptcy is discharged, the first step is to apply for a secured credit card. To get this type of card, a person puts down a deposit, and the initial credit limit is usually around the same as the deposit amount. The next step is to use the card conservatively, putting no more than 20 percent of the total credit limit on it at a time and paying it off each month. Once it has been established that the person will not max out the card and will pay it off responsibly, it might be possible to apply for a regular type of credit card.

Credit scores and issues such as identity theft can be monitored by signing up with a credit monitoring service. Although many bankruptcies occur because people have issues such as medical debt or job loss, those who struggle with spending should take a look at their budgets and try to improve.

One advantage of filing for bankruptcy is that it stops all actions against a person ranging from creditor harassment to foreclosure, lawsuits and more. Certain debts, including some taxes, child support and most student loans, cannot be discharged in bankruptcy, but in Chapter 7, most other debts can be, and a person may be able to make some assets exempt. A Chapter 13 bankruptcy may allow a person to keep certain assets and pay creditors using a payment plan of three or five years.

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Debtors challenged by upfront costs of filing for bankruptcy

On Behalf of O’Brien Law Firm, LLC

Posted on: March 27, 2018

Bankruptcy has the potential to give people in Mississippi a fresh start if they are struggling with financial challenges. The need to pay for court fees and legal advice, however, can keep people from pursuing this legal remedy that might wipe out their burdensome debts. The challenge of paying for the process sometimes prompts people to choose Chapter 13 bankruptcy when filing under Chapter 7 could have produced greater benefits.

When debtors have no cash on hand to pay an attorney, they might agree to pay for legal representation as part of a Chapter 13 payment plan. This form of bankruptcy requires a debtor to create a plan for paying down debts over the course of a few years. By bundling legal fees into the agreement, attorneys gain a method for collecting payment. The drawback for debtors, however, involves their frequent inability to complete a payment plan. Failing to finish payments voids their bankruptcy protection and allows debts to return.

With a Chapter 7 filing, debtors generally receive a legal discharge of their qualifying debts. The assistance of an attorney with this process greatly increases the likelihood of a debtor gaining substantial debt relief without a payment plan.

The decision to file for bankruptcy requires a person to consider many variables. An attorney may inform a person about what types of assets could be exempt from liquidation, how to halt collection efforts and how to prevent foreclosure or wage garnishment. An attorney may help organize a person’s financial records for disclosure to the court. This effort might allow a person to avoid mistakes that could cause a court to reject an application. During the process, an attorney might also intervene to protect a person being harassed illegally by creditors.

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Bankruptcy and credit myths

On Behalf of O’Brien Law Firm, LLC

Posted on: March 21, 2018

People in Mississippi who are struggling with debt might hesitate to file for bankruptcy because of certain myths they believe about bankruptcy. There are a number of misconceptions about filing for bankruptcy and what happens to a person’s credit afterward.

The main impact of a bankruptcy on a credit score is the bankruptcy itself. In other words, the score is unlikely to be mitigated by positive information on the credit report. The amount of debt discharged may affect the severity of the drop in credit score. Furthermore, debts that cannot be discharged, such as student loans, will remain on the report. However, it is important to remember that a bankruptcy eventually falls off the credit report. A Chapter 7 bankruptcy remains on the credit report for 10 years. All other information, including a Chapter 13 bankruptcy and things like liens and judgments discharged in bankruptcy, are removed from the report after seven years.

Even while the bankruptcy is still on the report, it is possible to improve the credit score significantly. It is possible to begin rebuilding credit with a secured credit card or a loan and by paying all bills on time. In the end, while bankruptcy represents a short-term hit on a person’s credit, getting free and clear of that debt may allow a person to rebuild a stronger credit record than before.

Another misconception people might have about bankruptcy is that they will lose all their assets. Even in a Chapter 7 bankruptcy, certain assets are exempt, but in a Chapter 13 bankruptcy, a person may be able to keep assets such as a home. Filing for bankruptcy can halt, at least temporarily, actions such as foreclosures, and the person works out a plan to pay creditors over three to five years. This plan must be approved by the court and is supervised by a bankruptcy trustee.

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Americans are piling up credit debt

On Behalf of O’Brien Law Firm, LLC

Posted on: March 14, 2018

Mississippi readers with credit card debt are not alone. According to a report by WalletHub, in 2017, Americans added the most credit card debt since 2007. Further, the Federal Reserve estimates that the total amount of U.S. credit card balances currently exceeds $1 trillion.

WalletHub reports that Americans added $92.2 billion in credit card debt in 2017. Of that, $67.6 billion was added in the final quarter, which represents the highest one-quarter jump in three decades. The latest numbers are part of a trend. Between 2015 and 2016, U.S. credit card debt increased by $44 billion.

According to experts, one reason for the sharp increase in debt is that charge-offs, or uncollectable debts, are at historically low rates. This means that banks feel more comfortable extending credit to Americans with subpar credit scores. Another reason could be medical expenses. According to the Centers for Medicare and Medicaid Services, Americans were responsible for paying $338 billion in out-of-pocket health care costs in 2015. These costs included deductibles, co=pays, office visits and uncovered medical procedures. Apparently, many people paid for those costs with credit cards. WalletHub reports that 62.3 percent of Americans say health care expenses make up a portion of their credit card debt.

Mississippi residents who are seeking relief from credit card debt may wish to consider filing for Chapter 13 bankruptcy. Under this chapter, consumers repay their obligations over a period of three or five years pursuant to a court-approved plan. Any remaining credit card balance would generally be discharged upon the successful completion of the plan. An attorney can outline the eligibility requirements.

 

Source: Yahoo Finance, Credit card debt has now reached pre-recession levels“, Brittany Jones-Cooper, March 8, 2018

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Embarrassment about bankruptcy is common but unnecessary

On Behalf of O’Brien Law Firm, LLC

Posted on: March 10, 2018

You have made the difficult decision to file for bankruptcy, but you may still have some misgivings. If so, you are not alone. Countless people in Mississippi and elsewhere who are going through a personal bankruptcy are dealing with negative feelings about their situation, including embarrassment and shame. You may be reassured to learn you do not have to feel this way.

There was a great deal of negative social and professional stigma surrounding bankruptcy in the past that, for the most part, no longer exists today. However, many people still attach a negative connotation to what they see as a last resort. You might feel a number of unpleasant feelings during your bankruptcy process, including the following:

  • Embarrassment over your friends, family members or co-workers finding out you had to file for bankruptcy
  • Loss of confidence and self-worth when you cannot meet your financial obligations
  • Guilt over not repaying your debts and taking what some think of as the “easy way out”
  • Worry that you may not be able to rebuild your credit or take out a loan in the future

Fortunately, most lenders are aware that bankruptcy has become a necessity for many, especially in today’s financially uncertain times. Many banks or alternative lending companies are willing to offer loans to people recovering from bankruptcy. You can start rebuilding your credit soon after discharging your debts, and you may have learned valuable skills in budgeting, saving and financial planning that can prevent you from having trouble in the years to come.

