Today I had the privilege of being one of the guest speakers at the MS Family Law Update seminar in Jackson, Mississippi.  I educated the attending family law attorneys on the many ways that bankruptcy can effect the divorce, child support, and custody matters that they routinely address.  My  presentation covered methods the attorneys need to use to properly protect their clients settlement and support claims when a spouse files for bankruptcy and as well, how bankruptcy could in turn protect the spouse that owes the support and other obligations.  I emphasized that timing is critical and discussed the possible benefits to filing bankruptcy before the divorce proceedings.

Despite everybody’s opinion that the economy is getting better, one thing is for sure – if you’re living from paycheck to paycheck, things are tough no  matter what they say.  If you suffer an illness, pay cut, or lose your job and  miss a week (or heaven forbid several weeks) of pay - you’re in a world of hurt! Roughly 42% of Americans report that they live this way, barely making ends meet.  What’s worse, more and more Americans are stealing from their future to live today – 21% of workers have stated they reduced their 401K contributions and/or personal savings in the last year and 34% say they aren’t contributing at all to such programs.  As an attorney who helps people solve debt problems, I see people making mistakes and doing things that actually make the situation worse than it has to be. They are too ashamed or afraid due to myth and rumor to discuss bankruptcy with an attorney so they first deplete their 401K, all other savings, borrow all they can from friends & family (which adds difficulty to others), and sell their possessions – all of which could have been prevented.  In most cases bankruptcy will protect your money and property.  Bankruptcy is not what it used to be.  Creditors spend millions of dollars to spread the propaganda that only bums and fraudsters file bankruptcy.   The truth is very different.  Bankruptcy is a very powerful consumer protection law and financial tool that it is an intricate part of our American economic system.  Our founding fathers took the idea of bankruptcy from the Bible and fashioned laws to give every American the right to a fresh start and a huge part of that fresh start is the protection of your money and property that will help you to begin that new life!

Individuals with excessive debt sometimes wonder whether it makes sense to file for bankruptcy.  There are many reasons why people who need financial help should file for Chapter 7 bankruptcy or Chapter 13 bankruptcy.  Making this decision is something you should discuss with a well informed Mississippi Bankruptcy attorney who is an authority in consumer bankruptcy.

Bankruptcy laws are there to help you get a fresh start and relieve you of the burden of overwhelming debt.

When Does Filing Bankruptcy Makes Sense.
There are a numerous circumstances in which filing for bankruptcy can benefit you:

1. You Have Already Tried to Negotiate.  If you have attempted to negotiate or work a repayment plan with your mortgage company or other creditors and they won’t listen to you.  They want all the money now and aren’t willing to be paid out over time. This can leave you with no option other than to file for bankruptcy.

2. Your Debts Exceed Your Income. A major reason why people file is they just can’t pay their bills.  This may be due to job loss, reduced hours at work, illness, divorce, and many other causes beyond their control.

3.  Your Mortgage Company is Trying to Take Your Home.  We are in the middle of a major mortgage fraud scandal involving robo-signers, fake documents, false affidavits and bogus assignments. Mortgage servicers make more money now when they foreclose than they do taking your regular monthly payments.  One sure way to get control over your mortgage servicer is to file bankruptcy and sue the servicer and owner of your note in the bankruptcy proceeding.

4.  Your Credit Score is Already Bad.  Filing bankruptcy can improve your credit score.  Most of our bankruptcy clients are back to a credit score in the 700′s within one to two years of a Chapter 7 discharge.

5. You Want to Keep Your Home and Vehicles.  Many people are concerned that they will lose everything if they file for bankruptcy. However, getting rid of your unsecured debts like credit cards, loans and medical bills will leave you with the money you need to be able to keep the important things like the house and car.

Before you make any decision on bankruptcy, consult an attorney skilled in consumer bankruptcy and mortgage problems.  Every individual’s situation is different and what might be right for someone else may not be right for you.  Speaking with an attorney ahead of time can help you do some pre-bankruptcy financial planning so you don’t run the risk of losing certain rights and/or property.  Hiring an attorney that only represents individuals, because of his or her knowledge and experience in consumer bankruptcy, is well worth the money.

It used to be that filing bankruptcy in Mississippi carried with it a bad social stigma.  Not anymore.  Did you know that Toni Braxton has filed bankruptcy twice.  She stated in an interview that “bankruptcy for me was a protection”.  She used bankruptcy to protect herself from all the creditors that came after her when she canceled her Las Vegas show due to illness.

