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Jackson Mississippi Bankruptcy Law Blog

Home ownership after a foreclosure

For many decades now, owning a home has been a primary part of the American dream and a sign of some semblance of success in life. It stands to reason then that people in Mississippi who lost their homes via foreclosures likely experienced significant disappointments in addition to their financial stresses and challenges. However, they should know that it is very possible to reclaim the title of home owner even after having gone through a foreclosure.

Realtor.com explains that there are two important components people should focus on when attempting to seek a new mortgage after a prior foreclosure. One of these is to be able to succinctly explain why the foreclosure happened in the first place. This dovetails directly into the second area of focus which is to highlight to a potential lender what the consumer has done differently since the foreclosure. The goal here is to help the lender develop a level of confidence that the buyer will not end up in the same situation again.

Common myths about bankruptcy you shouldn't believe

Bankruptcy is a huge financial decision to make. When you are faced with this possibility, you might find that everyone has some advice, opinions or cautionary tales. It is important for you to vet these before you heed them. There are many misconceptions about what bankruptcy entails.

Before you decide that you are going to file bankruptcy, you need to think carefully about the following points. This can help you to decide what you are going to do to recover your financial future.

Some hope for consumers with student loan debt

The high and continually rising cost of higher education seems to all but force many people in Mississippi to take out student loans in order to fund their college degrees. In theory, these loans can be very valuable and if a person is able to get a job that pays enough after college, they may be able to repay all of their loan debt. Yet, it seems that many consumers today struggle with many types of debt and student loans are part of that challenge.

For some people, help may be available via bankruptcy but discharging student loans in a bankruptcy is anything but easy or automatic. As explained by U.S. News and World Report, there are three criteria that are evaluated before a person is allowed to include student loans in a Chapter 7 bankruptcy. One of these is whether or not the consumer can demonstrate that they have made good faith efforts to make their loan payments.

How to rebound financially after a bankruptcy

Many people in Mississippi who struggle with high levels of debt might have thought about filing for bankruptcy but then not done anything about it because of fears that it might ruin them financially forever. This is far from the truth. In reality, bankruptcy is designed to not only help consumers get our from under mounds of debt but to be a stepping stone to a brighter financial future. Knowing how to make this happen is important.

NerdWallet recommends that people fresh out of bankruptcy take the time to develop a good budget that includes regularly putting some money away in savings, even if it is a modest amount. Also important at the outset is to review one's credit report and clean up any incorrect information that may appear. From there, monitoring a credit report and credit score carefully should be done.

Can foreclosure ever be your best option?

Despite your best efforts, there may times when circumstances (both within and outside of your control) leave you facing foreclosure on your home in Jackson. If and when this happens, do not fret; you certainly are not alone. Data shared by the Federal Deposit Insurance Corporation shows that one out of every 200 homes in the U.S. will go into foreclosure. As you weigh your options when facing foreclosure, you may legitimately want to ask yourself whether allowing a foreclosure to occur would be in your best interest. 

The potential damage to your credit rating might prompt you to immediately dismiss this thought. Consider, however, the current state of your credit. If you are at the point of facing foreclosure, there may a strong possibility that other factors are already negatively influencing your credit score. If this is the case, then having your home foreclosed upon may not have as great an impact as it might in other situations. Allowing it to proceed may get you out from underneath your mortgage and allow you to regroup and begin the process of recovering your credit rating. 

Rapper asks permission to convert Chapter 13 to Chapter 11

People in Jackson likely are willing to do all that they can in order to avoid financial struggles. Yet no one may be immune from having issues with debt. Oftentimes, those issues can become so overwhelming that bankruptcy protection is the only viable path for one to be able to reasonably return to enjoying a healthy financial situation. The automatic stay that accompanies a bankruptcy filing stops any further collection efforts that one's creditors might be planning. In addition, it may also halt foreclosure proceedings that a bank or lender may have initiated on one's home. 

Still, there may be times when the sale of a home as part of a bankruptcy filing may be mandated. This is what a rap artist Lil Kim hopes to avoid. Her home first went into foreclosure back in 2010, yet the bidding for its sale did not commence until April of this year (required minimum bids began at only $100). However, the artist is hoping to the stop the sale and retain the property. She filed for a Chapter 13 bankruptcy earlier this year, but is now pleading with the judge overseeing her case to allow her to convert to a Chapter 11 filing. This would allow her to reorganize her debts and offer money to her mortgage company in order to prevent foreclosure. A decision regarding her request has yet to be rendered. 

The excessive cost of health care in the U.S.

If you are one of the lucky people in Mississippi who has health insurance, you know that even this protection does not guarantee that you will be able to afford the care you need if and when you should need it. The cost of health care in the United States is an all-too real concern for the average American and actually can become a source of serious debt and even lead people to the decision to file bankruptcy.

As reported by CNBC, some research evaluated the cost of health care across a total of 11 developed nations including the United States. Other countried included the United Kingdom, Canada, Japan, Germany, Sweden, Switzerland, Australia, the Netherlands, Denmark and France. Overall it was found that people utilized health care services at a relatively similar rate in these 11 countries. What differed, however, was the cost of that health care.

How often do medical bills lead to bankruptcy?

You plan relentlessly for your financial future. You want security. You carefully consider your budget and only take on debt you know you can afford. You use your credit cards responsibly, paying them off at the end of each month.

Could you still find yourself facing bankruptcy? Maybe you worry that a sudden illness or a car accident could put you over your head in medical debt. You cannot plan for something like that. When it happens, you feel grateful to live in a country with excellent medical centers, but that does not come cheap. What if you get overwhelmed with debt based on factors that are entirely out of your hands? How often does that happen?

Success can follow your bankruptcy

Nobody likes losing, and for some people in Mississippi, filing for bankruptcy feels like losing. What you are losing, however, are the stress and anxiety that an overwhelming amount of debt brings. What you are gaining is a fresh start, and everyone deserves a new start. It may help you to know that there are many others in the same boat, including plenty of people that have become successful after a bankruptcy. Here is a lighter look at celebrities who have been where you are now and have come through fine on the other side, as you will too.

Business Insider offers several examples of the rich and famous who have gone from “riches-to-rags” then on to more riches. They include actress Kim Basinger, who filed bankruptcy after being sued by a motion picture company for backing out of a film contract in 1993. She has since gone on to star in many movies and even became a model in 2015 at age 60.

What does a trustee do in a chapter 7 case?

No matter where you live, federal courts oversee all bankruptcy cases according to rules established in the U.S. Bankruptcy Code. When you file a petition for chapter 7 bankruptcy in Mississippi, the federal trustee names another trustee to oversee the case and sell any nonexempt assets that you may have, according to U.S. courts procedures. The sale of such assets for the highest return is the central role of a trustee, and the trustee has broad powers to guard against fraudulent transfers of property to avoid creditor repayment.

In most chapter 7 cases for individuals, there are no assets. If this is the case in your bankruptcy, the trustee reports that to the courts, letting creditors with unsecured debt know there is nothing to allocate to them.