Many people in Mississippi feel like they are drowning under the weight of credit card bills, medical expenses and other forms of debt. When the pressure of debt becomes too great to bear, people can look for options to find relief and forge a path to a new financial future. Personal bankruptcy, including Chapter 13 bankruptcy, is one such option that can allow a person to keep their property and pay back their creditors over a set period with a court-approved repayment plan.
In general, if the monthly income of the person filing for bankruptcy exceeds the state’s median income, he or she must pay back the debt over a five-year period. On the other hand, if his or her income is equal to or less than the state’s median income, the debt can be addressed with a three-year repayment plan. At the end of the repayment period, debtors can find significant relief or eradication of the bills that have overwhelmed their lives.
In order to file for Chapter 13 bankruptcy, people in debt must follow the proper legal procedure, including providing proof of income, a list of creditors, an inventory of property and monthly living expenses. Filers must produce their most recent tax returns in addition to proof of tax filings as well as submitting a repayment plan. Debtors must adhere to the plan and continue to make child support payments, repayments to creditors and tax filings. The repayment plan must include full payments for certain types of debts and lesser payments for other types of unsecured debts.
Chapter 13 bankruptcy may be an important road out of debt for many people, especially those with too much income to qualify for Chapter 7 bankruptcy. Throughout the process, a bankruptcy lawyer may represent a debtor to advocate for a fair repayment plan that puts the client on a path to success.
It is possible for Mississippi residents to get financing for a car while in Chapter 13 bankruptcy. However, the process may take longer and be more difficult than for people who are not in bankruptcy. The first step is to find a lender and dealer. If finding a lender is not possible, the next step is to look for a subprime dealership. They specifically work with lenders whose specialty is people with bad credit.
The dealer will create a buyer’s order once the terms of the loan have been agreed upon and the vehicle has been chosen. This must then be submitted to the trustee along with paperwork that includes an explanation of why the vehicle is needed. A trustee is not likely to approve a luxury vehicle, so making the right choice is important.
The information in the Motion to Incur Additional Debt that the trustee files with the court will also be sent to creditors. Creditors have the option to object, but this is not an automatic rejection. The debtor would have to attend a hearing. A debtor receives an Order to Incur Additional Debt if the court approves the loan. This then must be taken to the dealer. If the loan is not approved, a debtor can try with a different car or try again later.
Some people may be reluctant to file for bankruptcy because they are afraid it will ruin their credit. However, this is not necessarily the case. Bankruptcy does damage a person’s credit, but so does unmanageable debt, and it is possible to rebuild credit after a bankruptcy. Furthermore, a Chapter 13 bankruptcy, which involves creating a payment plan to repay creditors over several years, can make it possible to keep some assets such as a house.
For people in Mississippi struggling with unrepayable debt, bankruptcy can be a way out from financial disaster. However, the types of debt that can be wiped away in bankruptcy vary depending on the type of bankruptcy a person pursues. In addition, some types of debts are almost always dischargeable while some types of debt are notoriously difficult to discharge.
Most consumers who file for bankruptcy pursue either Chapter 7 or Chapter 13 bankruptcy, both of which help people to find a new financial lease on life after debt. Only people who make below a certain income, usually the state median, can file for Chapter 7 bankruptcy. Under this type of filing, a person’s assets are liquidated while the funds are distributed to creditors to satisfy the debt. Some assets are exempt from liquidation, including those necessary for life such as a car or tools used on the job. After this process, remaining debt that is qualified for discharge will be fully released, and creditors will need to stop their attempts to collect these debts.
Chapter 13 bankruptcy is different because debt is restructured rather than instantly discharged. People enter a new period of repayment of the restructured debt, and after that payment period is over, qualifying debt could also be discharged. In general, mortgages, auto loans, personal loans, medical bills, credit card debts, unpaid utility bills and similar debts can be discharged in bankruptcy. Student loans are the most difficult type of debt to discharge along with child support and spousal support or government fines.
People struggling with debt can often be eligible for Chapter 13 bankruptcy regardless of their income level. When considering options to escape from the spiral of personal debt, people may consult with a bankruptcy lawyer for advice on the type of bankruptcy that is best to pursue in each individual circumstance.
People in Mississippi with bankruptcies on their records naturally await the day when their credit reports no longer show their defaults. The Fair Credit Reporting Act allows credit bureaus to report bankruptcies for up to 10 years from the date of filing. Until then, former debtors can take steps to improve their credit ratings and potentially remove bankruptcies from their records.
A certified financial planner said that Chapter 7 bankruptcies remain on record for 10 years, but Chapter 13 cases can come off records after only 7 years. People might have the ability to remove these events from their credit reports if the credit agencies have recorded them inaccurately. To begin, a person would examine credit reports from all three major credit reporting companies. If any errors are present, then the person could dispute the entry. A credit agency’s inability to verify a bankruptcy might enable a person to have the record removed. Another tactic involves contacting the court house where the bankruptcy filing took place. If the court did not verify the bankruptcy for the credit agencies, then it would be an unverified entry. After obtaining a written statement about this, a person could ask the credit bureaus to erase unverified entries.
Whether a bankruptcy remains on record or not, people have the ability to improve their credit ratings by paying bills on time or early. Avoiding new debts could also help people keep their records clean.
A person contemplating bankruptcy may wish to consult an attorney. A legal evaluation of the person’s finances might show that a Chapter 13 filing could pave the way to a fresh financial start. The attorney may help the person create a manageable payment plan that repays creditors at least partially before the court dismisses remaining debts.
Mississippi residents who find themselves with debts they cannot afford to pay have the option of voluntary bankruptcy. A voluntary filing means that a debtor chooses to file for bankruptcy without being petitioned to do so by a creditor. While bankruptcy can wipe out many types of debt, some debts are excluded. For example, taxes owed are often not allowed to be dismissed in bankruptcy. It all depends on what type of taxes, what type of bankruptcy and whether or not the taxes in question meet some very specific criteria.
For individuals and couples, there are generally two types of bankruptcy. Chapter 7 dismisses allowable debt and liquidates some assets to pay creditors. On the other hand, Chapter 13 requires making payments to creditors for a period of time under an affordable payment plan. When the payment plan is completed, remaining debt is dismissed.
Taxes can sometimes be eliminated by bankruptcy, but there are very stringent rules about this. Generally, taxes can be discharged if they are associated with a tax return that was due at least three years before the bankruptcy was initiated and filed at least two years before the bankruptcy. If an associated return was never filed, the taxes cannot be discharged. The taxes must also have been assessed at least 240 days before bankruptcy was filed.
This is only a partial list of the criteria that must be met for taxes to be dischargeable. Additionally, the rules could be different if the bankruptcy is involuntary.
When someone is considering bankruptcy, they might not have the option of filing for Chapter 7 if they do not meet the income requirements. Chapter 13 is considered to be bankruptcy for wage earners who have steady income and can make payments under a payment plan. A lawyer could help a debtor decide which type of bankruptcy to file.