People who really need to file bankruptcy in Mississippi to stop foreclosure or stop wage garnishment still hear persistent myths that are either half-truths or completely false.  The goal of bankruptcy is to help you out of difficult financial problems.

Here is a short run-down of some of the top false myths about bankruptcy.

1. You Can’t File for Bankruptcy Anymore
Not true.  There were changes to the law in 2005, but the end result was to put more of a burden on bankruptcy attorneys.  Bankruptcy is alive and well and an important financial tool.

2. Your Credit Will Be Ruined
Not true.  Bankruptcy does have an impact on your credit history – but in most cases that impact can improve your credit score.

3. You Will Lose Everything
Not true.  Mississippi bankruptcy law allows you to keep a certain amount of property, along with your house and cars.  This is true in Chapter 7 and Chapter 13.  No one wants you to start over again with nothing.

4. You Will Lose Your Retirement
Not true.  File bankruptcy in Mississippi and your retirement account, 401(k) plans and IRAs are exempt and fully protected, no matter how much you have in the account.

5. You Can Only File Bankruptcy One Time
There are limits on how many times you can get a discharge in bankruptcy, but you can file more than once.  A Chapter 7 discharge is available every eight years.  Chapter 13 discharge is  available every two years or four years from a Chapter 7 discharge.  A Chapter 13 can be started in between these time periods and you will not be granted a discharge, yet you will still have all of the protection of a Chapter 13.

Bankruptcy law is complex and you should seek legal advice before selling or disposing of property if you are in a financial bind.  The ultimate goal of bankruptcy in Mississippi is to help those who are in financial crises.  We offer free consultation to individuals and couples who are concerned about financial problems, foreclosure, wage garnishment, and mortgage fraud.

There are many types of bankruptcy, but only two types that most Mississippi residents would be interested in.

Chapter 7 is what people refer to as total bankruptcy, liquidation or complete bankruptcy.  Where a Chapter 13 proposes a plan to repay your creditors over set period of months, Chapter 7 wipes out or discharges your debts right away without any payment and gives you a clean slate.

The Chapter 7 will still allow you to keep your house and vehicles.  The unsecured creditors such as credit cards and medical bills are totally wiped out, discharged, and can never be collected from you. There is nothing deducted from your paycheck and you are responsible for continuing to make the monthly payments on the house, car and truck and any other property you intend to keep.

This gives you an immediate fresh start and still allows you to continue to pay the debts you decide to keep.

Chapter 7 bankruptcy is ideal for a Mississippi family that can maintain the house and car  payments once the burden of credit cards, medical bills and other debts is removed.  An individual or married couple can file Chapter 7.

Mississippi residents that are interested in exploring bankruptcy and non-bankruptcy options can contact us for a free consultation at 601.948.1600.

This is a question that comes up at every conference I have with individuals considering debt relief.  It is a natural question since very few of us could obtain a house or car without access to credit.

Credit Bureaus are allowed to report a bankruptcy filing for ten years.  That fact that  a bankruptcy is recorded on your credit report doesn’t mean you will never be able to buy a house and a new car or truck.  Bankruptcy does not carry the same tarnish today that it carried in the days of your grandparents.

One of the primary temptations facing people who file for debt relief is the flood of new credit cards they are offered after filing for Chapter 7.  You will not have to wait years and years to build up your credit rating or to obtain new credit.

It is very easy to be led astray with the offers of credit you receive after going the Chapter 7 route.  I warn my clients to be very careful about obtaining new credit cards. At first, any new credit card is likely to be a high interest, high fee type card. It may not be worth this price to have credit cards this early after your discharge. Getting back to a simple life and living on a cash basis is the way to go for a while after bankruptcy.

Mississippi citizens file bankruptcy for many reasons and it is not always the fault of the person who filed.  Medical bills and illness, unemployment, full time hours reduced to part time hours, and death or divorce of a spouse can cause anyone to fall behind on their financial obligations and make it impossible to catch up.

Credit bureau reports can be full of errors and mistakes since they don’t have any incentive to correct and remove inaccurate information.   Each person must constantly review the reports and dispute outdated and incorrect information on their own bureau reports.  In many cases, an individual will need to write the credit bureaus to remove the record of bankruptcy filing after the ten year period expires.

If you have questions about bankruptcy in Mississippi, or are considering filing bankruptcy, give me a call at 601.948.1600.