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.
Some people in Mississippi who are struggling with debt might want to consider filing for Chapter 13 bankruptcy. This can allow a person to keep some of his or her assets.
In a Chapter 13 bankruptcy, an individual works with the court to create a payment plan for paying off his or her debts over a period that lasts three to five years. People who are able to stick to the payment plan and make mortgage payments may be able to keep their homes. They might be able to keep other major assets as well as long as they can keep up with their payments. It may be possible to discharge the bankruptcy earlier if the payment plan is completed in less time than originally planned.
Some debts, including taxes, student loans and child support, must be paid in full and cannot be discharged in bankruptcy. The next level of debt includes any other major assets that can be repossessed if the debt is not paid. Finally, there are unsecured debts, such as medical and credit card debt. Most individuals who file for Chapter 13 might have to pay some of these debts, but the court may allow them to discharge them in part. A Chapter 13 bankruptcy only stays on a person’s record for seven years unlike Chapter 7, which remains on a credit report for 10 years.
A lawyer may explain a person’s options for debt relief and whether he or she qualifies for a Chapter 13 bankruptcy. It is necessary for someone to have an income that is high enough to make the necessary payments. Once the bankruptcy filing is made, foreclosure, creditor harassment and any other actions against the debtor must stop. However, a Chapter 13 bankruptcy can offer a person a fresh financial start, and a person can go on to rebuild his or her credit.
Mississippi residents who are having trouble paying off debts might look to the bankruptcy system for relief. For most individual filers, there are two options, Chapter 7 and Chapter 13. There is a limit on how much debt a filer can have if they want to file bankruptcy under Chapter 13. Specifically, the filer cannot have more than $1,184,200 in secured debts or more than $394,725 in unsecured debts.
Chapter 13 bankruptcy, which is sometimes called wage earner’s bankruptcy, involves the filer paying down debts for a period of between three and five years, pursuant to the terms of a repayment plan approved by the bankruptcy court. There is no maximum income limit for people filing Chapter 13, and it does not matter where the filer’s income comes from. Chapter 13 bankruptcy is a good solution for people who have regular income. Typically, the filer is allowed to keep important assets like a car or house.
Prior to filing, the debtor must go through credit counseling. After the bankruptcy petition and other required documents are filed, the bankruptcy trustee will work with the debtor to create a repayment plan. It is not up to the debtor how long the repayment plan will last. Rather, the period of repayment is determined based on the filer’s level of income.
Those who are considering bankruptcy as a means to relieve financial stress and reduce or eliminate debts might want to speak with a lawyer. Legal counsel with experience practicing bankruptcy law might help a client file the petition to begin the process. If necessary, the lawyer could fight for the client’s best interests during official proceedings.
People in Mississippi who have fallen behind on their mortgage payments face the possibility of foreclosure. While some lenders are open to loan modifications or short sales to satisfy the debt, many are not. Many lenders will begin foreclosure proceedings, which can end with the lender taking possession of the house and selling it at auction. The proceeds of the auction are then used to pay down the mortgage as well as the legal costs associated with foreclosure.
Where the lender is not willing to work with the borrower and forecloses on the property, filing for bankruptcy can protect the borrower. Once a person files for Chapter 13 or Chapter 7 bankruptcy, the court issues an Order for Relief that includes an automatic stay of collections actions. Creditors are then not allowed to attempt debt collection efforts until bankruptcy proceedings are complete. There are exceptions to the automatic stay in cases where the lender has already filed the foreclosure notice and lenders can file motions to lift the automatic stay.
Individuals who file for Chapter 13 bankruptcy set up a repayment plan as part of the bankruptcy process. The plan distributes the filer’s income to creditors, and the filer must account for current and past-due mortgage payments. If the person meets the requirements of the bankruptcy court for the length of the plan, he or she will usually avoid foreclosure and keep the home.
People who are struggling to pay down debts in Mississippi might want to speak with a lawyer. A lawyer with experience practicing bankruptcy law might be able to help by examining the facts of the case and suggesting a Chapter 13 or Chapter 7 bankruptcy filing to restructure or eliminate debts. A lawyer may be able to negotiate new payment terms with creditors or draft and file a bankruptcy petition to trigger the automatic stay.
Overall, the nation’s economy is in relatively good shape. This means that unemployment rates are down throughout much of Mississippi and the rest of the United States. However, there is a somewhat new phenomenon that is showing a darker financial picture for some Americans — there is a notable increase in bankruptcy filings for older individuals, particularly for baby boomers.
Anything that impacts the baby boomer generation, which represents approximately one-quarter of the population, is certain to have rippling effects throughout the entire economy. Economic researchers report that in the last 25 years, the rate of baby boomer bankruptcy filings has increased sixfold. The overall trend shows bankruptcy rates declining for those 54 and under yet dramatically increasing for the 55-plus group.
While any age group can be hit by major economic events, such as job loss or a family split, older people are unique in finding themselves transitioning into retirement. The combination of living longer, dealing with a decrease in social security benefits, less or non-existent pension plan benefits and far higher medical costs across the board places boomers and those nearing retirement at greater risk. Nothing occurring currently in the economy seems likely to change these trends in the near future.
Financial challenges can arise at any time in any one’s life. A fresh financial start may be possible with debt relief or a manageable payment plan. A bankruptcy lawyer can provide guidance and counsel in determining whether Chapter 13 relief would be appropriate under the specific facts and circumstances.
