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.
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.
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.
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.
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.
