If you’re considering bankruptcy, it’s important to understand how your case could end and how to avoid a frustrating outcome. Most filers hope for a discharge, which wipes out certain debts. However, some cases end in dismissal, which offers no relief at all. Knowing the difference can save you time, money, and stress.
A discharge is the ideal outcome for most debtors. In Chapter 7, it usually happens a few months after you file, while in Chapter 13, you’ll receive it after completing your repayment plan. Once the discharge is granted, creditors can’t come after you for those debts anymore.
That said, not all obligations go away. Student loans, some taxes, and child support may still be collectible. Also, liens on your property might still be valid even if the debt itself is discharged.
Dismissal is the opposite. It means the court has closed your case without granting relief. Creditors are free to resume collection efforts like garnishments, foreclosures, or lawsuits.
Dismissals often happen when a filer misses a key requirement, such as failing to file schedules, skipping the required credit counseling, or not showing up to the 341 meeting with creditors. In Chapter 13, even one missed payment might trigger dismissal.
If you’re filing, keep these basics in mind:
Bankruptcy comes with rules, and they’re easy to trip over if you’re unfamiliar. At O’Brien Law Firm, LLC, we help clients throughout the Greater Memphis Area avoid common mistakes, stay on track, and work toward a discharge whenever possible.
Reach out at 662-672-7619 or use our online form to schedule a consultation. Let’s walk through your options together.
Subchapter V is a simplified version of Chapter 11 bankruptcy designed to help small business owners reorganize without losing control of their operations. It’s faster, cheaper, and gives owners more say in how debts are repaid.
Sole proprietors in Southaven, Memphis, or any city across the USA may find Subchapter V as a beneficial path in navigating their bankruptcy process. However, a sole proprietor must ensure it is done properly and with all considerations considered.
Subchapter V isn’t available to everyone. As of April 2025, your total non-contingent debt must be under $3.42 million, and at least half of that must come from business activity. If most of your debt is personal or if your business is focused on one rental property, you may not qualify.
Another issue is that you must be “engaged in commercial activity” at the time you file. That can include winding down or collecting receivables, but it’s something courts look at closely.
Even if creditors reject your plan, you may still get it confirmed through a cramdown. To do this, you must commit all your projected disposable income over three to five years.
You also need to show that the plan is feasible and includes remedies if you fall behind, like allowing a creditor to take the asset back. However, unlike traditional Chapter 11, you don’t have to pay creditors in full before keeping your business.
Subchapter V lets business owners stay in charge. There’s no creditors’ committee unless the court orders one, and there are no U.S. Trustee fees. If you meet deadlines and remain in good faith, you retain full decision-making power. This control is often what makes Subchapter V attractive for sole proprietors looking to stay afloat.
At O’Brien Law Firm, LLC, we help sole proprietors across DeSoto County and Memphis use Subchapter V to save their businesses and reset their finances. Call 662-672-7619 or complete our intake form to schedule a confidential consultation.
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.
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.
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.
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.
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.
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.
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 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.
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.
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.
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.
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.
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.
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.
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.
