It is not uncommon for individuals in Mississippi and other states to have debt. In 2018, Americans held more than $1 trillion in combined credit card debt balances. Individuals may also have personal loan, payday loan or medical debt to contend with in addition to mortgages or student loan balances to pay down. To help a person better handle his or her finances, it can be a good idea to list all the debts he or she has.
Ideally, a person will list the balances on those debts, the interest rate charged by a creditor and when each payment is due. This can make it possible to develop a strategy to pay down the debt in a timely manner. Listing the interest rates for each debt can help debtors figure out how much it is truly costing them. By knowing the due date of each payment, it reduces the odds that payments are made late.
Late payments can have negative consequences on a person’s credit score and history. There could be options for those who can’t make a payment on time such as deferring a student loan payment. Other lenders may be amenable to alternate payment arrangements as they would rather get some of their money now as opposed to getting nothing.
Debtors who are having financial challenges may be able to overcome them by filing for bankruptcy. This may put a stop to a foreclosure or repossession as well as postpone a lawsuit or other collection actions. An attorney may explain the process of filing and inform a person whether they are eligible for a Chapter 7 bankruptcy. Chapter 7 may be preferable for those with few or no assets as debts may be discharged in a matter of weeks.
It is possible for Mississippi residents to get financing for a car while in Chapter 13 bankruptcy. However, the process may take longer and be more difficult than for people who are not in bankruptcy. The first step is to find a lender and dealer. If finding a lender is not possible, the next step is to look for a subprime dealership. They specifically work with lenders whose specialty is people with bad credit.
The dealer will create a buyer’s order once the terms of the loan have been agreed upon and the vehicle has been chosen. This must then be submitted to the trustee along with paperwork that includes an explanation of why the vehicle is needed. A trustee is not likely to approve a luxury vehicle, so making the right choice is important.
The information in the Motion to Incur Additional Debt that the trustee files with the court will also be sent to creditors. Creditors have the option to object, but this is not an automatic rejection. The debtor would have to attend a hearing. A debtor receives an Order to Incur Additional Debt if the court approves the loan. This then must be taken to the dealer. If the loan is not approved, a debtor can try with a different car or try again later.
Some people may be reluctant to file for bankruptcy because they are afraid it will ruin their credit. However, this is not necessarily the case. Bankruptcy does damage a person’s credit, but so does unmanageable debt, and it is possible to rebuild credit after a bankruptcy. Furthermore, a Chapter 13 bankruptcy, which involves creating a payment plan to repay creditors over several years, can make it possible to keep some assets such as a house.
For people in Mississippi struggling with unrepayable debt, bankruptcy can be a way out from financial disaster. However, the types of debt that can be wiped away in bankruptcy vary depending on the type of bankruptcy a person pursues. In addition, some types of debts are almost always dischargeable while some types of debt are notoriously difficult to discharge.
Most consumers who file for bankruptcy pursue either Chapter 7 or Chapter 13 bankruptcy, both of which help people to find a new financial lease on life after debt. Only people who make below a certain income, usually the state median, can file for Chapter 7 bankruptcy. Under this type of filing, a person’s assets are liquidated while the funds are distributed to creditors to satisfy the debt. Some assets are exempt from liquidation, including those necessary for life such as a car or tools used on the job. After this process, remaining debt that is qualified for discharge will be fully released, and creditors will need to stop their attempts to collect these debts.
Chapter 13 bankruptcy is different because debt is restructured rather than instantly discharged. People enter a new period of repayment of the restructured debt, and after that payment period is over, qualifying debt could also be discharged. In general, mortgages, auto loans, personal loans, medical bills, credit card debts, unpaid utility bills and similar debts can be discharged in bankruptcy. Student loans are the most difficult type of debt to discharge along with child support and spousal support or government fines.
People struggling with debt can often be eligible for Chapter 13 bankruptcy regardless of their income level. When considering options to escape from the spiral of personal debt, people may consult with a bankruptcy lawyer for advice on the type of bankruptcy that is best to pursue in each individual circumstance.
Your Mississippi bankruptcy is over and the court gave you your discharge papers. Congratulations! Now that you have your financial feet on the ground, it is time for you to begin your post-bankruptcy life. You likely learned so much during the past months that you can start afresh to establish and build your credit and responsibly manage it.
Reestablishing your credit, however, is the final of five things you should do. Here are all five.
1. Keep your bankruptcy paperwork
Do not be tempted to discard all the paperwork you collected during your bankruptcy. At the very least, you will need the following documents in the future:
Keep these and your other bankruptcy documents in a safe place. Even better, scan them and put them in a file folder on your computer desktop. That way you have electronic copies whenever you need them.
2. Get your credit reports
You may not be aware of it, but all three major credit reporting agencies give you a free report each year. Get all three after about three months to give your bankruptcy dust time to settle. Review each one carefully, making sure that none of your discharged debts appear on any of them. Likewise check to see that no collection agency now has one or more of your discharged debts. The last thing you need is to once again begin receiving harassing phone calls, emails or snail mails demanding payment for debts that your bankruptcy discharged.
