The repayment term for Chapter 13 bankruptcy is three to five years. During that time, it is not uncommon for some people to experience changes in finances that interfere with their ability to stay current on their bankruptcy obligations.
Job loss, serious illness, death, and divorce are some of the many reasons why some people encounter difficulty making their bankruptcy payments. Fortunately, the law offers the following solutions for people who are unable to pay their Chapter 13 bankruptcy payments.
Chapter 13 bankruptcy allows eligible debtors to suspend payments for short-term financial emergencies. To qualify, trustee approval is necessary and the suspension term is three months or less.
Chapter 13 bankruptcy plan modification is an option for debtors who are experiencing a temporary setback in their ability to make on-time payments. The interruption must last longer than three months. Debtors must also maintain an income level that allows them to make ongoing Chapter 13 payments. Debtors who pursue dismissal do not retain the protection of the automatic stay and are subject to debt collection calls, wage garnishments and foreclosure or repossession.
Changes in income like job loss, hospitalization, etc., that cause long-term income loss or an inability to pay are generally not eligible for modification. There are also circumstantial limitations to bankruptcy plan modifications.
Depending on the cause of their current financial challenges and amount of income, debtors may not qualify for bankruptcy modification but qualify for Chapter 7 bankruptcy protection if their income passes the means test. Chapter 7 can help those experiencing long-term financial stress to start over when they are no longer able to meet Chapter 13 bankruptcy requirements.
Debt is a reality for millions of people living in Mississippi and across the country. According to the National Consumer Law Center and the Consumer Federal Protection Bureau, 70 million people nationwide interacted with a debt collector during the year 2017. One third of American adults had some type of debt in collections during 2016. It can be stressful for people who are struggling to pay their bills to have to speak with debt collection services, but there are some ways to make it easier.
First, it is important for the debtor to know his or her rights. Under the Fair Debt Collection Practices Act, creditors are prohibited from calling people outside of certain hours. They are also limited in the number of calls they can make and prohibited from harassing people. If a debt collector violates the FDCPA, there may be actionable claims for damages.
Second, it is important for people to verify that the debt collector is legitimate. There are a number of organizations in operation that are not the real owners of a debt but targeting people to scam them. It is simple to check the legitimacy of a debt collector with the Better Business Bureau or an online search.
Third, it is important to get the original paperwork associated with a particular debt. The contract that governs the debt can contain provisions that give a debtor rights, and it is generally necessary to show that a debt is legitimate.
People in Mississippi have options when it comes to dealing with debts and debt collectors. A lawyer may help people who are struggling to pay bills by suggesting avenues to reduce or eliminate debts, including filing for bankruptcy protection in some cases. A lawyer might be able to negotiate with creditors to reduce the amount of debts outstanding or arrange better payment terms.
At the end of 2018, Americans owed credit card companies roughly $900 billion. However, the Consumer Financial Protection Board says that Mississippi residents and others throughout the country aren’t necessarily in a perilous financial situation. Currently, most of the credit card debt is being generated by people who have credit scores of at least 740. This means that they are more likely to pay their debts in full and on time.
Furthermore, interest rates for other debts such as mortgages and credit cards are lower by historical standards. This makes it easier for debtors to handle their overall debt loads. Finally, unemployment is reportedly at its lowest level in 50 years, and employers are expected to spend more money on worker salaries in 2020. Consumer confidence is also relatively high despite the fact that the United States and China have been engaged in a long-term trade battle.
However, there are some reasons to believe that increasing credit card debt could eventually become a problem. For example, those with lower credit scores are accumulating debt at a relatively high rate, and this has led to an increase in both late payments and charge-offs over the past two years. The CFPB also says that debtors have been increasingly seeking out debt settlements and other forms of relief in recent years.
Those who are seeking a fresh financial start may be able to obtain it by filing for bankruptcy. Doing so might make it possible to eliminate credit card and other debt balances. An attorney may be able to help a person learn more about the process of filing. In many cases, individuals who file are entitled to an automatic stay of creditor contact. This may prevent creditors from going through with a foreclosure or repossession until a case has been resolved.
A person in Mississippi who has an open Chapter 13 bankruptcy may be able to get a vehicle loan, but there are several steps that must be taken to do this. Moving ahead without getting the approval of the court puts the bankruptcy itself in jeopardy. The person could also face a lawsuit from creditors, and the vehicle could be repossessed.
The first step is going to a dealership and talking to the special finance manager. If the manager agrees, the person can choose a car, and a sample buyer’s order is created. This form should include such information as the monthly payment, the interest rate and the maximum term. The form should say that the person will purchase this car or a similar one. The reason for this is that if the car sells before the process is complete with the court, the person would have to start the process all over again unless “or similar” is included on the form.
The next step is to take the form to the trustee. The trustee must agree that the person has a good reason for purchasing the vehicle and that it is within the debtor’s budget. The motion is sent to the court and creditors. If there are no objections, the person is allowed to proceed with the purchase.
As this process demonstrates, filing for bankruptcy does not mean a person is never able to take out a loan or build credit again. A bankruptcy filing can clear the way for a person to start fresh financially. A person who is struggling with debt may want to talk with an attorney about eligibility for a Chapter 13 bankruptcy. It is necessary to have an income above a certain level. The person must also be able to work out a repayment plan with creditors.
People in Mississippi who are struggling to pay off their debts might consider bankruptcy as an option to reduce or eliminate them. For most individual filers, there are two options when it comes to filing bankruptcy: Chapter 7 and Chapter 13. It is important to know the differences between the two options as one or the other may be better for the petitioner in a particular case.
Chapter 7 bankruptcy is sometimes referred to as liquidation bankruptcy because it involves the liquidation of the petitioner’s assets in order to pay off as much debt as possible. At the conclusion of a successful Chapter 7 bankruptcy, any unsecured debts will be wiped out, and the petitioner may be able to keep important assets like a home, vehicle or tools used for work. In order to qualify under Chapter 7, the person must pass the means test, which begins with a comparison of the person’s income to the state’s median income. If the person’s income is at or below the statewide median, he or she is free to file for Chapter 7. There are cases in which people with higher incomes may also be able to file for Chapter 7.
Those who are unable to file Chapter 7 bankruptcy may be able to file under Chapter 13. Chapter 13 bankruptcy is sometimes called reorganization bankruptcy as it involves the reorganization of debts so that the petitioner can afford to pay them over a period of three or five years.
An attorney with experience practicing bankruptcy law may help individuals who are having trouble keeping up with debts and expenses. An attorney might be able to negotiate with creditors or draft and file a petition to begin bankruptcy proceedings. An attorney may also help the client understand the means test for Chapter 7 or represent the client during the required meeting of creditors.