People in Mississippi who have fallen behind on their mortgage payments face the possibility of foreclosure. While some lenders are open to loan modifications or short sales to satisfy the debt, many are not. Many lenders will begin foreclosure proceedings, which can end with the lender taking possession of the house and selling it at auction. The proceeds of the auction are then used to pay down the mortgage as well as the legal costs associated with foreclosure.
Where the lender is not willing to work with the borrower and forecloses on the property, filing for bankruptcy can protect the borrower. Once a person files for Chapter 13 or Chapter 7 bankruptcy, the court issues an Order for Relief that includes an automatic stay of collections actions. Creditors are then not allowed to attempt debt collection efforts until bankruptcy proceedings are complete. There are exceptions to the automatic stay in cases where the lender has already filed the foreclosure notice and lenders can file motions to lift the automatic stay.
Individuals who file for Chapter 13 bankruptcy set up a repayment plan as part of the bankruptcy process. The plan distributes the filer’s income to creditors, and the filer must account for current and past-due mortgage payments. If the person meets the requirements of the bankruptcy court for the length of the plan, he or she will usually avoid foreclosure and keep the home.
People who are struggling to pay down debts in Mississippi might want to speak with a lawyer. A lawyer with experience practicing bankruptcy law might be able to help by examining the facts of the case and suggesting a Chapter 13 or Chapter 7 bankruptcy filing to restructure or eliminate debts. A lawyer may be able to negotiate new payment terms with creditors or draft and file a bankruptcy petition to trigger the automatic stay.
Bankruptcy law recognizes that debts might overwhelm Mississippi consumers. When individuals file for bankruptcy protection, they generally do so under either Chapter 7 or Chapter 13. The form of bankruptcy determines whether eligible debts will be discharged or if the person must continue to pay creditors under a court-mandated payment plan. The chapter under which people file also establishes waiting periods before they can file for bankruptcy again.
Under a Chapter 7 bankruptcy, the court relieves a person of financial burdens by discharging many unsecured debts. After people complete this process, the law requires that they wait eight years before seeking Chapter 7 protection again. If they want to file for Chapter 13 protection, however, they only need to wait four years after completing a Chapter 7 case.
Chapter 13 bankruptcy helps people overcome financial stress by creating a manageable payment plan. This protection can help someone catch up on bills over three or five years and avoid foreclosure or wage garnishment. Someone who took advantage of Chapter 13 protection could file for Chapter 7 after waiting six years. Only two years must pass, however, if a person wants to file a second Chapter 13 petition.
A person needs to consider many factors when filing for bankruptcy a first or second time. The action stays on a credit report for many years and can endanger future employment opportunities or access to credit. A consultation with an attorney could inform a person about the pros and cons of pursuing bankruptcy relief. An attorney could determine if a person could pass a means test and describe which assets might be exempt from liquidation.
Mississippi residents have helped Americans as a whole generate a total of over $1 trillion in credit card debt. Those who want to pay off that debt have several options to do so. However, the best option may be to start with the credit card that has the highest interest rate. This is because reducing the principal balance on that card also reduces the amount of interest paid to a lender.
Ultimately, people will be able to pay their debt down faster if more of each payment goes toward the principal instead of interest. Once a credit card balance is paid off, a debtor will then start paying down the balance with the next highest interest rate. While it may take longer to pay down a debt using this method, it will save a person money in the long run.
To speed up the process of paying down credit card balances, they should be transferred to a card that has a zero percent introductory interest rate. This will result in all of a given payment going toward the principal balance. Another way to pay down debt faster is to make payments every two weeks instead of once a month. Doing so means making the equivalent to 13 monthly payments, and that can also result in more money going to the principal balance.
Individuals who are looking to eliminate debt may do so by filing for Chapter 7 bankruptcy. Credit card debt can often be discharged without a debtor paying any of the outstanding balance. Once a debt is discharged, a debtor has no obligation to repay it. In most cases, a debtor is entitled to an automatic stay of creditor contact after filing for bankruptcy.
Going into debt is a normal part of life for most Americans. Significant purchases such as a house or car usually require loans. Emergencies happen, medical or otherwise, and you may have to max out your credit cards. The causes of debt are numerous.
As the numbers rise, you may wonder if you should start to worry about the debt you are in. When can you tell your debt has become a problem? When should you start considering filing for bankruptcy?
Signs of too much debt
A simple calculation you can do is to compare how much debt you pay each month to how much you make each month to find your debt-to-income ratio. Add up your recurring monthly debts and divide it by your gross monthly income. Multiply the answer by 100 to get a percentage. The cutoff of what is bad differs between financial institutions and experts, but generally speaking, a number above 43 percent is a red flag.
This ratio is not solid proof, however. Other signs include:
Low credit scores and high interest rates may also reflect your financial state.
When to file for bankruptcy
Not every debt situation requires bankruptcy. Another option may be better for your circumstances. Bankruptcy may be best for long-lasting financial troubles, there exists a risk of losing assets or a lender is garnishing your wages. Also, most of your debt needs to be eligible for bankruptcy.
Perhaps you are about to petition for either Chapter 7 or Chapter 13 bankruptcy protection. Within a few weeks of your filing date, you must attend the 341 meeting.
This is sometimes called the meeting of creditors, but there is another aspect to it: The 341 meeting is a major stop on your bankruptcy journey because you will meet your trustee.
Acting under the U.S. Bankruptcy Code
The United States Bankruptcy Code requires you, as the debtor, to attend the 341 meeting, the initial meeting of creditors. The name comes from Section 341 of the Code. The trustee assigned to your case from the Office of the United States Trustee will conduct the hearing. He or she will want information that makes your bankruptcy administration go as smoothly as possible. Therefore, you must truthfully answer questions under oath. The trustee will also want to ensure you understand both the positive and negative effects of a bankruptcy filing.
Inviting creditors
The Office of the U.S. Trustee will notify your creditors of the time and place for your 341 meeting. Creditors may attend and ask you questions concerning your bankruptcy; for example, they can inquire about the type and location of your assets. However, creditors rarely come to these meetings. They do not waive their rights if they choose not to appear.
What to bring
Your attorney will accompany you to the 341 meeting and provide documents the trustee needs. Every bankruptcy proceeding is different, but, among other items, trustees usually expect to receive federal and state tax returns, payroll information, bank statements and perhaps a property tax card for any real estate owned. The only items you must bring with you are your Social Security card and a government-issued photo ID, such as your passport or driver’s license. Keep in mind that the 341 meeting is held outside of court and no judge will be present. Despite the fact that the hearing usually only lasts a few minutes, it is an important stop on your journey to a debt-free future.
