If a Mississippi resident is having trouble paying down his or her debt, it may make sense to think about filing for bankruptcy. By taking this step, an individual can obtain a stay of creditor contact and certain actions such as wage garnishment. However, the bankruptcy will be noted on a credit report and stay there for up to 10 years for those who file Chapter 7 bankruptcy.
An upside to filing for Chapter 7 bankruptcy is that individuals will likely have most of their debts wiped away in a short period of time. If a person files for Chapter 13 bankruptcy, he or she will have three to five years to repay their debts. Debtors who don’t qualify for Chapter 13 because they have too much debt may qualify for Chapter 11 bankruptcy instead. Regardless of what type of bankruptcy a person files for, the effects of that decision should decrease over time.
Individuals who file for Chapter 7 bankruptcy may be able to get a mortgage within four years of filing. Prior to filing for bankruptcy, it could be worthwhile to meet with an attorney. A consultation might be free, and individuals may find out about alternatives to filing for bankruptcy protection. Debtors may get help putting financial records together to present to a bankruptcy court.
Those who are facing financial challenges may find that filing for bankruptcy is an effective way to handle debts. Bankruptcy may allow debtors more time to renegotiate loan terms or have existing debts discharged in a reasonable amount of time. Taking this action might also put an end to wage garnishment or prevent it from happening at all. Debtors may generally keep property such as a house or car as their bankruptcy case unfolds.
People in Mississippi who are considering bankruptcy might wonder if they will be able to recover financially. One study by Lending Tree found that three years after a bankruptcy, people applying for a mortgage without a bankruptcy on average only paid about 19 bps less than those with a bankruptcy. Two years after a bankruptcy, around 65 percent of people had brought their credit score up to 640 or more.
Once a bankruptcy is discharged, the first step is to apply for a secured credit card. To get this type of card, a person puts down a deposit, and the initial credit limit is usually around the same as the deposit amount. The next step is to use the card conservatively, putting no more than 20 percent of the total credit limit on it at a time and paying it off each month. Once it has been established that the person will not max out the card and will pay it off responsibly, it might be possible to apply for a regular type of credit card.
Credit scores and issues such as identity theft can be monitored by signing up with a credit monitoring service. Although many bankruptcies occur because people have issues such as medical debt or job loss, those who struggle with spending should take a look at their budgets and try to improve.
One advantage of filing for bankruptcy is that it stops all actions against a person ranging from creditor harassment to foreclosure, lawsuits and more. Certain debts, including some taxes, child support and most student loans, cannot be discharged in bankruptcy, but in Chapter 7, most other debts can be, and a person may be able to make some assets exempt. A Chapter 13 bankruptcy may allow a person to keep certain assets and pay creditors using a payment plan of three or five years.
Bankruptcy has the potential to give people in Mississippi a fresh start if they are struggling with financial challenges. The need to pay for court fees and legal advice, however, can keep people from pursuing this legal remedy that might wipe out their burdensome debts. The challenge of paying for the process sometimes prompts people to choose Chapter 13 bankruptcy when filing under Chapter 7 could have produced greater benefits.
When debtors have no cash on hand to pay an attorney, they might agree to pay for legal representation as part of a Chapter 13 payment plan. This form of bankruptcy requires a debtor to create a plan for paying down debts over the course of a few years. By bundling legal fees into the agreement, attorneys gain a method for collecting payment. The drawback for debtors, however, involves their frequent inability to complete a payment plan. Failing to finish payments voids their bankruptcy protection and allows debts to return.
With a Chapter 7 filing, debtors generally receive a legal discharge of their qualifying debts. The assistance of an attorney with this process greatly increases the likelihood of a debtor gaining substantial debt relief without a payment plan.
The decision to file for bankruptcy requires a person to consider many variables. An attorney may inform a person about what types of assets could be exempt from liquidation, how to halt collection efforts and how to prevent foreclosure or wage garnishment. An attorney may help organize a person’s financial records for disclosure to the court. This effort might allow a person to avoid mistakes that could cause a court to reject an application. During the process, an attorney might also intervene to protect a person being harassed illegally by creditors.
Federal bankruptcy laws provide people in Mississippi with a possible path to a fresh start when they experience financial hardships. Data from 2015 collected by Debt.org revealed that 97 percent of the 844,495 bankruptcy filings from that year arose from individuals seeking protection from creditors.
The two most common forms of consumer bankruptcy are Chapter 7 and Chapter 13. The flier’s incomes and debts determine which form applies. For those who qualify within the terms of Chapter 7, they could achieve a court judgment that discharges some or all of their unsecured debts. The law exempts certain assets, like a primary residence or retirement account, from liquidation during this process. Nonexempt property, however, must be sold to pay creditors.
Under Chapter 13, a person develops a payment plan of three or five years. This form of bankruptcy generally applies to people who have a regular and reliable source of income. They also have the chance to protect more assets under Chapter 13 if they can meet the obligations of a court-approved payment plan. Upon the successful completion, many remaining unsecured debt balances will be discharged. Another option is Chapter 11, but this is for people who have debts higher than the amounts allowed under Chapter 13.
Problems like a medical crisis or job loss can lead to severe financial challenges, and people who find themselves in this type of a situation often do not know where to turn. They might find it advisable to meet with an attorney who can describe the bankruptcy process in more detail.
If Mississippi residents are like most Americans, they have some sort of credit card debt. In fact, data from the Federal Reserve shows that U.S. credit card debt exceeded $1 trillion in 2017, which is the highest in history.
A recent study by CreditCards.com analyzed financial data from America’s 25 most populous metropolitan areas. It then ranked each city by the amount of credit card debt its population carried and its debt burden in relation to its median income. The study found that the top five cities with the highest average debt are Washington, D.C., Dallas-Fort Worth, New York, Houston and San Antonio, which have debt averages ranging from $7,442 to $7,070 per person. The next five cities on the list are Baltimore, Atlanta, San Diego, Seattle-Tacoma and Denver, which have debt averages ranging from $6,985 to $6,720 per person.
To determine each city’s debt burden, the study calculated how long it would take a person to pay off the city’s average credit card debt while earning the city’s median income. The study found that the cities with the heaviest debt burdens are San Antonio, Miami-Ft. Lauderdale-West Palm Beach, Houston, Los Angeles and Dallas. The cities with the lowest debt burdens are Seattle, Washington, D.C., Boston, Minneapolis and San Francisco. It would take someone living in San Antonio, the city with the highest debt burden, 22 months to pay off their debt. Meanwhile, someone from San Francisco, the city with the lowest debt burden, could pay off their debt in just 13 months.
Some people have difficulty paying off their credit card debt. When this happens, bankruptcy may be the best option. Individuals facing financial challenges might benefit by discussing their situation with a bankruptcy attorney.
