A Mississippi debtor who successfully files for Chapter 13 bankruptcy will go on a payment plan that lasts for three or five years. Payments are made to a trustee, and the trustee then distributes the payments to creditors.
How much that has to be paid is based on the person’s income and expenses. It is necessary to submit expenses for six months. The income can be from a number of sources including employment, alimony or a pension plan. If it varies from month to month, the amount the person must pay can vary as well. For some expenses, such as rent, the filer can use the actual amount owed, but there is a government-set amount that is used for utilities.
Priority debts include things such as child support, taxes and alimony and generally must be paid in full. If a person wants to keep a piece of property, such as a home, the payments have to be caught up with. For unsecured debt, such as medical and credit card bills, the person has to pay as much as the nonexempt assets are worth. However, a person does not necessarily have to pay off all debts. At the end of the payment period, if the person has followed the bankruptcy agreement, many of the remaining unsecured debts will be discharged.
People who are struggling with debt and considering bankruptcy may want to discuss options with an attorney. Some people may hesitate to file for bankruptcy because they think they will be unable to afford the payments or that their credit will be ruined for decades. However, bankruptcy gives a person an opportunity to make a fresh start while avoiding creditor harassment.
Debt can be a significant source of stress for both men and women in Mississippi. However, data collected by Comet Financial show that women carry higher debt loads than men on average. The average student loan balance for women was $30,716 while men owed amounts that averaged $24,323. Car loans produced another disparity, with women owing an average of $12,183 compared to $10,371 for men.
Credit card debts followed the same pattern. While women carried an average outstanding balance of $6,559, men’s credit card debts averaged $5,163. Medical bills hit women harder as well. Their average medical debts were $1,110 more than that for men. The gender wage gap presents itself as the likely contributor of higher debts for women. In general, female workers only earn $0.72 to $0.82 for every $1 paid to male workers.
Regardless of gender, people have a strong interest in paying down their burdensome debts. To accomplish this, they might scrutinize their budgets for expenses that can be cut so that money can be redirected to debt balances. For many people, a second job has the potential to bring in hundreds of extra dollars per month that could go toward paying off loans.
When circumstances have forced a person so far into debt that keeping up with loan payments and living expenses appears impossible, speaking with an attorney about bankruptcy might reveal a solution. After reviewing someone’s financial situation, an attorney might recommend filing for Chapter 13 bankruptcy. This action might result in an adjusted payment plan that a debtor can keep up with every month. An attorney could prepare the financial disclosures necessary for petitioning the court. Legal support could allow a person to halt creditor harassment and potentially convince a court to discharge a portion of debts after the completion of a payment plan.
A cautionary tale is being given to consumers after some in the financial world are looking backward to 2008. Those in Mississippi and elsewhere in the country may want to pay heed to the warning.
During the housing and financial crisis of 2008 and the subsequent recession many not only had a larger housing debt than practical, but consumer debt was also higher than ideal. With the recession, nearly 10 percent of credit cards had at least one missed payment.
But while the recession was ongoing, nearly one half of consumers with credit cards were making an effort to pay down their credit card debt. Either by force or by choice, American consumers became more frugal. Better times often lead people to return to bad habits. Some feel Americans are returning to bad credit habits. The beginning of 2018 showed that consumer debt has reached an all time high.Though credit cards are a part of this debt, the new household debt focuses more on vehicle and student loans. Payments on each of these debts have an effect on the household budget. The fear isn’t so much the present ability to pay as most are meeting obligations.
The fear is that should a downturn in the economy take place, Americans have not left themselves enough of a cushion to weather a storm. A re-evaluation of spending habits as they apply to consumer debt is warranted. Cutting back on spending by 10 percent, avoiding revolving debt for nonessential items and always making more than the minimum payment are some suggestions.
An interruption of household income, even briefly, can have a substantial effect on household finances. In some cases, the situation may not be recoverable without assistance. In these instances, a consultation with an experienced bankruptcy attorney may open up options the debtor has not considered.
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.
