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.
The United States Courts recently released an update on the rate of bankruptcy filings in the United States. The report focuses on a 12-month period, spanning from January 1 of 2017 to December 31 of 2017. Bankruptcy filings for the calendar year were down by 0.7 percent.
Although the rate of filings decreased, the report notes that this was the smallest decrease since 2010. The report also states that the overall number of filings was the lowest since 2006.
Importance of bankruptcy data
It is important to point out that many people still seek financial relief through bankruptcy. In 2017 there were 765,863 individual petitions for bankruptcy relief filed with the court.
The national trend did not hold true for every state in the country. There were a reported 12,398 filings in Mississippi in 2017 and 12,246 in 2016. This translates to an increase in bankruptcy filings in the state of 152.
Chapter 7 most frequent form of relief
The vast majority of these filings involved a petition for relief under Chapter 7. 486,347 filings under this chapter were reported.
Chapter 7 is a popular option due to the fact that a successful petition can result in the discharge of qualifying debts. Examples of financial obligations that often qualify for discharge include medical bills and credit card balances.
Putting together a successful petition can be a difficult task. The applicant must include various information, including financial records and a complete application. The applicant must also pass the means test.
Data can help ease the way for others in Mississippi struggling with debt
This data shows that if you are struggling to manage debt in Mississippi, you are not alone. An attorney experienced in these matters can help you overcome the hurdles that may make it difficult to move forward with a petition for relief through bankruptcy. Contact a lawyer experienced in debt relief solutions for Mississippi clients to discuss your options.
Mississippi homeowners who are struggling to pay their mortgages might be interested in learning about a couple of bankruptcy court rulings in Ohio. When people file for Chapter 13 bankruptcy, they may be able to cram down second mortgages on their homes. The rulings also found that first mortgages may sometimes be crammed down as well.
A cramdown in Chapter 13 bankruptcy means that a second mortgage may sometimes be transformed into unsecured debt, meaning that the lien against the home will be destroyed. The homeowners are then able to concentrate on catching up their first mortgages during their court-approved repayment plans, which can help them to save their homes from foreclosure. At the end of the repayment period, the remaining unsecured debt balances are discharged, including the second mortgages on the home.
A cramdown only happens when a debtor is upside-down on his or her home to the extent that no part of the second mortgage is secured by the house. In two cases in Ohio, the bankruptcy courts also found that first mortgages could be crammed down or transformed into unsecured debt when the debtors owe more on their homes than they are worth. In the case of first mortgages, the cramdown is only on the amount that is owed above the fair market value of the home. A third ruling in Ohio found the opposite, however.
The Ohio opinions allowing first mortgages to be crammed down in bankruptcy could potentially change bankruptcy law everywhere. People who are unable to make their mortgage payments might benefit by talking to experienced bankruptcy lawyers to learn whether or not Chapter 13 bankruptcy might be an option for them. Chapter 13 bankruptcy might help people to stop foreclosure and other types of collection actions so that they can get back on their feet.
