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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