It is important when recovering from monetary difficulties to let go of any sense of guilt or shame and realize that you have done the best you could to regain your financial footing. While you are going through the bankruptcy process, your attorney should be able to advise you on effective ways to keep moving in a positive direction.

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Federal Reserve chair discusses student loan debt

On Behalf of O’Brien Law Firm, LLC

Posted on: March 8, 2018

Some people in Mississippi may be struggling to pay off their student loans, but these obligations are generally not dischargeable in a bankruptcy. The total amount of student loan debt in the United States has reached $1.4 trillion carried by 40 million people. In the 1970s, Congress began reducing the ability of borrowers to discharge student loan debt. It is only allowable in cases of “undue hardship”. What this is has never been defined, but courts have traditionally set very stringent guidelines.

On March 1, Federal Reserve chairman Jerome Powell spoke before the Senate Committee on Banking, Housing, and Urban Affairs and said he could not explain why student loans were not dischargeable. However, he said that it was not a change he could make in his position although Congress could address it.

Sen. Brian Schatz asked Powell about the effect the student loan debt could have on the economy. Powell said that on an individual level, it hurt people’s credit ratings and their economic lives over the long term. As for the economy as a whole, he said the amount of debt could hinder growth. Powell is not the first financial expert to express concern about student loan debt. For example, the president of the Federal Reserve Bank of New York has talked about its effect on economic mobility.

While a person may currently be unable to discharge student loans in bankruptcy, restructuring debts under a Chapter 13 bankruptcy might free up enough cash to stay on top of payments. People who are struggling with debt might want to talk to an attorney about how this type of bankruptcy could work for them. Filing for bankruptcy automatically stops any debt-related action against a person including foreclosure. Chapter 13 bankruptcy allows a person to keep some assets and pay off creditors over three or five years.

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3 options if you are struggling to pay your mortgage

On Behalf of O’Brien Law Firm, LLC

Posted on: March 6, 2018

Sometimes in life, financial hardship comes upon you unexpectedly. Even if you have always been diligent about paying your bills and debts, a sudden change in circumstances, such as a job loss or a major medical expense, can cause your finances to take a sharp downward turn.

The main monthly expense for many families is their home mortgage payment. Predictably, when finances take a turn for the worse, the mortgage payment is often the first bill to suffer the effects of lost wages or diminished income. If you are having trouble meeting your monthly mortgage payment, do not despair. There are options for you to restore your financial stability and remedy the situation. Here are three options to take into consideration as you examine how to proceed.

1. Loan modification

A loan modification can be the first step to try to avoid foreclosure by the bank. It is worth it for you to attempt to speak to your bank about the possibility of a loan modification before you face more drastic measures. A loan modification can make your loan payments more affordable while you make efforts to get your financial situation back on track.

2. Short sale

If the situation has progressed to a more critical stage, you may wish to consider a short sale. In a short sale situation, the mortgage lender agrees to allow you to sell your home for less than what you owe on the mortgage. In this scenario, the lender still gets partial payment on the mortgage rather than having to take the full hit of a foreclosure and sale at auction.

3. Bankruptcy

Bankruptcy is often the homeowner’s last resort if he or she can no longer pay the mortgage. Although there can be a stigma attached to bankruptcy, in certain cases, it can be the best option for you and help you get a fresh financial start. There are two different types of bankruptcy for individuals: Chapter 7 and Chapter 13. If you are in a situation in which you think bankruptcy may be your only option, you should contact a qualified bankruptcy attorney to help you evaluate your case and plan the way forward.

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Vehicle ownership and Chapter 13 bankruptcy

On Behalf of O’Brien Law Firm, LLC

Posted on: February 28, 2018

If they have a steady stream of income, debtors in Mississippi may use a Chapter 13 bankruptcy to pay off their substantial debts. They will have three to five years to use their disposable income to resolve their debts. If individuals currently have a vehicle or would like to purchase one during any stage of the bankruptcy process, this still can be achieved. However, there are some factors that have to be considered.

Chapter 13 bankruptcy filers who possess a vehicle before they file a petition may keep their vehicle except in certain cases. If the payments for the vehicle are extremely costly, the court may prevent the debtor from including the payment when calculating their disposable income. The expensive payment may be considered unreasonable as filers are only permitted to retain living expenses that are necessary and sensible.

Debtors who have an upside down auto loan and purchased their vehicle at least 910 days before submitting a bankruptcy petition may opt to cramdown the loan for the bankruptcy process. This allows the loan to be reduced to the amount of the vehicle’s cash value. The excess amount is included with the unsecured debts.

For debtors who are not current with their vehicle payments, filing for Chapter 13 bankruptcy stays most collections, including repossession of the vehicle. The payments in arrears may be included in the bankruptcy plan, and if the debtors make the remaining payments, they may be able to retain ownership of the vehicle.

Individuals who have substantial debt may consult a bankruptcy attorney about their legal options. A lawyer may advise individuals how a Chapter 13 bankruptcy may apply in their case if they have a regular income. People may be advised of how a bankruptcy may help them have a fresh financial start by reducing interest and stopping creditor harassment.

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Most bankruptcy filings come from individuals

On Behalf of O’Brien Law Firm, LLC

Posted on: February 20, 2018

Federal bankruptcy laws provide people in Mississippi with a possible path to a fresh start when they experience financial hardships. Data from 2015 collected by Debt.org revealed that 97 percent of the 844,495 bankruptcy filings from that year arose from individuals seeking protection from creditors.

The two most common forms of consumer bankruptcy are Chapter 7 and Chapter 13. The flier’s incomes and debts determine which form applies. For those who qualify within the terms of Chapter 7, they could achieve a court judgment that discharges some or all of their unsecured debts. The law exempts certain assets, like a primary residence or retirement account, from liquidation during this process. Nonexempt property, however, must be sold to pay creditors.

Under Chapter 13, a person develops a payment plan of three or five years. This form of bankruptcy generally applies to people who have a regular and reliable source of income. They also have the chance to protect more assets under Chapter 13 if they can meet the obligations of a court-approved payment plan. Upon the successful completion, many remaining unsecured debt balances will be discharged. Another option is Chapter 11, but this is for people who have debts higher than the amounts allowed under Chapter 13.

Problems like a medical crisis or job loss can lead to severe financial challenges, and people who find themselves in this type of a situation often do not know where to turn. They might find it advisable to meet with an attorney who can describe the bankruptcy process in more detail.

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I can’t pay my taxes. What should I do?

On Behalf of O’Brien Law Firm, LLC

Posted on: February 16, 2018

You tried to be responsible. You gathered all of your financial documents, and you filed your tax return before the deadline. However, when you finished, you discovered you’re on the hook for a lot more money than expected—more than you have in the bank.

