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Category: Chapter 7
Filing for bankruptcy is not without costs

On Behalf of O’Brien Law Firm, LLC

Posted on: October 24, 2019

When a Mississippi resident is facing overwhelming debt, options start to dwindle. Financial problems may have a single cause, such as an illness or job loss, or might be the result of several years of financial bad luck or mismanagement. However, the associated costs of bankruptcy may prove burdensome for a debtor and may even make filing for bankruptcy protection difficult.

Financial counselors indicate there are three categories of costs an individual filing for bankruptcy must consider: court filing fees, mandatory education classes and attorney fees. The minimum total for these is a little under $1500 while the maximum can be closer to $4000, depending primarily on whether Chapter 7 or Chapter 13 bankruptcy is involved. It is possible to have fees on filing and classes waived based on income as compared to federal poverty guidelines, in consideration of family size and state of residence.

Legal representation is not a guaranteed right, and it is possible to represent oneself in a bankruptcy proceeding. There are legal clinics that do not offer representation but can be of assistance with filling out the appropriate paperwork and legal forms. The question becomes whether it is worth the risk to file in pro per, that is, acting as one’s own counsel. Statistically, it is extremely difficult to successfully discharge debt through self-representation as compared to the success rate when represented by legal counsel.

Bankruptcy is governed by federal law, and procedures must be followed precisely. A consultation with an experienced bankruptcy lawyer might be helpful in determining if either Chapter 7 liquidation or Chapter 13 reorganization is appropriate under the specific circumstances of the case.

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Heavy financial debt and filing for bankruptcy

On Behalf of O’Brien Law Firm, LLC

Posted on: October 14, 2019

Financial challenges and overwhelming debt are problems for many Mississippi residents. Struggling with debt may lead to physical and emotional exhaustion, especially if the person has to moonlight. Paying back creditors is a weary task. However, many people choose to go this route because they think filing for Chapter 7 bankruptcy or Chapter 13 bankruptcy may cause additional financial struggles.

Some debtors do not realize that choosing a route other than bankruptcy could mean losing funds in a retirement account because of the need to pay back creditors. In most cases, a bankruptcy filer does not need to relinquish assets held in an Individual Retirement Account (IRA) or a 401(k) plan. These types of funds are typically protected by bankruptcy regulations. Consulting with a bankruptcy attorney can help clarify the pros and cons.

Legal counsel may also help a client get a better settlement with creditors. It’s important to understand that debtors opting for debt settlements may need to pay taxes on the forgiven amounts. A debtor facing serious financial challenges may not have the money available to pay back the Internal Revenue Service. Furthermore, IRS debts generally cannot be forgiven in a bankruptcy. This makes obtaining good debt forgiveness terms all the more important.

An individual contemplating filing for Chapter 7 bankruptcy first needs to pass a means test. A bankruptcy attorney can help a client fill out the legal paperwork required to determine if the debtor qualifies. Setting up an appointment with a bankruptcy lawyer is the best way to make a wise decision.

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Planning for bankruptcy and divorce together

On Behalf of O’Brien Law Firm, LLC

Posted on: September 30, 2019

For many people in Mississippi, there can be a close relationship between divorce and financial problems. Existing financial difficulties can lead to tension and distress in a marriage. In addition, the extra challenge of property division can be devastating for people with little income and substantial debt. Therefore, a number of people decide to file for bankruptcy at the same time that they file for divorce. They may wonder whether it is better to make a bankruptcy filing before or after the divorce is finalized.

Some divorcing couples may want to file jointly for bankruptcy because they can discharge both of their debts before proceeding to the divorce. If they are filing for Chapter 7 bankruptcy, the entire process can be finalized in a few months. On the other hand, people filing for a Chapter 13 bankruptcy, often because they bring in over the median income in their area, may want to wait until after the divorce. This type of bankruptcy involves a years-long repayment plan, and it can be challenging to divorce while handling the plan as well. For example, the final property division outcome of a divorce can be delayed extensively.

Filing for bankruptcy jointly can help people deal with property like a home. When spouses file jointly, they have increased exemptions for property. People with income at or below their state median may benefit from a joint filing, especially if they are still on good terms. Those with high incomes, on the other hand, may wish to pursue bankruptcy separately.

The process for seeking debt relief and divorce can differ for each couple and each person. A bankruptcy attorney may provide detailed guidance and advice on how filing for personal bankruptcy might affect a divorce and potentially help people achieve a new financial future.

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Supreme Court ruling upholds creditor responsibilities

On Behalf of O’Brien Law Firm, LLC

Posted on: June 5, 2019

People in Mississippi may be aided in finding relief from overzealous creditors by a U.S. Supreme Court ruling. The high court ruled on June 3 that creditors can be held in contempt of court if they continue to pursue debts that were clearly discharged in a bankruptcy. Previously, the Ninth Circuit court had found that creditors should be cleared of sanctions in these cases, even if they should have reasonably known that the bankruptcy discharge applied to their debt.

The Supreme Court said that other courts can use civil contempt penalties against creditors that fail to follow a bankruptcy discharge order if it can be shown that the creditor should not have had any doubts that the order barred their activities. The case came about after the Sherwood Park Business Center continued to attempt to collect debts from a man who had filed for Chapter 7 bankruptcy, eliminating the debt. The bankruptcy court imposed sanctions on the creditor, saying that it was aware of the man’s bankruptcy order and the debt’s discharge. However, other courts overturned the contempt order on the basis of the creditor’s statement of its good faith in the legitimacy of its collection attempt.

Bankruptcy lawyers said that the high court’s ruling provides a higher level of protection for debtors. It uses an objective standard of reasonableness to assess a creditor’s actions and beliefs rather than relying on a subjective assessment of good faith. They said that the bankruptcy code provides detailed provisions and that creditors should generally be very clear on whether the bankruptcy discharge applies.

One reason why many people file for bankruptcy is to put an end to phone calls, letters and other forms of ongoing creditor demands. People who are facing an insurmountable debt burden might opt to consult with a bankruptcy attorney about their options for relief.

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Filing for Chapter 7 bankruptcy

On Behalf of O’Brien Law Firm, LLC

Posted on: March 13, 2019

Debtors in Mississippi who have significant debt and who have a lower income or no income may benefit from a Chapter 7 bankruptcy. However, they should carefully consider their financial situation and the impact that bankruptcy will have on their credit before filing.

Chapter 7 bankruptcy, which is the most frequently filed bankruptcy, is a liquidation bankruptcy as it uses the proceeds from the sale of secured property, such as a vehicle or home, that exceeds the exemption threshold to pay back creditors. Filing and being discharged from a Chapter 7 bankruptcy is a process that can take only three to six months; in comparison, a Chapter 13 bankruptcy will take three to five years to be completed.

Debtors who are considering Chapter 7 bankruptcy should be aware that the bankruptcy will remain on their credit report for as long as a decade from the time they file. Filing for bankruptcy will also lower their credit score; however, they may find that the negative effect on the credit score will lessen as time goes on.

A means test has to be conducted in order for debtors to qualify for a Chapter 7 bankruptcy. Debtors will use this test to determine if their income is low enough for them to file. Their household income will have to be less than their state’s median income for a household of an equal size. The means test will deduct certain monthly expenses, like a vehicle or mortgage payments, from any current monthly income to determine the disposable income.

A bankruptcy attorney may assist clients with financial challenges and determining if a Chapter 7 bankruptcy is the best option to resolve their financial situation. Assistance may be provided for completing the means test and filing the necessary legal paperwork to begin the bankruptcy process.

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