When Mississippi residents feel the burdensome strain of large debt and monthly payments relative to their financial wherewithal, the thought of bankruptcy may cross their minds. Some, in fact, get the fleeting thought and then dismiss it immediately.
The fear of having to liquidate their assets is too much to bear. However, it need not be worrisome at all for many.
Mississippi exempt assets not subject to liquidation
As stated by the Mississippi Bar Association, there are many assets that are exempt from liquidation. Such assets include $10,000 worth of personal property, such as a car or household items. Insurance payments on exempt property are also exempt. If a person is receiving disability insurance benefits, these too may be exempt, as may be pension or retirement benefits.
The home may be exempt up to $75,000 in equity beyond the mortgage balance. However, although one can keep the house, the debtor will need to keep paying that mortgage. The filing debtor of a Chapter 7 bankruptcy can also keep his or her car so long as he or she makes those car payments timely. Personal injury awards are also exempt up to $10,000, as may be workers’ compensation awards.
Personal property exemption
The $10,000 exemption in personal property does not mean determining how much it would cost to replace the item. It is not the cost of buying a new item. Rather, the figure used is the fair market value of the used item. What dollar amount can that used item bring in if sold? When using that latter definition, $10,000 may cover a lot of personal property. Also, when figuring out the car value, it is the value of the car minus the balance of the car loan to determine the equity counted towards that $10,000 limit. If the car market value is $15,000, and the owner owes $10,000 on the loan, the countable equity is only $5,000. Of the $10,000 exempt limit, saving the car would still leave $5,000 of other personal property.
In fact, many people eligible for Chapter 7 do not have any non-exempt assets. Many may already have sold valuable property to make ends meet prior to considering bankruptcy. Others just never got far enough ahead financially to gain exempt assets. This reality may make filing for Chapter 7 a relatively simple matter. It can lead to a future of financial relief and ability to live without the constant feeling of treading water.
As you consider your options for getting out of debt, you may be hesitant to choose the route of bankruptcy for various reasons. Perhaps you fear losing meaningful assets or ruining your credit. Maybe you are unsure if such an approach is even moral.
The truth is that bankruptcy comes with numerous benefits that may help ease your worries on the matter. Talk to a bankruptcy lawyer to determine if it is the right fit for your financial circumstances so you can experience these positive effects.
Asset protection
Regardless of the type of bankruptcy you claim, you will not lose all your assets. Each bankruptcy chapter comes with its own list of protected property and income, and state laws allow for additional exemptions. Which assets you want to safeguard may affect how you file.
Immediate relief from creditors
As soon as you file for bankruptcy, the court issues a stay to all your creditors, which puts an immediate end to:
The stay is temporary, except for harassment, but your attorney can help you decide what steps to take so you can retain your property and limit interaction with creditors.
A fresh start
While it is true that bankruptcy hurts your credit, the harm is only temporary and is less consequential than remaining in your current situation. You can rebuild your credit within years to better than before and even qualify for loans and credit cards in a short time. These are likely to have high interest rates, however, so you need to manage your money wisely to avoid getting into trouble again.
Peace of mind
With all your focus on numbers and legal issues, you may have put aside your emotional well-being. However, having a solid plan for eliminating debt alleviates stress from chaos and confusion. Once you file, you will have peace from taking action and knowing you are on track to financial freedom.
Are you missing payments on your home and also have credit card debt? If you are dealing with this level of financial turmoil, you are probably feeling scared and confused. You might feel like there is no way out of this situation. Thankfully, there are several options you have to save your home and help you manage your debt.
When foreclosure is near and credit card debt keeps racking up, you can start by modifying your loan or filing for bankruptcy. Here is how each option works.
1. Loan modification
If you are lucky, you might be eligible to restructure your mortgage loan. This would bring your account current and establish a more affordable payment. In certain cases, this is the best option rather than filing for bankruptcy or accepting foreclosure. Your lender may be wary of approving a loan modification, so you likely want a legal representative to help.
2. File for Chapter 13 bankruptcy
This type of bankruptcy reorganizes your debt and will bring your mortgage loan current over the next few years. You pay a portion of your debt over this period through an affordable repayment plan. Your lender will not be able to reject these payments when you file for Chapter 13 bankruptcy, and you will keep your home as long as you make your repayments.
3. File for Chapter 7 bankruptcy
If you do not have enough income for a repayment plan, you might go for Chapter 7 bankruptcy instead. Chapter 7 bankruptcy will allow you to wipe out your credit card debt. Once your credit card debt is eliminated, you can try reapplying for a loan modification. Your lender might be more lenient with modifications once your credit card debt is gone.
Both types of bankruptcy and applying for a loan modification are viable options to save your home. The exact strategy you choose will largely depend on your income and assets.
Many people consider bankruptcy because of bills and financial responsibilities that exceed their savings and income. According to the National Association of Realtors, the average monthly amount for mortgages is $1,061, and this can become burdensome. If you have filed for Chapter 13 bankruptcy, though, you may receive an offer from your lender for a modification. These agreements have pros and cons, and there are a few things you should know.
Take advantage of a low interest rate
Because your lender does not want your loan to go into foreclosure, they will likely offer a modification with a low interest rate. After around five years, it may go back up, but it will not exceed the rate specified in your contract or the interest rate qualified buyers are eligible for. Having your interest rate reduced like this, though, can alleviate the burden of a hefty monthly mortgage payment to make.
Revisit filing for Chapter 13 bankruptcy
In such cases, the relief from a modification may make Chapter 13 unnecessary. For many people, though, bankruptcy is not due to any single financial issue — it is the solution to a series of debts and financial burdens. Still, it is worth considering how a modification might or might not impact your decision to file for Chapter 13.
Consider the effect of amortization
Another important factor to take into consideration is the responsibility to taking on the extended amortization that is often included in the modification agreement. This typically entails an additional 40-year agreement, and this may last the remainder of your life. Though a modification may temporarily relieve financial stress, it may also prolong it for years in the long run.
If you are considering Chapter 13 bankruptcy or a mortgage modification, you should be aware of all your options. Contact an attorney for more information and legal advice on handling excessive debts.
A no-interest credit card certainly sounds appealing, but if you have ever taken a credit card company up on such an offer, you may know that things do not always work out in your favor. No-interest credit cards allow you to make purchases without assessing interest on the amount accrued, but only for a specified amount of time.
Once the no-interest window has closed, you will have to pay interest according to your card’s standard annual percentage rate. This can prove problematic if you still have a considerable balance on your account at the end of that grace period. So, before you apply for that no-interest credit card or sign on the dotted line, consider the following.
The card’s APR
If you are considering applying for a no-interest credit card, do your research about its APR, and then check out how it compares to the APR of credit cards you are already using. If it is higher, going this route is probably not a good idea for you, unless you are absolutely certain you can pay the balance off in full before the no-interest period is over.
Additional fees
If the card you are considering is also a rewards card, you may have to pay an annual fee in addition to interest once the grace period ends. The amount of these fees tends to vary based on factors such as how valuable the rewards benefits are.
Spending habits
It also may prove wise to take a good, hard look at your spending habits. It can be all too easy to take advantage of an interest-free credit card. Before you know it, you have racked up considerable debt, and the no-interest period is nearing its end.
Credit card debts are one common cause behind filing for bankruptcy. If you have any doubt about your ability to pay off your credit card balance in full before the no-interest period ends, you may want to reconsider taking advantage of these offers.
