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.
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.
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.
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.
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.