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Month: April 2018
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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