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.
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.
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.
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.
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.