What do you do? Do you have to take out a loan to pay off your taxes? Or ask your family and friends for help?

Fortunately, the IRS offers some options to help you out—but only if you’ve already filed your required tax returns. If you’ve missed the filing deadline, then the below options are unavailable to you, and you should contact an attorney experienced in IRS debt to help you come up with a solution.

If you owe $10,000 or less:

You can apply for a Guaranteed Installment Agreement. This is an agreement under which the IRS allows you to pay off your tax liability in monthly installments over a three-year period. To qualify for this agreement, you must have a clean tax record over the past five years—i.e., you’ve filed your tax returns each year, you’ve paid any taxes you owe and you haven’t entered into another tax installment agreement.

If you owe up to $50,000:

Even if your tax liability is under $10,000 but you need more than three years to pay it off, a Streamlined Installment Agreement could be a good option for you. Under this agreement, you can pay off your liability in monthly installments over a six-year period. Note that for tax liability above $25,000, tax payers must submit payment via payroll deduction or direct deposit.

Regardless of your tax debt situation, talking to attorney with in-depth knowledge in this field can be an extremely valuable first step to resolution.

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What U.S. cities have the highest credit card debt?

On Behalf of O’Brien Law Firm, LLC

Posted on: February 14, 2018

If Mississippi residents are like most Americans, they have some sort of credit card debt. In fact, data from the Federal Reserve shows that U.S. credit card debt exceeded $1 trillion in 2017, which is the highest in history.

recent study by CreditCards.com analyzed financial data from America’s 25 most populous metropolitan areas. It then ranked each city by the amount of credit card debt its population carried and its debt burden in relation to its median income. The study found that the top five cities with the highest average debt are Washington, D.C., Dallas-Fort Worth, New York, Houston and San Antonio, which have debt averages ranging from $7,442 to $7,070 per person. The next five cities on the list are Baltimore, Atlanta, San Diego, Seattle-Tacoma and Denver, which have debt averages ranging from $6,985 to $6,720 per person.

To determine each city’s debt burden, the study calculated how long it would take a person to pay off the city’s average credit card debt while earning the city’s median income. The study found that the cities with the heaviest debt burdens are San Antonio, Miami-Ft. Lauderdale-West Palm Beach, Houston, Los Angeles and Dallas. The cities with the lowest debt burdens are Seattle, Washington, D.C., Boston, Minneapolis and San Francisco. It would take someone living in San Antonio, the city with the highest debt burden, 22 months to pay off their debt. Meanwhile, someone from San Francisco, the city with the lowest debt burden, could pay off their debt in just 13 months.

Some people have difficulty paying off their credit card debt. When this happens, bankruptcy may be the best option. Individuals facing financial challenges might benefit by discussing their situation with a bankruptcy attorney.

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New report provides update on bankruptcy filings in Mississippi

On Behalf of O’Brien Law Firm, LLC

Posted on: February 9, 2018

The United States Courts recently released an update on the rate of bankruptcy filings in the United States. The report focuses on a 12-month period, spanning from January 1 of 2017 to December 31 of 2017. Bankruptcy filings for the calendar year were down by 0.7 percent.

Although the rate of filings decreased, the report notes that this was the smallest decrease since 2010. The report also states that the overall number of filings was the lowest since 2006.

Importance of bankruptcy data

It is important to point out that many people still seek financial relief through bankruptcy. In 2017 there were 765,863 individual petitions for bankruptcy relief filed with the court.

The national trend did not hold true for every state in the country. There were a reported 12,398 filings in Mississippi in 2017 and 12,246 in 2016. This translates to an increase in bankruptcy filings in the state of 152.

Chapter 7 most frequent form of relief

The vast majority of these filings involved a petition for relief under Chapter 7. 486,347 filings under this chapter were reported.

Chapter 7 is a popular option due to the fact that a successful petition can result in the discharge of qualifying debts. Examples of financial obligations that often qualify for discharge include medical bills and credit card balances.

Putting together a successful petition can be a difficult task. The applicant must include various information, including financial records and a complete application. The applicant must also pass the means test.

Data can help ease the way for others in Mississippi struggling with debt

This data shows that if you are struggling to manage debt in Mississippi, you are not alone. An attorney experienced in these matters can help you overcome the hurdles that may make it difficult to move forward with a petition for relief through bankruptcy. Contact a lawyer experienced in debt relief solutions for Mississippi clients to discuss your options.

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Bankruptcy opinions may change the law

On Behalf of O’Brien Law Firm, LLC

Posted on: February 8, 2018

Mississippi homeowners who are struggling to pay their mortgages might be interested in learning about a couple of bankruptcy court rulings in Ohio. When people file for Chapter 13 bankruptcy, they may be able to cram down second mortgages on their homes. The rulings also found that first mortgages may sometimes be crammed down as well.

A cramdown in Chapter 13 bankruptcy means that a second mortgage may sometimes be transformed into unsecured debt, meaning that the lien against the home will be destroyed. The homeowners are then able to concentrate on catching up their first mortgages during their court-approved repayment plans, which can help them to save their homes from foreclosure. At the end of the repayment period, the remaining unsecured debt balances are discharged, including the second mortgages on the home.

A cramdown only happens when a debtor is upside-down on his or her home to the extent that no part of the second mortgage is secured by the house. In two cases in Ohio, the bankruptcy courts also found that first mortgages could be crammed down or transformed into unsecured debt when the debtors owe more on their homes than they are worth. In the case of first mortgages, the cramdown is only on the amount that is owed above the fair market value of the home. A third ruling in Ohio found the opposite, however.

The Ohio opinions allowing first mortgages to be crammed down in bankruptcy could potentially change bankruptcy law everywhere. People who are unable to make their mortgage payments might benefit by talking to experienced bankruptcy lawyers to learn whether or not Chapter 13 bankruptcy might be an option for them. Chapter 13 bankruptcy might help people to stop foreclosure and other types of collection actions so that they can get back on their feet.

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Abusive debt collector practices are unlawful

On Behalf of O’Brien Law Firm, LLC

Posted on: February 7, 2018

You may think that it is unavoidable to deal with debt collectors after you are deeply in debt. While it may be helpful to speak with collectors to see if you can work out a reasonable payment arrangement, some collection practices are considered abusive and are against the law. You and others might be interested in learning the differences between permissible and unlawful methods to collect a debt.

