Bankruptcy in Mississippi
Sometimes people accumulate personal debts beyond their ability to pay. Sometimes the only solution is to declare bankruptcy. The U.S. Bankruptcy Code has two methods for individuals to settle their debts, Chapter 7 and Chapter 13.
What is Chapter 7 Bankruptcy?
Chapter 7 bankruptcy, commonly called straight bankruptcy, comprises about 80 percent of consumer filings. The most drastic method of settling financial problems involves liquidating, or selling, the debtor’s non-exempt property and possessions and distributing the proceeds to the creditors. Most people who file Chapter 7 do not have many non-exempt assets.
What are exempt assets?
Under Mississippi law, a person may exempt $10,000 of specific types of personal property; insurance payments on the exempt property; income from disability insurance; most payments under a qualified pension, profit-sharing, or similar retirement or disability plan; and the debtor’s homestead up to the value of $75,000 over and above any mortgage amount.
What about my car loan and mortgage?
For secured debts such as a car loan or home mortgage, the debtor must continue to make payments on those loans to keep the asset. Otherwise, the creditor may petition the court for permission to repossess the asset.
How long does Chapter 7 bankruptcy stay on my credit history?
A record of the bankruptcy remains on the debtor’s credit history for 10 years.
What is chapter 13 bankruptcy?
Approximately 20 percent of all consumer bankruptcy filings fall under Chapter 13. Known as wage earner’s bankruptcy, Chapter 13 allows a debtor with a steady income to pay all or part of the debts over a period of time, usually three years but as long as five. It is usually filed by people who are past due in their home mortgage or car payments.
What are the qualifications for chapter 13?
To qualify for Chapter 13, the debtor must have less than $250,000 in unsecured debt (credit cards) and less than $750,000 in secured debts (mortgages and car loans). A person with debts greater than these must file under Chapter 7 or, in some cases, Chapter 11.
What are the advantages to filing chapter 13?
A cosigner to a debtor’s consumer obligation is protected by a stay under Chapter 13 unless the plan will not retire the entire debt. The discharge or elimination of debts under Chapter 13 is broader than under Chapter 7. For example, if the debtor completes the payment plan, the creditor usually cannot demand any remaining debt. However, debts secured by collateral may still be collected.
