search here
Category: Bankruptcy
Inheriting Money During Bankruptcy: What Happens if You Receive an Inheritance Mid-Case?

On Behalf of O’Brien Law Firm, LLC

Posted on: August 22, 2025

Filing for bankruptcy is meant to give you a fresh financial start, but what happens if you’re in the middle of your case and a relative passes away, leaving you money or property? In Mississippi and southwest Tennessee, the law is clear: timing matters, and so does how your case is structured.

The 180-Day Rule and Why It Matters

When you file for bankruptcy, your assets become part of the bankruptcy estate. Under federal law, if you become entitled to an inheritance within 180 days of filing, it’s usually pulled into that estate. What matters is the date of the person’s death, not the day the inheritance ends up in your hands.

In Chapter 7, non-exempt inherited assets can be sold to pay creditors. In Chapter 13, the value of a non-exempt inheritance can raise your monthly payments.

State-Specific Rules in Mississippi and Tennessee

Mississippi has opted out of federal bankruptcy exemptions, meaning you can only use exemptions under state law. For example, Mississippi’s retirement account exemption protects funds in certain qualified plans if you are the participant or named beneficiary.

If the retirement funds came from someone else’s account and you’re not a beneficiary, you likely can’t claim that protection.

What Happens if You Don’t Report It

Inheritance information is hard to hide. Probate records are public, and trustees often hear from executors, relatives, or even the court. Failing to disclose an inheritance can have severe consequences. You could lose your bankruptcy discharge, be ordered to repay the amount (even if it’s spent), or face allegations of bankruptcy fraud. The cost of trying to hide it is almost always higher than being upfront.

How We Can Help You Protect Your Rights

At O’Brien Law Firm, LLC, we understand how frustrating it is to think you might lose an inheritance during bankruptcy. We help clients in Southern Mississippi figure out what’s protected, what’s not, and how to minimize the impact on your case.

If you’ve received or expect to receive an inheritance mid-case, don’t guess your next step. Get legal guidance before you act. Call us at 662-672-7619 or complete our online intake form to discuss your situation and learn your options. The sooner we talk, the more we can do to protect your financial future.

Read More
Discharging Tax Debt in Bankruptcy: When Can IRS and State Tax Bills Be Wiped Out?

On Behalf of O’Brien Law Firm, LLC

Posted on: July 23, 2025

In Mississippi, tax debt feels like a weight that never lifts. Many people assume tax bills stay with them forever, no matter what. But that is not always true. In some cases, bankruptcy can help clear certain tax debts. The process is not simple, though, and the details matter more than most people realize.

What Is the 3-2-240 Rule?

Taxes do not disappear easily in bankruptcy. The key timing rule, known as the 3-2-240 rule, decides if federal and state income taxes can be wiped out.

The first part, the “3-year rule,” means the tax return was due at least three years before you file for bankruptcy. The “2-year rule” requires that you filed that tax return at least two years before the bankruptcy. Finally, the “240-day rule” states that the IRS or the Mississippi Department of Revenue assessed the tax at least 240 days before you filed.

If these conditions are not met, the taxes stay. Fraud or willful evasion makes the debt non-dischargeable, no matter how old it is.

Chapter 7 vs. Chapter 13

Chapter 7 can completely erase qualifying tax debts if they meet the timing rules. However, you have to pass the means test to file Chapter 7, and some assets might be sold to pay creditors.

On the other hand, Chapter 13 allows you to set up a payment plan over three to five years. While it does not automatically wipe out all taxes, it stops aggressive IRS collection actions and gives you more time to pay priority tax debts in full. Older taxes that qualify can sometimes be discharged at the end of the plan.

Planning Strategies Beyond Bankruptcy

Some people consider an Offer in Compromise, where the IRS agrees to settle for less than owed if you prove you cannot pay. In other cases, waiting a bit longer to meet the 3-2-240 timing can make a huge difference before filing for bankruptcy.

Call for Help Today

At O’Brien Law Firm, we understand how stressful tax debt can feel. We help clients across Mississippi figure out if bankruptcy can truly clear tax bills or if another strategy makes more sense. If you feel stuck and want to explore a fresh start, reach out to us today. We are ready to guide you and help protect your financial future.

Read More
Filing Bankruptcy Before or After Divorce: How Timing Your Bankruptcy Can Impact Your Divorce Settlement

On Behalf of O’Brien Law Firm, LLC

Posted on: June 20, 2025

Divorce and financial hardship often go hand in hand. Many couples in Mississippi face the difficult decision of when to file for bankruptcy: before or after ending the marriage. The choice matters. Timing can affect what debts are erased, how property is divided, and whether either spouse is left holding the bag.

Benefits of Filing Bankruptcy Before Divorce

Filing a joint Chapter 7 bankruptcy before divorce can make the entire process smoother. It allows both spouses to eliminate joint debts like credit cards or personal loans in one filing. That leaves fewer issues to sort through during the divorce. In Mississippi, joint filers may also qualify for double exemptions, which protect more property from being liquidated.

In addition, filing together means sharing court and legal costs. However, both spouses must pass the Chapter 7 means test. If their combined income is too high, they may not qualify. In that case, waiting until they separate and have lower individual incomes may open the door to Chapter 7 later.

Why Some Wait Until After Divorce

In some cases, delaying bankruptcy makes more sense. One spouse may plan to file solo to protect specific assets or avoid sharing exemption limits. For example, if the divorce awards one spouse the house, they may file alone later to protect it from creditors.