The U.S. Federal Trade Commission prohibits debt collection practices that are deceptive, unfair or abusive. The Fair Debt Collection Practices Act protects you from such collection methods as the following:

  • Foul or abusive language on the phone by collectors
  • Repeated, harassing phone calls or calls at inconvenient times of the day and night
  • Phones calls at your workplace, if you specify the collector cannot contact you at work
  • Threats of jail time or fines
  • False statements of being an attorney, government representative or member of law enforcement
  • Intimidation or threats of physical harm

There are less abusive, but no less unlawful, methods a debt collector might use, which often trick unsuspecting debtors. For example, a collection agency might send you documents that intentionally resemble legal or government papers. A collector may ask you to sign paperwork that he or she deceptively assures you is not a legal document, or the other way around. A debt collection agency may contact other members of your family only once to obtain your contact information, but you should know that the law forbids collectors from talking about your debt to anyone else but you or your attorney.

Debt collection practices may be confusing. If you are in doubt as to whether a collector is using unlawful tactics to collect from you, or are wondering what steps can be taken to stop creditor and debt collector harassment, it may be in your best interests to contact an attorney.

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The 3 most common reasons people go through bankruptcy.

On Behalf of O’Brien Law Firm, LLC

Posted on: February 2, 2018

Bankruptcy no longer has the social stigma it once did. However, those who are considering bankruptcy may take comfort in knowing what has caused others to seek financial relief through this legal process. Although reasons for financial struggles vary from family to family, three of the most common causes of bankruptcy that are often cited by those petitioning for relief from the court include:

  • Medical debt. Whether you have health insurance or not, a medical emergency can quickly lead to insurmountable debt. Even those with insurance can find high deductibles unmanageable. As a result, medical debt is the most common cause for bankruptcy.
  • Unemployment. It is simply impossible to make ends meet without an income. Job opportunities can be scarce, and many families continue to struggle to find adequate employment.
  • Divorce. The end of a marriage is also the end of a financial partnership. In many cases, the income relied upon by the family has not changed, but the financial needs often double as the family shifts from one household to two.

recent publication in the Chicago Tribune notes that these three factors contribute to almost 90 percent of all bankruptcy petitions within the United States.

Is bankruptcy right for me? The decision to go into bankruptcy is not an easy one. Those who are struggling financially are wise to take three different questions into account when attempting to determine if bankruptcy is right for their family. First, how much of an income or savings is at your disposal? Second, how much do you owe? Third, how much do you own in assets (home, car, business interests)?

Gather this information together and seek legal counsel. An attorney experienced in bankruptcy matters will be able to answer your questions. Questions like what can you keep in bankruptcy and how will life look after the bankruptcy process is complete.

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What is an “automatic stay” in bankruptcy?

On Behalf of O’Brien Law Firm, LLC

Posted on: February 1, 2018

Bankruptcy is a legal process that can help those who are struggling financially find a fresh financial start. Those who have considered this process have likely stumbled on a number of legal terms, including “automatic stay.” This term refers to a court order that is granted after an applicant is approved for bankruptcy.

What happens when an automatic stay is issued? This court order requires creditors to stop contacting you. In addition to ceasing contact, these creditors cannot file a lawsuit in an attempt to gain payment or enter a lien against your property.

The automatic stay can also stop a landlord from evicting a tenant that is going through bankruptcy if the eviction is in connection to a demand for rental payment. The court order can also stop garnishment. Garnishment is a process that allows a creditor to remove money directly from your paycheck. When you get the paycheck from your employer, the creditor would already have taken a portion of payment from the check. When an automatic stay goes into effect, the garnishment should stop.

This order also extends to include utilities. A person that is going through bankruptcy is often protected from utility disconnection.

Does the applicant need to do anything to make the automatic stay go into effect? Essentially, no. The applicant just needs to put together a successful application for relief through bankruptcy. If granted, the automatic stay goes into effect automatically (hence the name).

This is just one of the many legal terms to understand before determining if bankruptcy is the right option for you. An experienced attorney can discuss this and other terms and help you decide the best way to get back on your feet.

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Borrowing from a 401(k) account to pay off debt

On Behalf of O’Brien Law Firm, LLC

Posted on: January 31, 2018

Households around the country owe an average of $15,654 to credit card companies. Paying down this debt while saving for retirement can be a challenge for Mississippi individuals and families who are struggling to make ends meet, and borrowing from 401(k) retirement accounts to reduce revolving balances may seem like a good idea. Credit card interest rates are generally far higher than those imposed by retirement plans, but there are a number of important factors to consider before taking out a 401(k) loan.

Borrowing from money earmarked for retirement may not be a wise decision if it does not address the fundamental problem. When credit card balances are high due to excessive spending, paying the debt off with 401(k) funds will merely provide a temporary respite if spending habits do not change. However, this kind of borrowing may be prudent when revolving debt balances were caused by events, such as medical emergencies, that are unlikely to be repeated.

A 401(k) loan may not be a good idea for individuals who may change jobs in the near future. Employers usually expect workers who leave to repay these loans within 90 days, and failing to do this could lead to a tax bill and penalty fees. Those mulling this option should also consider the impact that borrowing from a 401(k) account will have on their retirement plans. This is especially important for individuals with 401(k) plans that do not allow new contributions to be made until outstanding loans are repaid in full.

Attorneys with debt relief experience may suggest filing for Chapter 13 bankruptcy to those with unmanageable financial situations who wish to safeguard their retirement savings. Funds in 401(k) plans have protection under bankruptcy law, and individuals who take this option may be able to enjoy the benefits of a fresh financial start without jeopardizing their future.

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Bankruptcy and your credit score

On Behalf of O’Brien Law Firm, LLC

Posted on: January 26, 2018

Bankruptcy is touted as a fresh financial start, but those who have done some research likely know it will have a negative impact on one’s credit score. Although this is true, there are many reasons bankruptcy may still be the best option. Three common examples to take into consideration before ruling out bankruptcy include:

  • Unmanageable debt. Failing to pay off debt will continue to chip away at one’s credit score. Depending on the type of debt, a successful bankruptcy petition can resolve this problem. Bankruptcy can lead to the discharge of debt, meaning the applicant is no longer liable for the debt. This can essentially wipe the debt off your record.
  • Alternative methods are not an option. In some cases, consumer credit counseling services can offer an alternative to bankruptcy. Others may consider paying off debts with installments. If alternatives like those noted above are not an option, bankruptcy may be the best bet.
  • Credit score is fluid. The credit score for each individual is always changing. It is not a static number. After the bankruptcy is complete, active steps are available that can help rebuild one’s credit score. Paying bills on time and using a credit card properly are two ways to take control of your financial future and start building that score.

Attempting to regain control of your finances is a frustrating process. A skilled lawyer with experience in alternatives to bankruptcy and the various forms of bankruptcy that are available can help guide you through this process and alleviate some of that frustration.

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Three lessons for individuals from the Toys “R” Us bankruptcy

On Behalf of O’Brien Law Firm, LLC

Posted on: January 25, 2018

Toys “R” Us declared bankruptcy in September with a plan. The store was not going to give up. Instead, the story put together this plan to structure itself to reenter the marketplace successfully. Toys “R” Us is not giving up – it just went back to the drawing board to adjust its business model.

