Mississippi Bankruptcy Law
If everything you try fails and the bill collectors are still coming after you, bankruptcy is an option you should learn about and consider. However, you need someone you can trust. Our Mississippi law firm has been handling bankruptcy cases since 1986. Don't believe all the myths and misinformation you hear about bankruptcy from your friends or the tv. We know what rights you have in a bankruptcy case and we can help you make the best decision for your situation.
Most people wait too long to seek help for their debts and end up in a more difficult position than they would have been. They ignore the red flags that are warning them of financial disaster. Some of these red flags include struggling to make your minimum payments, borrowing from one card to pay another, tapping your retirement accounts to pay your debts, getting behind on your rent or mortgage, threats of foreclosure or repossession, and constant debt collection calls and notices. Give us a call early on and get the facts and information you need to decide what is best for you. We give everyone a free consultation.
Bankruptcy is a federal court process designed to help consumers and businesses eliminate their debts or repay them under the protection of the bankruptcy court. Bankruptcy cases are always filed in the United States Bankruptcy Court, but cases depend heavily on state and local laws. It is up to your bankruptcy attorney to be aware of the federal, state and local laws and to guide you through the process.
Chapter 7 Bankruptcy
Chapter 7 is a form of bankruptcy that allows you to discharge your unsecured debt. Common examples of unsecured debts are credit cards, medical bills, payday loans, signature loans, repossession deficiencies, and judgments. It will also discharge any secured debts if you are willing to give the collateral back to the creditor. If you have secured debts such as a mortgage or vehicle that you wish to retain, they will not be included in the Chapter 7 as long as you continue to make your payments. You will sign what is called a “Reaffirmation Agreement” which in simple terms means you sign back up for the debt.
You would file Chapter 7 after you have exhausted all of your non-bankruptcy options. However, it is all too common for people to make minimum payments for years, and attempt to work with their creditors, just to find themselves no better off than when they started. Chapter 7 Bankruptcy is a responsible way for you to reorganize your finances, liquidate your debt, and achieve the fresh start you deserve.
Who Can File Chapter 7?
Individual consumers are eligible to file a Chapter 7 Bankruptcy provided they meet the following criteria:
1. All Debtors filing Chapter 7 bankruptcy must pass a means test. The means test is a form that compares the Debtor’s income and expenses to the national IRS standards. This form is best completed by a skilled and qualified attorney. It is our experience that Debtors who previously qualified under the old bankruptcy laws, still qualify with the new bankruptcy laws. In fact, more than 96% of potential bankruptcy Debtors still qualify for Chapter 7 Bankruptcy.
2. In addition, Debtors are only eligible to file for Chapter 7 bankruptcy and receive a discharge of their debts eight years after a prior chapter 7 discharge.
Types of Bankruptcy
There are four basic types of bankruptcy:
Chapter 7: Also known as straight bankruptcy, it is the fastest, easiest and least expensive kind of bankruptcy.
Chapter 11: This reorganization is used primarily by businesses but also by people with unsecured debts higher than $360,475 or secured debts of more than $1.08 million.
Chapter 12: This is used solely by family farmers as a way to reorganize their finances.
Chapter 13: This is for individuals with a regular source of income where we can structure a payment plan that allows them to keep all of their property. It is used heavily by people who are looking to save a home from foreclosure or a car from repossession.
The most common types of personal bankruptcy for individuals are Chapter 7 and Chapter 13. As much as 70% of all U.S. consumer bankruptcy filings are Chapter 7 cases.
Chapter 13 Bankruptcy
A Chapter 13 Bankruptcy is a reorganization of your debt. Some call it a bill consolidation through the court system. Unlike a Chapter 7, which simply liquidates your unsecured debt and has no payments, a Chapter 13 Bankruptcy is a powerful tool to pay creditors on terms that are favorable to you. This chapter of bankruptcy allows you to keep property that has delinquent payments. A person normally utilizes a Chapter 13 Bankruptcy in the following situations:
1. First, a Chapter 13 Bankruptcy can allow a Debtor to stop the foreclosure of a residence or repossession of a vehicle. The Chapter 13 repayment plan allows the Debtor to take any mortgage arrears and pay back the mortgage company over a three to five year period. It also allows you to completely refinance automobile loans and generally lower interest rates. This provides you an opportunity to impose payment terms favorable to you, rather than unrealistic terms imposed by a creditor.
2. Furthermore, debts that may not be dischargeable in a Chapter 7 can be paid back through a Chapter 13 Bankruptcy. Examples of non-dischargeable debts are delinquent income taxes and back due child support. The Chapter 13 Bankruptcy allows the Debtor to repay these debts over the three to five year payment plan and in most situations prohibits wage garnishment.
How Does It Affect My Credit?
Many Debtors are surprised when they learn it is possible to actually have a higher credit score within one year after completion of a bankruptcy than if they had not filed. The truth is that bankruptcy is a negative reflection on your credit; however it is not the only factor creditors use when making a lending decision. Some of the positive effects that you will experience upon completion of your bankruptcy are as follows:
1. First, all of your eligible unsecured debt will be discharged. Therefore your debt to income ratio will be much improved.
2. Second, the negative payment history that is being used against you when creditors make lending decisions will be gone, and the line items on your credit report will show “Discharged in Bankruptcy.” Everyday that you put between the discharge of your case and the rest of your life, will continue to improve your credit score.
3. Third, continuing to make payments on the secured debts that you have elected to keep, such as a house or car, will establish a positive payment history. Most of our clients experience the ability to purchase a new home or car within one year of their bankruptcy discharge. It is also common to receive credit card offers right after you are discharged. Much is made about the fact that the bankruptcy discharge will appear on your credit for up to ten years after your bankruptcy, but the fact that bankruptcy appears on your credit does not mean that you will not experience positive lending opportunities.
How Much Do I Have to Pay My Creditors in a Chapter 13?
The amount you are required to pay into your Chapter 13 repayment plan depends on a multitude of factors. These factors include the outstanding delinquent payments on secured debt, the amount of secured or priority debts that the you want to pay through the repayment plan, and your personal ability to pay your debts based on your individual budget. The most accurate way to determine the approximate amount of your bankruptcy payment is to call our office and set up a free consultation. At the consultation, we will be able to tell you more details based on your specific circumstances.
Who Can File Chapter 13?
A Chapter 13 Bankruptcy is an option for Debtors provided they have income or wages sufficient to fund a repayment plan. The bankruptcy code also sets certain debt limitations for both secured and unsecured debt. If a Debtor is over those limits, they are not eligible to file a Chapter 13 Bankruptcy. If you have a prior bankruptcy discharge under Chapter 7 or Chapter 13 you should consult our office to advise you of your eligibility.
What Debts Can Be Included in a Chapter 13 ?
When you file a Chapter 13 Bankruptcy case it is required that you list all of your debts. Debtors are often confused between listing debt and providing for repayment and discharge of those debts. There are three ways to treat debt through the Chapter 13 repayment plan.
1) The first category is secured debt that you are going to continue to pay yourself, outside of the bankruptcy. An example of this is your home so long as you are not behind on your mortgage payments.
2) The second type of debt is debt to be paid through the Chapter 13 repayment plan. This could be mortgage arrears, your car, furniture, or even IRS taxes and back due child support.
3) The third type of debt is unsecured debt which is paid as best you can. Often you will repay only a portion of this debt and the remainder will be wiped out upon the discharge of your case. Examples of these debts are credits cards, medical bills, payday loans, personal loans, judgments, repossession deficiencies, and other unsecured debts.