Tom Sawyer and Huckleberry Finn may have enjoyed the feelings of pure freedom when floating down the grand Mississippi River, but for residents struggling with debt, freedom is not a feeling they often enjoy. Creditors calling and harassing, the threat of foreclosure or repossession, or just the sheer amount of credit card or medical debt mounting can make any Mississippian feel trapped and helpless.
For many residents there is hope. A Chapter 7 bankruptcy can dismiss nearly all debts, allowing those dealing with financial troubles to get a fresh start in life. This type of bankruptcy, also known as a liquidation or straight bankruptcy, allows debtors to get rid of their debts completely, removing the threat of creditors, foreclosure, and repossession. Many individuals who have filed in Mississippi have found the freedom that Tom and Huck once felt.
The Basics of Bankruptcy – Chapter 7
There are myths surrounding bankruptcy that continue to misinform the general public. Here are a few of those myths explained with the truth revealed.
Bankruptcy is a long and painful process. – A Chapter 7 bankruptcy is a relatively short process, ranging between 3-6 months. Once a bankruptcy has been discharged, it’s considered complete.
Bankruptcy is expensive. – Filing a Chapter 7 bankruptcy does cost some money, but it usually is more affordable than trying to pay off all your debts alone. A bankruptcy will wipe away nearly all unsecured and some secured debt. The fees for a bankruptcy only happen once, with no additional fees or accruing interest on your payments.
Bankruptcy will ruin my life and I won’t ever have credit. A bankruptcy will lower your credit initially about 50-75 points. However, many individuals who file for bankruptcy have been able to get loans for a house, car, or credit card. Your credit will rebuild if you continue to use it while making regular payments on your loans. A bankruptcy is a chance for people struggling under massive amounts of debt to break free and start over.
Creditors will still pursue me after I file. – As soon as you file for a bankruptcy, Chapter 7, or any other type, creditors will not be allowed to contact you in any form. This means all harassment stops, providing you and your family the peace you need to move forward.
I will lose everything if I file for bankruptcy. – No you won’t. Bankruptcy exemption laws have been put in place to allow debtors to retain some personal property and assets depending on the state they live in. Please see below for more information on what assets you will be able to keep in the event of a bankruptcy in Mississippi.
Qualifying
If you have read the debunked myths above and feel that a bankruptcy might the right option for you, the next step is to see if you qualify. There are two main ways a debtor can qualify for a Chapter 7 bankruptcy in Mississippi. Besides being a resident for over a year, the debtor must fall at or below the median income level for the state they live in.
If a single individual wishes to file for a Chapter 7 bankruptcy in Mississippi, he must make $32,658 or less annually. If a married couple or family of two files, that number increases to $41,579; families of three, $47,058; and for families of four the income goes up to $55,711. The median income level changes each year, so it is essential to check with an attorney before you file to see if you fall at or below the median level.
The next step is to pass the means test. This test is a procedure of calculations that determines if you qualify for bankruptcy based on your financial history. Typically a bankruptcy attorney will enter all of your financial information in a means test calculator to make sure your case won’t be immediately discharged.
The Exemptions
As you work with your attorney to prepare your Chapter 7 bankruptcy petition, he will help you apply for the exemptions applicable to you. The exemption amounts, like the median income amounts, change from year to year.
A list of exemptions for Mississippi residents includes:
- Homestead – a home with up to 160 acres of land worth up to $75,000, or a mobile home worth $30,000.
- House goods – clothes, books, furniture, appliances, jewelry, animals (including pets), crops, and other household items each worth less than $200.
- Wages – 75% of all earned but unpaid wages (not including taxes) are available to a debtor.
- Benefits
- 100% Proceeds of Life Insurance
- 100% Federal civil service or retirement disability benefits
- 100% Crop Insurance proceeds
- 100% Military Survivor benefits
- 100% Wages of seamen on voyage or railroad unemployment insurance
- 100% Refund proceeds from federal and state taxes
- Wild Card – If the debtor filing is the age of 70 or older, you may be able to file for an additional $50,000 to any asset or property.
Additionally all college saving accounts, social security income, and worker’s compensation are all exempt from a bankruptcy.
Chapter 7 can give you back your financial freedom. While it won’t discharge all your debts, it can get rid of most of them. Talk to a Mississippi bankruptcy attorney today to see if you qualify.
Mississippi Bankruptcy Courts
Thad Cochran United States Bankruptcy Courthouse
703 Hwy 145 North
Aberdeen, Misssisssippi 39730
Phone: (662) 369-2596
Dan M. Russell, Jr. United States Courthouse
2012 15th Street, Suite 244
Gulfport, Mississippi 39501
Phone: (228) 563-1790
501 East Court Street, Room 2300
Jackson, Mississippi 39201-5002
Phone: (601) 608-4600