3. Establish a budget
Before you roll your eyes at the thought of budgeting, you need to recognize that establishing a budget and sticking to it are two of the most important things you can do for yourself in your post-bankruptcy life. This is the only way you can ensure that your monthly household income can cover your monthly bills.
Unless you are one of those unusual people who keeps your hardcopy bills after you pay them, you probably will need to estimate the amount of at least some of your monthly bills at first. On the other hand, if you have online accounts or do online banking, you can find out how much you paid on each bill each month. If you can discover this, total each bill’s last six payments and divide by six. This will give you a realistic average of how much you spend each month for each bill. Do not forget to determine a monthly average for those bills, such as insurance, for which you pay an annual or semiannual premium.
4. Establish an emergency savings account
While budgeting is one of the most important things you can do, even the best budget seldom makes provision for those emergency situations that invariably arise when you can least afford them. If your air conditioner stops working or your car needs its transmission fixed, you need cash to pay for the repairs. Open a new emergency savings account into which you place any money left over at the end of each month, no matter how small the amount.
5. Begin rebuilding your credit
Once you have your monthly bills in hand, it is time to start reestablishing your credit. Not only does a credit card come in very handy when even your emergency savings account cannot cover an unexpected expense, some businesses, particularly online businesses, refuse to take anything other than a credit card.
Now that your bankruptcy wiped out virtually all your debts, you can apply for a new credit card. Admittedly, you may have to settle for a prepaid one or one with a low credit limit. In addition, you likely will pay a higher than usual interest rate. Nevertheless, getting one credit card and paying it off each month is a great way to reestablish your credit.
For all practical purposes, your bankruptcy gives you the opportunity for a financial “do over.” By following the above five steps, you undoubtedly will discover that this time you can face and overcome whatever financial issues arise in the future.
If you are a Mississippi resident whose monthly bills exceed your monthly income, you likely are in a quandary over what to do. You may be considering bankruptcy as a last resort, but are confused about which type is best for you. In addition, you may fear that you will lose everything if you file bankruptcy. Set your mind at rest. You do not lose everything in a bankruptcy. In fact, many of your assets are exempt in a Chapter 7 bankruptcy.
While bankruptcy admittedly is a drastic solution to your financial problems, sometimes it not only is your best option, but also your best strategy. If you have reached the point where one of the following red flags applies to you, you may wish to seriously consider bankruptcy.
You truly cannot pay your bills
If you recently got laid off from your job or you or one of your family members suffered an unexpected injury or illness resulting in huge medical expenses, you may be on the brink of financial disaster through no fault of your own. While buying your groceries and paying your other living expenses via credit cards may be a short-term solution, your credit card debt will quickly balloon and your minimum payments alone may well become more than you can handle.
In addition, as your credit card balances increase, so does the portion of your payments going for interest instead of debt reduction. Not only do the interest payments eat you alive, you quickly reach your credit limits. Now you really are in trouble and Chapter 7 bankruptcy may be your only answer. Its whole purpose is to discharge your overwhelming debts, particularly your credit card debt.
You start getting harassing phone calls
Once you begin making late payments or no payments at all, your phone starts ringing incessantly. This is especially true if your creditors start turning your accounts over to collection agencies. These debt collectors are notorious for the lengths to which they will go to collect debts. Not only will they deluge you with nasty phone calls, they may also contact your relatives and/or show up at your door or those of your neighbors. Again, Chapter 7 bankruptcy can rescue you. Its automatic stay provision prohibits your creditors from attempting to collect their debts during the pendency of your bankruptcy.
Your wages become garnished
Assuming you are still working, you may receive a nasty surprise when your paycheck amount is considerably less than what you expected. When this happens, it likely is because one of your creditors sued you and obtained a court order allowing it to garnish your wages. When presented with such a court order, your employer by law must abide by it and withhold the designated amount from your paycheck each pay period until you pay your debt in full. This is another way in which Chapter 7 bankruptcy can come to your aid. It stops the garnishment. Be aware, however, that it cannot stop a garnishment related to child support or alimony payments a court ordered you to make.
Your home is in danger of foreclosure
If you own your own home and are behind on your mortgage payments, your mortgage lender may threaten to foreclose or even have started foreclosure proceedings against you. In this situation, a Chapter 13 bankruptcy protects your home much better than a Chapter 7. While Chapter 7 can forestall a foreclosure, it seldom prevents one altogether. You stand a much better chance of saving your home by filing for Chapter 13 instead.
Unlike Chapter 7, which discharges most of your debts, a Chapter 13 bankruptcy is a reorganization. Under your reorganization plan, you not only have the opportunity to renegotiate the terms of your mortgage, you also have a relatively long period, generally between three and five years, to get caught up on your mortgage payments under their new rates.
There is no denying that deciding to file bankruptcy is a life-changing decision that you should not make lightly. Having said this, however, bankruptcy is not the end of the world. In fact, it is a new financial beginning for you and your family.