It may seem ironic that a business that thrives on keeping consumers in touch with their youth would provide valuable lessons in adulthood. Yet the store’s perseverance is applicable for anyone that is struggling financially. Lessons for those who are also struggling include:

  • Mistakes happen. Financial mistakes happen. In the event these mistakes lead to difficulties making ends meet take comfort in the fact that you are not alone. The decision to consider bankruptcy is not a reflection on one’s personal situation, it is more akin to a business decision.
  • There is more than one type of bankruptcy. There are different types of bankruptcy. Toys “R” Us is using Chapter 13, a version also available for individuals. This type of bankruptcy basically allows you to set up a more realistic plan to repay debts.
  • Bankruptcy can offer a fresh start. Arguable, problems began when this toy selling giant in the retail world failed to transition into a market that now thrives online. The time it is taking to restructure its business plan allows for innovation and brain storming. The team behind the store can emerge from the bankruptcy stronger than ever. This is true for personal bankruptcy as well. Taking the time to develop a repayment plan and proactively get finances under control can set up for a fresh financial future.

Each form of bankruptcy has application requirements. In order to qualify, certain criteria must be met. An attorney experienced in these matters can review your situation and provide guidance on the best form of bankruptcy relief for you.

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Benefits and drawbacks of mortgage modifications

On Behalf of O’Brien Law Firm, LLC

Posted on: January 24, 2018

If you file for Chapter 13 bankruptcy, you may start receiving unsolicited mortgage modification offers from your lending company, which present you with a potential offer aimed at making your home more affordable. Modifying your mortgage differs from refinancing in that refinancing completely eliminates your original loan, replacing it with a new one, whereas a modification refers to a change in your existing loan.

Just how might the terms of your loan change should you decide to move forward with a mortgage modification?

Potential changes to loan terms

The main point of a mortgage modification is to lower your payments until they become more manageable. This might include lowering your interest rate, switching from an adjustable rate to a fixed rate, or extending the length of the loan to give you more time to pay. It may, too, give you more options in terms of deferring or forgiving some of your principal balance or adding an additional amount on the back end of your loan.

Advantages and disadvantages

When it comes to mortgage loan modifications, there are benefits and drawbacks. In terms of benefits, you may find that you can modify your loan faster than you can refinance it. Furthermore, your interest late on a mortgage modification will typically remain low for about five years, and even after that, it typically will not climb higher than your contract rate, or the standard rate reserved for well-qualified buyers.

In terms of drawbacks, mortgage modifications leave you with a new, 40-year amortization schedule. If you are already in middle age, this could mean taking on a new debt for the remainder of your life.

Ultimately, whether a mortgage modification is a good idea for you depends on the unique circumstances of your situation and finances. If you are experiencing considerable financial stress that stems in large part from your mortgage responsibility, a mortgage modification may help you manage your finances and avoid Chapter 13 bankruptcy.

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How does discharge work in a Chapter 7 bankruptcy case?

On Behalf of O’Brien Law Firm, LLC

Posted on: January 19, 2018

If you are considering filing for personal bankruptcy you have likely looked into a Chapter 7 bankruptcy. A Chapter 7 petition for relief through bankruptcy takes many steps, including discharge.

What is discharge? Discharge is defined by the United States Courts as the process that “releases individual debtors from personal liability for most debts and prevents the creditors owed those debts from taking any collection actions against the debtor.”

Essentially, this means the debt is forgiven.

Can any type of debt get discharged? Note the above definition states “most debts.” There are certain types of debt that do not qualify for discharge through bankruptcy. It is important to carefully consider the role dischargeability will play in your bankruptcy petition before moving forward.

Examples of debt that generally do not qualify for relief include child support, alimony, tax debts and student loans. The failure to allow for discharge of student loan debt is a contentious issue. In some cases, an individual can overcome this general rule. Discharge of student loans may be available if the applicant can establish the loan results in an “undue hardship.”

In order to establish undue hardship, the applicant must meet a three part test. The test includes a review of the applicant’s income, duration of the repayment period and whether or not the individual has made a good-faith effort to repay the loans.

There are also some cases where a creditor may file a complaint objecting to the discharge. These cases are not often successful. Examples of success are present when the creditor can establish that the person seeking relief through bankruptcy has kept fraudulent records or committed perjury during the bankruptcy process.

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What is Chapter 7 bankruptcy?

On Behalf of O’Brien Law Firm, LLC

Posted on: January 17, 2018

The term bankruptcy is likely a familiar one, but did you know that there are many different types of bankruptcy? One of the more common types used for individuals is Chapter 7. The following provides more information on this type of bankruptcy:

  • Defined. Chapter 7 bankruptcy involves the discharge of qualifying debt. Examples can include credit card debt and medical debt. Once discharged, the individual that is granted relief through a successful petition for bankruptcy is no longer liable for the discharged debt.
  • Process. The process begins with an application or petition for relief. If granted, an automatic stay will go into effect. This is a court order that means creditors can no longer demand payment. A trustee will be assigned to the case to review the assets and liabilities and administer the case.
  • Aftermath. It is important to take proactive steps after a bankruptcy is complete to begin rebuilding your credit. It is important to pay all bills on time. It can also help to get a credit card. Establishing that you can manage a credit card and make payments on the due date will help to build your credit score.

Putting together a petition for relief requires completion of an application as well as submission of various schedules and paperwork. A failure to properly complete this petition can result in a denial of relief. As such, it is wise to seek legal counsel. An attorney experienced in handling Chapter 7 bankruptcy cases can provide assistance throughout the application process and help better ensure you receive the relief you need.

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Understanding the bankruptcy means test

On Behalf of O’Brien Law Firm, LLC

Posted on: December 6, 2017

If you are giving some thought to filing for bankruptcy, you may be wondering about the bankruptcy means test, and what it means and entails. Essentially, the bankruptcy means test determines whether you will be able to move forward with a Chapter 7 bankruptcy, if preferable, or if your only option is to file for Chapter 13 bankruptcy.

There are benefits and drawbacks associated with both types of bankruptcy filings, but determining which bankruptcy process to follow is an important first step in regaining control over your finances.

What the bankruptcy means test involves

If you undergo a bankruptcy means test, the first step involves determining whether your household income over the last six months falls below the median income in place in Mississippi. If you have lost or taken on a new job within the last six months, you can expect that the income changes will factor in when determining whether you can proceed with a Chapter 7 bankruptcy. If your income falls below the median threshold in place in Mississippi, you automatically pass the test and can move on with your Chapter 7 filing.

If you do not pass the means test during the first step, the second step involves gathering documentation regarding all expenses you had in the last six months. Once you take into account expenditures for food, rent, medical bills and so on, any money left over is disposable income that you should reasonably be able to put toward your debt. If your amount of disposable income is below a particular level, you may still be able to proceed with a Chapter 7 bankruptcy.

