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Jackson Mississippi Bankruptcy Law Blog

Chapter 13: saving possessions and clearing debt

No one jumps to the topic of personal bankruptcy with ease. Yet due to a number of advantages, Chapter 13 bankruptcy is an ideal route for thousands of Mississippi residents -- generally for the reason that it does not result in the liquidation of assets and it allows room for a repayment plan. Many consumers are overwhelmed by the details of Chapter 13, and as a result suffer from a number of psychological issues. However, this plan is straightforward and can typically help resolve debt within three years.  

The common goal of Chapter 13 bankruptcy is to make the process of handling debt simpler and less damaging overall, but the steps of the process can prove to be distressing. U.S. News reports on the emotional toll of bankruptcy, and how filing such a plan can have lasting psychological effects. While Chapter 7 is generally seen as more pressing, U.S. News uses the findings of a financial therapy expert to show that those filing Chapter 13 nevertheless may experience stress in relationships and even family trauma. One reason for this stress is the process itself, where individuals must track down all debt, hire legal experts and scrutinize their case to ensure accuracy. As a result, emotional health can be pushed to the background.

Choosing the right type of bankruptcy

Are you one of the many residents in Mississippi who are facing serious levels of debt that you can no longer effectively manage on your own? If so, you may have given thought to filing for bankruptcy. While certainly a personal bankruptcy may offer you the chance to get back on your financial feet, it is important that you effectively evaluate your bankruptcy options so as to choose the right type of plan that meets your needs.

360 Degrees of Financial Literacy explains that there are essential differences between the two most common types of consumer bankruptcy. Chapter 7 plans are known for the potential loss of assets as those belongings backed by collateral such as cars or homes may be taken and sold in order to repay money owed to creditors. This does not happen in a Chapter 13 plan. Instead, a Chapter 13 plan is basically a form of debt consolidation that allows people to simplify their repayment and even to lower the amount they pay without losing assets.

Understanding Chapter 13 bankruptcy

Even in the midst of a relatively healthy national economy, many consumers in Mississippi continue to find themselves struggling to get out from under high piles of debt. If you are one of the people plagued by debt and expenses that you cannot get ahead of, you may be wanting to know if a bankruptcy could help you. Before you jump in and make a decision, it is important to understand Chapter 13, one special type of consumer bankruptcy.

As explained by the United States Court, with a Chapter 13 bankruptcy your debt is not simply eliminated as with a Chapter 7 bankruptcy. At the same time, your assets are not subject to being lost either. Rather, a Chapter 13 plan is a form of consolidated repayment that allows you to make one payment per month versus many. You make payments to a trustee who then disperses money to your creditors. This happens over a period of 36 to 60 months. Generally the amount of money you repay is less than what was originally owed as creditors agree to receive less in exchange for reciving something.

Medical debt: an end in sight?

Surgeries often come with a variety of complications, including challenging physical therapy and alternative, doctor-ordered regimens. Yet millions of Americans also face medical debt post-surgery -- debt that can linger for years after a medical procedure. This type of financial predicament is no stranger to the state of Mississippi, which is known for having the highest medical debt in the country. While reasons why so many in the state are affected by overdue bills are complex, some experts point to limited insurance coverage and the debt that ultimately affects hospitals.   

An article in The Atlantic highlights the growing issue of medical debt in America, and how the South is especially affected by the prevalence of unpaid medical bills. According to article, nearly one in four American adults under the age of 65 lives with medical debt. Furthermore, 37 percent of Mississippians aged 18 to 64 carry medical debt. The Atlantic also points out that not all states expanded Medicaid under the Affordable Care Act of 2010, which could account for the alarming number of Mississippi residents living with debt. Another reason for crippling debt in this region could be high deductibles and co-pays, balance billing or simply that some services are not included in insurance plans.

Can creditors still collect after a repossession?

We sometimes have clients who are still dealing with bill collectors even though they have had property repossessed (such as a car or a boat) and the creditors are still trying to collect on the debt. The lender may also have “charged off” the loan, but the collection calls still come. For a consumer dealing with debt issues, this can be a confusing and frustrating experience.

As a matter of law, lenders still have the ability to collect on an outstanding debt, even if they have taken back the collateral (i.e. repossessed the car or boat) that the loan was based on. In many instances, there still may be an amount left on the loan that still needs to be paid, even though the collateral has been returned to satisfy the outstanding amount. Chances are that the interest, late fees and other penalties assessed make the loan much more costly than the property. 

Frequently Asked Questions About Bankruptcy

Filing for bankruptcy is a major life decision, and one that doesn't come easy. The burden of financial stress can be overbearing and a lot to overcome. You've heard there are certain benefits to bankruptcy, but fear the negative impact it could have on your financial future.

Like most people considering bankruptcy, you probably have a lot of questions about how it will improve your financial situation, what the drawbacks are, and the difference between Chapter 7 and Chapter 13. Continue reading for answers to some of the most frequently asked bankruptcy questions.

Are you actually a homeowner?

When you bought your first home, you were thrilled to tell everyone that you were finally a homeowner. It had been your dream for 10 years and you made it happen.

But are you really a homeowner? If you saved up the money and bought that house outright, then you are. If you took out a mortgage, experts warn that you're actually a borrower, not an owner.

New reporting rule will help with medical debt on credit reports

Medical debt can hurt almost as much as the condition causing it. As many as 43 million Americans have a medical bill in collections that has negatively affected their credit, according to the Consumer Financial Protection Bureau. The average amount in question was only $579, compared to $1,000 for non-medical debt. Even with the relatively low amounts at issue, the CFPB found that, for 15 million people, that medical debt was the only problem on their credit report.

"More people who typically would have been a good credit risk are now saddled with big bills," commented the policy director at the Healthcare Financial Management Association.

Don't let college debt bury your future

Going to college is something to be proud of. Continuing your education is important to your future. You plan to study hard and graduate. Your endgame is to get a respectable job in your field. College is also expensive. There are options available to college students who qualify. Some students get scholarships and others get grants. You may have received these aids yourself. The reality is that many college students will have to take out loans to help pay for their college experience.

It was reported that as of this year there are over 44 million borrowers in the United States. The accumulated debt is estimated to be at 1.3 trillion dollars. That number is enough to make any college student nervous. You don't want to find yourself buried under a load of debt when you graduate.