In most circumstances, it is not possible to discharge student loans through bankruptcy. However, some Mississippi debtors may be able to discharge them if a few factors are in place. These rules apply to both private and federal loans.
The borrower must be able to demonstrate that repaying the loans will lead to “undue hardship”. What constitutes undue hardship has never been defined by Congress, but nearly all federal circuit courts use a standard called the Brunner test. The Brunner test requires that there be extenuating circumstances and that extreme hardship will result from paying back the loan that will not allow the person to keep up a minimum living standard. It also requires that the circumstances are unlikely to change for the term of the loan and that the person has made an effort to repay the loan. This does not necessarily mean the person has already made one or more payments. It can mean that the person has attempted to set up a payment plan or taken other steps. The 8th Circuit uses a similar standard while the 1st Circuit does not have a set standard.
There are alternatives to trying to discharge these loans in bankruptcy. A person might be eligible for income-driven replacement. Paying off other debt or getting a loan with a lower interest rate could also help.
A person who is struggling to pay student loans or other obligations might want to talk to an attorney about the types of debt relief that might be available. If the debtor’s income is below a certain level, Chapter 7 bankruptcy might be a possibility. Getting rid of credit card debt could allow the person to pay off student loans or other debts that cannot be discharged, such as child support.
Various problems, like job loss, a medical crisis or a death in the family, could motivate Mississippi consumers to pursue bankruptcy when their income cannot keep up with debt payments. About two-thirds of the non-business bankruptcies filed by individuals fall under Chapter 7 bankruptcy rules. A Chapter 7 bankruptcy requires the sale of assets to recover money for creditors before a judge typically discharges remaining debts. Certain assets are usually exempt from liquidation, like the family home, but the mortgage on the family home might still remain a burden if not included in a bankruptcy.
About one-quarter of Chapter 7 bankruptcies involve real estate mortgages that have not been paid for 120 days. Often these properties qualify for the homestead exemption, and borrowers choose to apply the exemption. They hope to save the home after bringing their other debts under control, but this choice removes the home mortgage from the bankruptcy process and sometimes leaves them exposed to foreclosure if they still cannot make payments.
In some cases, a lender has already initiated a foreclosure action when the borrower files for bankruptcy. Borrowers might still choose to ask the court to remove the mortgage from consideration because they hope to avoid the complications involved in selling the property under the supervision of a trustee. This decision, however, might still leave a borrower exposed to the negative effects of foreclosure, like a bad credit history.
A person concerned about mounting debts that threaten to cause foreclosure or wage garnishment could learn about legal options for debt management from an attorney. An evaluation of debts and income by an attorney could reveal that the person qualifies for fling under Chapter 7.
Overall, the nation’s economy is in relatively good shape. This means that unemployment rates are down throughout much of Mississippi and the rest of the United States. However, there is a somewhat new phenomenon that is showing a darker financial picture for some Americans — there is a notable increase in bankruptcy filings for older individuals, particularly for baby boomers.
Anything that impacts the baby boomer generation, which represents approximately one-quarter of the population, is certain to have rippling effects throughout the entire economy. Economic researchers report that in the last 25 years, the rate of baby boomer bankruptcy filings has increased sixfold. The overall trend shows bankruptcy rates declining for those 54 and under yet dramatically increasing for the 55-plus group.
While any age group can be hit by major economic events, such as job loss or a family split, older people are unique in finding themselves transitioning into retirement. The combination of living longer, dealing with a decrease in social security benefits, less or non-existent pension plan benefits and far higher medical costs across the board places boomers and those nearing retirement at greater risk. Nothing occurring currently in the economy seems likely to change these trends in the near future.
Financial challenges can arise at any time in any one’s life. A fresh financial start may be possible with debt relief or a manageable payment plan. A bankruptcy lawyer can provide guidance and counsel in determining whether Chapter 13 relief would be appropriate under the specific facts and circumstances.
Many people living in Mississippi have concerns about credit card debt. While credit cards can be a useful tool in managing personal finances, consumers will sometimes run up balances that can be difficult to manage or pay off. In fact, a recent study has shown that the average household credit card debt in the United States is $8,284.
In many cases, consumers do not intend to run up significant debts. They use credit cards responsibly, and either pay their balances each month or make reasonable monthly payments. However, circumstances can affect an individual’s ability to pay their credit card bills. For example, someone may become ill, unemployed or face a major, unexpected expense such as a medical bill or home repair.
When people can’t pay their credit card bills or can only pay a minimum amount, balances will balloon due to interest rates and late fees. It can be very difficult to catch up, particularly if one is attempting to cope with a diminished income or other urgent financial obligations. Over time, the stress of trying to deal with creditors and pay bills can take a significant toll on a debtor’s health, marriage and family life.
Fortunately, people living in Mississippi have several debt relief options. These include bankruptcy as well as negotiating installment payments and debt consolidation. Homeowners who are concerned about making mortgage payments may also be able to avoid foreclosure through some similar strategies.
Debtors could benefit from speaking with an experienced attorney. The lawyer might be able to review the client’s current financial situation and make suggestions regarding debt relief options like bankruptcy and possible ways of avoiding foreclosure.
According to an article in Health Affairs, medical debt in collections peaks when individuals are in their late 20s. This is because younger people tend to make less money than those in their 50s or 60s. Furthermore, younger people are more likely to not have insurance. Even if a person has insurance, the policy likely comes with a deductible that an individual could have trouble paying. However, there are ways that those dealing with such debt in Mississippi and throughout the country can better manage it.
For instance, it could be possible to negotiate with a care provider to reduce the bill. This may work best for those who can provide detailed income and other financial information to demonstrate their ability to pay. A medical bill advocate may be able to negotiate on a patient’s behalf. In some cases, a substantial portion of the balance could be forgiven when going this route.
If that doesn’t work, a doctor or hospital may allow an individual to make payments each month. In the event that a bill is already in collections, there is a chance that the debt collector will take less than the amount owed to resolve the matter. Individuals who are searching for a way to pay down a medical debt could try to crowdfund the money or ask family members for a loan.
Those who are struggling to pay off a medical debt might benefit by filing for either liquidation or reorganization bankruptcy. Doing so may make it possible to put an end to creditor phone calls or other debt collection activities. This might mean keeping a home, car or other property that is secured with collateral. It may also mean that a creditor lawsuit could be postponed until the bankruptcy case has been resolved.
