Many people living in Mississippi are aware that bankruptcy is one option for debt relief. However, national statistics show a decline in bankruptcy cases in recent years.
While reasons for the decline are not entirely clear, many attorneys have put forth some ideas. Some have noted that the reasons why individuals file for bankruptcy in the first place have been mitigated. Unemployment numbers are down, which means people have more income they can apply toward debt. In addition, the Affordable Care Act has provided people with health insurance coverage, possibly reducing high levels of medical debt.
Other reasons for low bankruptcy rates may be less encouraging. Some debtors simply cannot afford the fees and court costs required to file for bankruptcy. Furthermore, many people carry student loan debt, which is very difficult to discharge in bankruptcy. As a result, individuals with significant debt burdens may feel as though there is no reason to bother filing for a discharge of their debts.
Still, bankruptcy remains an effective way for some people to cope with unmanageable debt. In cases where debt can’t be discharged, bankruptcy might provide some relief by granting automatic stays against collection activity. In a Chapter 13 bankruptcy, debts can be repaid as part of a three- or five-year repayment plan. This could make it easier for someone to regain their financial footing.
Individuals who are considering bankruptcy may benefit from consulting with an attorney. The lawyer could review the client’s circumstances and make suggestions regarding debt management options, including Chapter 7 and Chapter 13 bankruptcy.
Mississippi had the fourth highest per-capita rate of personal bankruptcies in the nation in 2018, and the data suggests that more than two-thirds of them were filed because of overwhelming doctor and hospital bills. Comprehensive health insurance provides protection against spiraling medical debt, but many Americans find themselves without this crucial coverage each year after going through a divorce or losing their jobs. A recent study conducted by University of Missouri and University of Denver researchers reveals that individuals are twice as likely to file a Chapter 7 or Chapter 13 bankruptcy after going without health insurance for just two years.
The researchers made this discovery after analyzing data on 12,500 bankruptcies from the Bureau of Labor Statistics. Millions of Americans currently have health insurance because of the Affordable Care Act, but the future of the landmark 2010 law is uncertain. Attorneys from 18 states filed a legal challenge to the ACA after Congress voted to eliminate the individual mandate. If the litigation is successful, up to 20 million Americans could lose their health insurance.
More than half of Americans polled by the Kaiser Family Foundation said that financial concerns had led them to cancel or put off a visit to a doctor or dentist in the last year, and many of them were enrolled in a health plan. More than a third of the insured respondents said that they had difficulty making copayments or meeting their deductibles.
The nation’s bankruptcy code was written to give people who are struggling to make ends meet the opportunity of a fresh start, but individuals with unmanageable financial situations are often reluctant to take action because of the myths surrounding debt relief. Attorneys with experience in this area may help dispel these myths and explain how Chapter 7 or Chapter 13 bankruptcy offers an escape from overwhelming debt. Attorneys ma also explain that the automatic stay issued when a bankruptcy is filed requires lenders to immediately cease their collection efforts.
One of the main concerns for people in Mississippi who are considering bankruptcy is how long the filings will stay on their credit report. Depending on the type of bankruptcy filed and the other specific facts of the case, the filing might be listed on a person’s credit report for up to 10 years. There are two main types of bankruptcy for individual filers, Chapter 7 and Chapter 13, and each of them has different impacts on the filer’s credit report.
Filing for bankruptcy under Chapter 7 will eliminate most personal debts, including those from medical bills, personal loans and credit cards. Any debts that are discharged via Chapter 7 bankruptcy will be noted on the person’s credit report, and the bankruptcy itself will be listed as well for a period of 10 years from the date of the filing. A Chapter 7 may negatively impact a person’s credit score by as much as 200 points, but it will also eliminate debts.
A Chapter 13 bankruptcy, also sometimes called a wage earner’s bankruptcy, will be listed on the person’s credit report for seven years. This type of bankruptcy is designed for people who have regular income and earn too much to file for Chapter 7. Over the course of three or five years, a Chapter 13 petitioner will pay back creditors according to a payment plan approved by the bankruptcy court.
People in Mississippi who are struggling to pay down debts might want to schedule a meeting with a lawyer. A lawyer who practices bankruptcy law may help by examining the client’s circumstances and suggesting options to reduce or eliminate debts. A lawyer may help the client complete pre-bankruptcy counseling and other requirements or represent the client during the meeting of creditors or other official proceedings before the bankruptcy trustee.
Statistics show that older people are filing for bankruptcy at higher rates than ever before, in Mississippi and across the country. According a 2018 report by the Consumer Bankruptcy Project, more than 10% of people who filed for bankruptcy protection in 2016 were 65 years old or older; this was a significant increase over the number in 1991.
The elderly population of the country also grew over that time span, but only by 2.3%. There are a number of economic and social factors contributing to the rise in elder bankruptcy. People are living longer, and they need more medical care in their later years. The cost of medical care has been increasing for decades.
Additionally, many people 65 and older have little or no personal savings and cannot rely on a company pension or 401(k) plan. They are also increasingly in debt, with nearly half of Americans at least 75 years of age carrying debt by 2016 compared to only about 20% in 1989, according to a survey of consumer finances by the U.S. Federal Reserve. Approximately 800,000 households made bankruptcy filings in 2016, including an estimated 133,000 senior citizens.
People in Mississippi who are struggling to pay for life necessities or pay down debts might want to schedule a consultation with an attorney. An attorney who practices bankruptcy law might be able to help by suggesting options to reduce or eliminate debt or by examining the client’s financial situation and negotiating settlements with creditors. An attorney might help themprepare for bankruptcy by guiding them through pre-bankruptcy counseling in advance of filing a petition.
For many people in Mississippi who are struggling to pay down debts, filing for bankruptcy is a viable option to improve their financial position. During the peak of the recent financial downturn, almost 1.6 million bankruptcies were filed. The majority of those filings were made by consumers. The total number of annual filings dropped to under 800,000 by the time ten years had passed. People who have credit card debt may be able to get a fresh start via bankruptcy.
If the person is in a position where he or she has a lot of debt and does not own major assets like a home, a bankruptcy filing can clean the slate. As part of the bankruptcy process, petitioners are required to complete finance classes. These classes, which are taken both before and after the bankruptcy, can provide education, information and perspective that can be useful to the person going forward.
As many as two-thirds of all bankruptcies are filed because the person has medical debt. Going through divorce is also a common catalyst for bankruptcy filings. It’s a misconception that people who file for bankruptcy have to give up all of their assets. In a Chapter 7 bankruptcy, the filer may have the opportunity to reaffirm certain debts and keep assets like a home or a car.
Individuals who have questions about the bankruptcy process might want to schedule a meeting with a lawyer. A lawyer who has experience practicing bankruptcy law may be able to help by examining the client’s debts and income and suggesting options to reduce or eliminate outstanding debts. A lawyer may be able to help by drafting and filing the petition to begin the bankruptcy case, by communicating with the bankruptcy trustee on the client’s behalf or by ensuring the client completes necessary counseling and other requirements.
