After Mississippi consumers have filed for bankruptcy, they may be concerned about rebuilding their credit. However, they should be wary of companies called credit repair agencies that offer to help with this.
Under the Credit Repair Organizations Act, it is not legal for a company to charge for this type of service until the repair has been done. Some credit repair agencies will send out letters to people who have filed for bankruptcy, while others will advertise online or on TV. The companies claim to be able to establish a new credit identity for people who have filed for bankruptcy, but some of them suggest applying to the IRS for an Employer Identification Number. People are then instructed to use this number in place of their Social Security number. However, this number is intended for business use, and using it in this way can be illegal.
A bankruptcy can remain on a credit report for up to 10 years, but there are other steps people can take to repair their credit. One is applying for a secured credit card. This allows a person to deposit a certain amount to cover the credit offered and establish a regular payment record. The person can then transition to regular credit cards. Another way is to apply for a bad credit car loan.
How to reestablish credit is one of several concerns people may have when considering bankruptcy, but being unable to keep up payments for debt also hurts a person’s credit. An attorney may be able to outline debt relief options, including bankruptcy. Depending on a person’s income and other factors, it may be possible to file for either Chapter 7 or Chapter 13 bankruptcy.
Mississippi residents with mounting debts often get phone calls from debt collectors. Some of these threatening callers may not be following regulations on debt collection procedures. In fact, debt collectors are sometimes accused of harassing debtors. According to the Fair Debt Collection Practices Act (FDCPA), collectors have limitations as to what they are permitted to do when attempting to collect debts. The same regulations apply to credit card debts, missed payments on mortgages, vehicle loans and medical bills.
The Consumer Financial Protection Bureau (CFPB) states that the FDCPA forbids debt collectors from using unjust methods to collect debts. For example, debt collectors aren’t allowed to use foul language during calls. The FDCPA covers calls made by lawyers and third parties. However, legal regulations do not enforce these rules on the original creditors. Per the official FDCPA guidelines, debt collectors aren’t legally permitted to call debtors prior to 8 a.m. or later than 9 p.m.
Debt collectors cannot call people at their jobs about missed payments if the debtors previously requested them to refrain from calling. Furthermore, debt collectors aren’t allowed to harass debtors. Harassment includes making several phone calls within a 24-hour period. Debt collectors must honor written requests asking that they cease making phone calls and sending texts regarding the payment of debts.
Debt collectors aren’t allowed to divulge confidential information to other people (except for a spouse) about a person’s debts. In addition, a debt collector is not permitted to make a threat of repossession. If a debtor has hired a lawyer, collectors must contact this attorney instead of the debtor. Bankruptcy offers a legal solution to a pressing problem.
Sometimes, even the best intentions to pay back debts involve severe financial repercussions. That’s why an individual facing heavy debts may want to consult with a bankruptcy attorney.
Data published by credit reporting agency Equifax indicates that people in Mississippi and across the country owe $13.5 trillion in total consumer debt. Of that debt, more than $1 trillion is owed by people between the ages of 18 and 29. This debt is primarily made up of student loans, but it also includes credit card debt, mortgage debt, auto loans and other types of consumer debt. The last time people in this demographic owed over $1 trillion was just before the 2008 financial crisis during the fourth quarter of 2007.
The data was gathered and put out by Equifax and the Fed Consumer Credit Panel of New York. People between the ages of 30 and 39 owe $2.9 trillion. The demographic owing the most in consumer debt is people between 40 and 49, who owe a total of $3.4 trillion. Those between the ages of 50 and 59 are not far behind, owing $3.2 trillion, according to the data.
People over 70 years of age have roughly the same amount of outstanding debt as young people between 18 and 29 at $1 trillion. People between 60 and 69 owe around $2 trillion. The type of debt affecting the most borrowers is student loan debt, which more than 44 million people carry. The U.S. Secretary of Education has said there is a student loan debt crisis. Some research indicates that 40 percent of those with student loan debt might default by the year 2023.
Individuals who are struggling to pay their debts might want to schedule a consultation with a lawyer. An attorney with experience practicing bankruptcy law may examine the facts of the person’s situation and suggesting options to reduce or eliminate debt. Filing for Chapter 7 or Chapter 13 bankruptcy triggers an automatic stay, suspending collections efforts by creditors.
Bankruptcy may be an option for Mississippi residents who have been overwhelmed by substantial debt. However, filing for bankruptcy can have a long-term impact on their credit. Before filing, they should consider several factors to decide whether it is the best option for them.
Debtors may want to try to negotiate a settlement with their creditors, who generally prefer obtaining a settlement rather than having the debt discharged in bankruptcy. Debtors may find it easier to negotiate a settlement if they are a few months behind on their payments, as creditors might not be inclined to reduce a debt if the payments are current.
Some debtors may benefit from credit counseling, particularly if they have been unable to reach a settlement with their creditors. With the assistance of credit counselors, it may be possible to get lower monthly payments and interest rates.
Lenders and creditors who have received judgements against debtors can be begin garnishing the wages of those debtors. If this occurs, filing for bankruptcy stop the wage garnishment and can even help debtors get some of the money that was garnished returned to them.
Medical bills that are not covered by insurance is another factor to consider in determining whether bankruptcy is the best way to resolve debt. Medical bills are the one of the main causes of bankruptcy because even with health insurance, people find it very difficult to pay those bills. By filing bankruptcy, people with substantial medical bills can pay them off using a 3-to-5-year payment plan or have them completely discharged.
A bankruptcy attorney may evaluate the financial circumstances of a client’s situation and may recommend filing a certain type of bankruptcy to stop wage garnishment. Assistance might be provided with developing a multi-year payment plan to resolve credit card debts and medical bills.
Bankruptcy law recognizes that debts might overwhelm Mississippi consumers. When individuals file for bankruptcy protection, they generally do so under either Chapter 7 or Chapter 13. The form of bankruptcy determines whether eligible debts will be discharged or if the person must continue to pay creditors under a court-mandated payment plan. The chapter under which people file also establishes waiting periods before they can file for bankruptcy again.
Under a Chapter 7 bankruptcy, the court relieves a person of financial burdens by discharging many unsecured debts. After people complete this process, the law requires that they wait eight years before seeking Chapter 7 protection again. If they want to file for Chapter 13 protection, however, they only need to wait four years after completing a Chapter 7 case.
Chapter 13 bankruptcy helps people overcome financial stress by creating a manageable payment plan. This protection can help someone catch up on bills over three or five years and avoid foreclosure or wage garnishment. Someone who took advantage of Chapter 13 protection could file for Chapter 7 after waiting six years. Only two years must pass, however, if a person wants to file a second Chapter 13 petition.
A person needs to consider many factors when filing for bankruptcy a first or second time. The action stays on a credit report for many years and can endanger future employment opportunities or access to credit. A consultation with an attorney could inform a person about the pros and cons of pursuing bankruptcy relief. An attorney could determine if a person could pass a means test and describe which assets might be exempt from liquidation.