If you really want to file for Chapter 7 bankruptcy but you do not pass the means test, you may wait six months and then try again. If you cannot wait another six months to file, your best bet may be to proceed with a Chapter 13 bankruptcy.

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A Chapter 13 may be preferable to Chapter 7

On Behalf of O’Brien Law Firm, LLC

Posted on: December 4, 2017

Filing for bankruptcy in Mississippi is typically a difficult decision with plenty of forethought. However, filing bankruptcy can also be a financial silver lining to much of the stress and gloom that may have permeated the filing person’s life.

As explained by the Mississippi Bar, two main options Mississippi residents have when deciding to file for bankruptcy are the Chapter 7 and the Chapter 13 bankruptcy filing. The former is when the person agrees to liquidate assets to help pay the debts while the latter involves a payment plan to pay off the debts, usually at a lower amount.

Chapter 13 benefits

One benefit of a Chapter 13 that is not available under Chapter 7 is that if the filing debtor had a cosigner on any of the debt, that cosigner may be able to receive protection under the Chapter 13 filing. In addition, gaining credit back may be easier in some instances because the creditor who sees the Chapter 13 filing on the debtor’s credit report will understand that the debtor paid more of the debt back than if there was a Chapter 7 filing.

Chapter 13 eligibility factors

To be eligible for a Chapter 13 bankruptcy discharge, the filing person must have less than a quarter of a million dollars in unsecured debt. Unsecured debt includes that derived from credit card use and medical bills.

There must also be less than three-quarters of a million owed on the secured debt. Secured debt includes such loans as a home mortgage and an auto loan.

The filing debtor must have a reasonably steady income that indicates he or she can likely pay at least part of the debts in a three-to-five-year period. If the debtor has no income, he or she will likely not be able to successfully file for a Chapter 13.

Payment plan

Essentially, the filing person will propose a payment plan that uses his or her disposable income each month to pay creditors. As noted, the duration of the payment plan is typically between three and five years. Disposable income includes that which remains after the debtor satisfies basic living requirements, such as food, housing and other necessary bills.

On the down side, Chapter 13 has a higher failure rate because sometimes the debtor finds he or she is unable to fulfill the payment plan.

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Is it hard to modify your mortgage?

On Behalf of O’Brien Law Firm, LLC

Posted on: October 30, 2017

All types of debt could be weighing you down: credit card bills, medical payments, student loans and mortgage payments, to name a few. To avoid bankruptcy or to keep your house during bankruptcy, one option you might want to consider exploring is mortgage modifications. Are they relatively easy to get, or is being granted one a rarity?

The good news is that many people easily get a mortgage modification, but as with anything, such a move can come with downsides.

Pros and cons of a mortgage modification

The disadvantages of a mortgage modification include your mortgage possibly being reset for a 40-year period, meaning that if you had, say, 18 years’ worth of payments left, you may turn out to have 40 years’ worth at the end. Your credit score might also take a hit, although not as bad as a foreclosure mark.

The advantages include a lower monthly payment, especially for the first few years, and such a modification can help get you through a distressing time in your life. You can file for bankruptcy, and through this reorganized debt plan be able to stay in your house.

Ease of getting one

Now to the heart of the matter: Who can most easily get a modification? Generally, those who qualify show financial hardship yet demonstrate sufficient income to make the new payments. Hardship examples could be illness, death of a spouse or job loss. Applicants must be behind on their payments or about to become behind. If you are seeking a modification in bankruptcy, the fact that many of your debts are being eliminated or reorganized should show you have some increased capacity to make payments.

Some lenders have their own departments and programs for loan modification, so you can check online on your lender’s website or contact it to find out. Otherwise, there are programs such as Freddie Mac Flex Modification that may be able to help. Also, if you have no hardship to show to your lenders, they may offer you a refinance since you might not qualify for a modification.

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Is bankruptcy always a good idea when you are in a lot of debt?

On Behalf of O’Brien Law Firm, LLC

Posted on: October 4, 2017

For many people struggling under the weight of tremendous debt, bankruptcy makes good sense. For example, Chapter 7 can wipe out unsecured debts such as credit cards and medical bills. Chapter 13 reorganizes debt so it is more manageable to pay. However, there are some cases in which bankruptcy may not make sense, such as:

If all or most of the debt is not dischargeable

Not every type of debt is treated equally in bankruptcy. For one thing, it is possible for credit card bills to be wiped out, but most student loans and tax obligations must remain. So, if all your debt is due to IRS and student loan payments, bankruptcy may not make sense. Of course, it is possible you may be able to meet student loan undue hardship standards, so it never hurts to meet with a lawyer. There are also some exceptions to the IRS rule.

Other debts that remain in bankruptcy include child and spousal support payments and court-ordered payments from a criminal case.

When much of the debt is dischargeable

The good news is that many types of debt are dischargeable in a Mississippi bankruptcy, and you are able to keep assets such as retirement accounts. Your disability income and personal injury proceeds (up to $10,000 for the latter) are also protected. You are allowed to keep $10,000 worth of personal property, and for many people, that means being able to retain a car and all their savings. Equity in your house is protected, too, up to $75,000.

So, with a single bankruptcy filing, you can either wipe out or consolidate crippling credit card bills and medical bills. In such cases, bankruptcy can make a lot of sense.

Alternatives

If it does not make sense to file, or if you have some dischargeable debt mixed with non-dischargeable debts, it helps to be aware of bankruptcy alternatives. They include credit counseling and other types of debt consolidation.

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Medical bills often lead to bankruptcy

On Behalf of O’Brien Law Firm, LLC

Posted on: September 11, 2017

The health care costs and insurance issue in the United States impacts not only the health of Mississippi residents, but often their financial stability. Medical debt is a top cause of personal bankruptcy filings.

Long gone may be the days when filing for bankruptcy was shameful or a sign of a financially irresponsible person or couple. An expensive medical situation a responsible person handles in the best possible way can land him or her in huge medical debt.

Medical debt is the leading cause of bankruptcy

As reported by USA Today, the Kaiser Family Foundation reports that the leading cause of personal bankruptcies is unpaid medical bills that turn into large debts. In 2014, about four out of 10 Americans incurred debt from a medical problem.

One might expect that this would primarily be a problem for the uninsured. However, Kaiser notes that of the 25 percent of Americans who have difficulty paying medical bills, among them are those who buy health insurance independently and those who receive group health insurance through their jobs.

Many try to solve the problem by using savings or retirement to pay debt, or by getting an additional part-time job. With today’s high-deductible medical insurance policies and those with high co-pays and coinsurance, CNBC confirms that having health insurance is not insurance against huge medical debt.