Filing separately also helps when income limits are an issue. Once separated, each person is evaluated based on their own earnings, which may allow one or both to qualify for Chapter 7. However, this route means paying for two cases instead of one, and a person could miss out on certain protections.

Bankruptcy Does Not Erase Everything

Not all debts go away in bankruptcy. In Mississippi, support obligations like child support or alimony are not dischargeable. However, property settlement payments to an ex-spouse may be wiped out under Chapter 13. That is why it matters how debts are labeled in your divorce decree.

We Help Mississippi Clients Time Bankruptcy the Right Way

At O’Brien Law Firm, we work with clients to make smart decisions about bankruptcy and divorce timing. If you are unsure when to file or how it might affect your future, we are here to help. Contact us today to protect your finances and move forward with confidence.

Read More
Discharging Student Loans in 2025: How New Federal Guidelines Might Relax the “Undue Hardship” Standard

On Behalf of O’Brien Law Firm, LLC

Posted on: May 27, 2025

For years, student loans were considered almost impossible to erase in bankruptcy. However, in 2025, that’s changing. Thanks to updated federal guidance, borrowers in Mississippi and across the U.S. now have a better shot at getting rid of federal student loans through bankruptcy, especially if they’re struggling financially or dealing with long-term hardship.

What “Undue Hardship” Means and Why It Matters

To discharge student loans in bankruptcy, you have to prove that paying them would cause undue hardship. That means showing you can’t keep up a minimal standard of living while making payments, the hardship is likely to continue, and you’ve tried in good faith to repay the debt.

This test, often called the Brunner Test, was often extremely difficult to meet. But now, borrowers can use simpler documentation to show their situation. You no longer need years of past repayment history or perfect paperwork to prove you tried. Even one positive step, like applying for a repayment plan, may be enough.

New 2024 Guidance Makes Discharge More Accessible

In 2024, the U.S. Departments of Education and Justice released joint guidelines that made the process easier. Borrowers can now fill out an attestation form instead of going through drawn-out court fights. If the Department agrees you meet the standard, they may even support your request for discharge.

So far, the results are promising. As of late 2024, about 85% of processed student loan bankruptcy cases have ended in full or partial discharge. That’s a huge jump from just a few years ago when fewer than 1 in 10 were successful.

What the Process Looks Like in Mississippi

Discharging loans still requires filing bankruptcy, usually Chapter 7 or Chapter 13, and starting a separate lawsuit within the case, called an adversary proceeding. You’ll need to submit financial records and medical documentation (if relevant) and show why repayment would be unfair under your circumstances.

Borrowers in Mississippi may especially benefit if they attended a for-profit school, are living on disability income, or have faced long-term underemployment. The courts will also look at age, dependents, and your chances of earning more in the future.

If your debt feels impossible to manage, contact O’Brien Law Firm to find out if bankruptcy could be a path to relief.

Read More
Cryptocurrency Mining Debt: Discharging Energy Costs in Chapter 11 Amid Regulatory Scrutiny

On Behalf of O’Brien Law Firm, LLC

Posted on: April 21, 2025

Crypto mining can be expensive, especially when energy prices spike or the market crashes. Miners in Mississippi now have stronger legal protections under the state’s Senate Bill 2603. However, financial trouble can still hit fast. If you’ve racked up debt from electricity costs or equipment leases, Chapter 11 bankruptcy may offer a way to stay in business while sorting things out. Still, IRS rules and local laws add some tricky layers.

Mississippi Protects Crypto Miners—but the Bills Still Add Up

Mississippi’s Senate Bill 2603 supports digital asset mining at both the residential and commercial levels. It prevents local governments from changing zoning rules to block mining or placing special noise limits on miners that don’t apply to other businesses. Home miners also get protection as long as they follow general sound rules. No special license is required, even for businesses offering mining or staking as a service.

However, these legal wins don’t erase the financial pressure. Running powerful mining rigs around the clock costs a lot, especially when crypto prices fall. That’s where bankruptcy law comes in.

The IRS Treats Mining as Income—Before You Ever Sell

The IRS counts mined crypto as income on the day it’s created. If you mine $1,000 worth of Bitcoin, that $1,000 goes on your taxes, even if you never sell the coin or its value drops later. That means tax debt can pile up before you ever make cash.

Miners can deduct certain costs, such as power bills, equipment, and even home office space. However, those deductions don’t wipe out the original income tax. And in bankruptcy, that tax still sticks.

Chapter 11 Can Help—But It’s Not a Clean Slate

Chapter 11 lets you restructure debts while continuing to mine. Core Scientific, a major U.S. miner, used Chapter 11 to stay operational while cutting deals with creditors. In Mississippi, a similar filing can help you renegotiate equipment leases or electricity contracts.

Still, tax debt tied to mining income often remains. You can reorganize how it’s paid, but you can’t erase it. That’s why timing and legal support matter.

If energy bills, taxes, or equipment costs are stacking up, contact O’Brien Law Firm. We’ll walk you through the next steps and help you build a legal plan that fits your situation.

Read More
“From my initial consultation throughout the entire process, Mr. O'Brien and his staff handled my legal matters with the utmost professionalism and care. I am especially grateful for Crystal who patiently answered all my questions and put my mind to ease over and over. Thank you O'Brien Law Firm, LLC!”
– C.H.
“Thank you so much for the advice. I knew I chose the right attorney!”
– C.H.

Don’t Wait Any Longer

Request a Free Initial Meeting Now