Medical debt leads to other debt and skimping on necessities

In fact, medical debt often causes substantial credit card debt. Millions of people use credit cards to cover growing medical bills and buy themselves time. The high credit card interest then causes the credit card debt to grow, and often it becomes insurmountable.

Thus, a bankruptcy that includes a lot of credit card debt may, in reality, be a medical debt bankruptcy. It may also be ironic that many people skimp on prescriptions or even more expensive healthier food to attempt to pay at least something towards their medical debt.

 

Personal bankruptcy can be the most effective and legal method to get that fresh start without crushing medical debt. It creates a beginning point to gain back one’s control and choices in life.

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Chapter 7 bankruptcy may be simpler than you thought

On Behalf of O’Brien Law Firm, LLC

Posted on: September 11, 2017

When Mississippi residents feel the burdensome strain of large debt and monthly payments relative to their financial wherewithal, the thought of bankruptcy may cross their minds. Some, in fact, get the fleeting thought and then dismiss it immediately.

The fear of having to liquidate their assets is too much to bear. However, it need not be worrisome at all for many.

Mississippi exempt assets not subject to liquidation

As stated by the Mississippi Bar Association, there are many assets that are exempt from liquidation. Such assets include $10,000 worth of personal property, such as a car or household items. Insurance payments on exempt property are also exempt. If a person is receiving disability insurance benefits, these too may be exempt, as may be pension or retirement benefits.

The home may be exempt up to $75,000 in equity beyond the mortgage balance. However, although one can keep the house, the debtor will need to keep paying that mortgage. The filing debtor of a Chapter 7 bankruptcy can also keep his or her car so long as he or she makes those car payments timely. Personal injury awards are also exempt up to $10,000, as may be workers’ compensation awards.

Personal property exemption

The $10,000 exemption in personal property does not mean determining how much it would cost to replace the item. It is not the cost of buying a new item. Rather, the figure used is the fair market value of the used item. What dollar amount can that used item bring in if sold? When using that latter definition, $10,000 may cover a lot of personal property. Also, when figuring out the car value, it is the value of the car minus the balance of the car loan to determine the equity counted towards that $10,000 limit. If the car market value is $15,000, and the owner owes $10,000 on the loan, the countable equity is only $5,000. Of the $10,000 exempt limit, saving the car would still leave $5,000 of other personal property.

In fact, many people eligible for Chapter 7 do not have any non-exempt assets. Many may already have sold valuable property to make ends meet prior to considering bankruptcy. Others just never got far enough ahead financially to gain exempt assets. This reality may make filing for Chapter 7 a relatively simple matter. It can lead to a future of financial relief and ability to live without the constant feeling of treading water.

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The benefits of filing for bankruptcy

On Behalf of O’Brien Law Firm, LLC

Posted on: August 7, 2017

As you consider your options for getting out of debt, you may be hesitant to choose the route of bankruptcy for various reasons. Perhaps you fear losing meaningful assets or ruining your credit. Maybe you are unsure if such an approach is even moral.

The truth is that bankruptcy comes with numerous benefits that may help ease your worries on the matter. Talk to a bankruptcy lawyer to determine if it is the right fit for your financial circumstances so you can experience these positive effects.

Asset protection

Regardless of the type of bankruptcy you claim, you will not lose all your assets. Each bankruptcy chapter comes with its own list of protected property and income, and state laws allow for additional exemptions. Which assets you want to safeguard may affect how you file.

Immediate relief from creditors

As soon as you file for bankruptcy, the court issues a stay to all your creditors, which puts an immediate end to:

  • Harassment
  • Lawsuits
  • Foreclosure
  • Repossession
  • Wage garnishment

The stay is temporary, except for harassment, but your attorney can help you decide what steps to take so you can retain your property and limit interaction with creditors.

A fresh start

While it is true that bankruptcy hurts your credit, the harm is only temporary and is less consequential than remaining in your current situation. You can rebuild your credit within years to better than before and even qualify for loans and credit cards in a short time. These are likely to have high interest rates, however, so you need to manage your money wisely to avoid getting into trouble again.

Peace of mind

With all your focus on numbers and legal issues, you may have put aside your emotional well-being. However, having a solid plan for eliminating debt alleviates stress from chaos and confusion. Once you file, you will have peace from taking action and knowing you are on track to financial freedom.

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3 strategies for preventing foreclosure and getting out of debt

On Behalf of O’Brien Law Firm, LLC

Posted on: July 20, 2017

Are you missing payments on your home and also have credit card debt? If you are dealing with this level of financial turmoil, you are probably feeling scared and confused. You might feel like there is no way out of this situation. Thankfully, there are several options you have to save your home and help you manage your debt.

When foreclosure is near and credit card debt keeps racking up, you can start by modifying your loan or filing for bankruptcy. Here is how each option works.

1. Loan modification

If you are lucky, you might be eligible to restructure your mortgage loan. This would bring your account current and establish a more affordable payment. In certain cases, this is the best option rather than filing for bankruptcy or accepting foreclosure. Your lender may be wary of approving a loan modification, so you likely want a legal representative to help.

2. File for Chapter 13 bankruptcy

This type of bankruptcy reorganizes your debt and will bring your mortgage loan current over the next few years. You pay a portion of your debt over this period through an affordable repayment plan. Your lender will not be able to reject these payments when you file for Chapter 13 bankruptcy, and you will keep your home as long as you make your repayments.

3. File for Chapter 7 bankruptcy

If you do not have enough income for a repayment plan, you might go for Chapter 7 bankruptcy instead. Chapter 7 bankruptcy will allow you to wipe out your credit card debt. Once your credit card debt is eliminated, you can try reapplying for a loan modification. Your lender might be more lenient with modifications once your credit card debt is gone.

Both types of bankruptcy and applying for a loan modification are viable options to save your home. The exact strategy you choose will largely depend on your income and assets.

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Mortgage modification offers after Chapter 13

On Behalf of O’Brien Law Firm, LLC

Posted on: June 13, 2017

Many people consider bankruptcy because of bills and financial responsibilities that exceed their savings and income. According to the National Association of Realtors, the average monthly amount for mortgages is $1,061, and this can become burdensome. If you have filed for Chapter 13 bankruptcy, though, you may receive an offer from your lender for a modification. These agreements have pros and cons, and there are a few things you should know.

Take advantage of a low interest rate

Because your lender does not want your loan to go into foreclosure, they will likely offer a modification with a low interest rate. After around five years, it may go back up, but it will not exceed the rate specified in your contract or the interest rate qualified buyers are eligible for. Having your interest rate reduced like this, though, can alleviate the burden of a hefty monthly mortgage payment to make.

Revisit filing for Chapter 13 bankruptcy

In such cases, the relief from a modification may make Chapter 13 unnecessary. For many people, though, bankruptcy is not due to any single financial issue — it is the solution to a series of debts and financial burdens. Still, it is worth considering how a modification might or might not impact your decision to file for Chapter 13.

Consider the effect of amortization

Another important factor to take into consideration is the responsibility to taking on the extended amortization that is often included in the modification agreement. This typically entails an additional 40-year agreement, and this may last the remainder of your life. Though a modification may temporarily relieve financial stress, it may also prolong it for years in the long run.

If you are considering Chapter 13 bankruptcy or a mortgage modification, you should be aware of all your options. Contact an attorney for more information and legal advice on handling excessive debts.

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What to know before getting a no-interest credit card

On Behalf of O’Brien Law Firm, LLC

Posted on: June 12, 2017

A no-interest credit card certainly sounds appealing, but if you have ever taken a credit card company up on such an offer, you may know that things do not always work out in your favor. No-interest credit cards allow you to make purchases without assessing interest on the amount accrued, but only for a specified amount of time.

Once the no-interest window has closed, you will have to pay interest according to your card’s standard annual percentage rate. This can prove problematic if you still have a considerable balance on your account at the end of that grace period. So, before you apply for that no-interest credit card or sign on the dotted line, consider the following.

The card’s APR

If you are considering applying for a no-interest credit card, do your research about its APR, and then check out how it compares to the APR of credit cards you are already using. If it is higher, going this route is probably not a good idea for you, unless you are absolutely certain you can pay the balance off in full before the no-interest period is over.

Additional fees

If the card you are considering is also a rewards card, you may have to pay an annual fee in addition to interest once the grace period ends. The amount of these fees tends to vary based on factors such as how valuable the rewards benefits are.

Spending habits

It also may prove wise to take a good, hard look at your spending habits. It can be all too easy to take advantage of an interest-free credit card. Before you know it, you have racked up considerable debt, and the no-interest period is nearing its end.

Credit card debts are one common cause behind filing for bankruptcy. If you have any doubt about your ability to pay off your credit card balance in full before the no-interest period ends, you may want to reconsider taking advantage of these offers.

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3 ways to get out of debt when it is too much

On Behalf of O’Brien Law Firm, LLC

Posted on: May 9, 2017

Millions of Americans file for bankruptcy every year because they find themselves in over their heads when it comes to debt. Some things that increase debt are out of your hands, such as overwhelming medical bills from an unexpected illness or injury, an unexpected job loss, or lack of the ability to make smart financial choices.

Debt is not limited to those who make poor choices when it comes to spending. Even those who totally prepare for the future may deal with a significant tragic event that changes the course of their lives. The following tips are ways to help you get out of debt when you find yourself in a place you cannot get out of.

1. Accept the problem and stay calm

You can stay in denial about your all-consuming debt or you can accept that you cannot do it on your own and seek help. The more you deny the problem, the worse it can get. It is easy to panic when you face the truth about your financial situation, but stay calm and rest assured that you have options.

2. Unsubscribe to emails about special deals

Online offers and discounts make it way too easy to spend without even thinking about it. If you cannot afford to buy something, remove the temptation from yourself. Stay off online websites and unsubscribe to emails that notify you about special sales.

3. Create a battle plan on three fronts

To combat your debt and determine how to deal with it, you should have a mental, emotional and financial plan. The mental and emotional stress of worrying about finances can take a serious toll on your health. Every step you take to get control of your spending and debt will lessen the load on your shoulders.

Your financial battle plan may include filing for bankruptcy if you just cannot see another way out. Bankruptcy can give you a fresh financial start when the future terrifies you. If you are tired of the worries you carry about debt, speak to an attorney right away.

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Should Uncle Bob be the executor of your estate?

On Behalf of O’Brien Law Firm, LLC

Posted on: March 14, 2017

If the time has come for you to consider naming an executor for your estate, the mere thought of it may be keeping you up at night. You hesitate to put such a burden on your spouse, and your only child lives on the opposite side of the country and is busy with a family of her own. That only leaves one other close family member, Uncle Bob – but is he the right choice?

The duties of an executor

The responsibilities an executor faces could be relatively easy or extremely complex, depending on the size of your estate. Basic duties include filing papers with the court to start the probate process, which determines the validity of your will; taking inventory of the contents of your estate; and using the funds to pay funeral costs, bills and taxes. Your executor will also notify the appropriate agencies and companies about your death, terminate your credit cards and take care of filing your income tax returns. The final responsibility would be to distribute assets to the beneficiaries you named in your will.

The qualities an executor should have

What may be keeping you up at night is that Uncle Bob has never been a particularly astute businessman. He is a researcher; he spends his time in a lab, after all. However, he is calm under pressure, he is admired by many for his common-sense approach to problems and he knows how to keep to a budget. You could do worse, but there is still something nagging at you about Uncle Bob.

Choosing an alternate

While you are considering who to name as your executor, you should also think about a successor, someone who can take over if your first choice is, for some reason, unable to serve. If you prefer, you can also ask the executor you appoint to name a successor; you can always approve or disapprove the choice.

The final decision

One of the qualities you want in your executor is someone who is conservative in terms of managing money. Your Uncle Bob fits this description, and in most respects, you feel he would be a good choice. However, the biggest problem with Uncle Bob as executor has finally occurred to you: This man is 12 years older than you are and may well pass away before you do, so you must cross him off your list. Now who should you choose? The best option may be to select a third party. Stay proactive. Lower your stress level and get good advice by reaching out to an attorney experienced with matters.

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Considering bankruptcy in Mississippi? Consider this.

On Behalf of O’Brien Law Firm, LLC

Posted on: December 6, 2016

If you are struggling to make ends meet, you are not alone. The Administrative Office of the United States Courts reports that there were over 11,000 filings for bankruptcy in Mississippi over a twelve month period ending September 30, 2016.

If considering bankruptcy, it may help to know some of the benefits of the process. Three examples include:

  • No more phone calls, letters or contact. If your petition for relief through bankruptcy is approved, contact from debt collection agencies ends. Any attempt to make contact with you is illegal and can result in legal action against
    the agency that is making the attempts.
  • Debt can be discharged.Depending on the type of relief sought, bankruptcy can also result in the discharge of debt. This essentially means the debt is forgiven and you are no longer responsible for the payments.
  • Credit scores can go up. It may seem to go against what you know about bankruptcy, but the process can actually help raise your credit score. Failing to make required payments can hurt your score. Although going through bankruptcy will likely have an initial negative impact, it allows you start over. You can take proactive steps after bankruptcy to rebuild your score and, ultimately, be better off than you were before you filed for relief.

These are just a few of the benefits that can come with an approved bankruptcy petition.

Navigating through the process and weighing the pros and cons can be an intimidating process. As a result, it is wise for those who are considering bankruptcy for debt relief to contact an experienced attorney. Your attorney will review your situation, provide advice to help you get your financial footing and advocate for your legal rights to help you get there.

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– C.H.
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