Articles Posted in Bankruptcy Pre-Planning

QuestionYes…but let me explain why you want to list everyone.  The bankruptcy rules require you list all of your creditors so the court can get an accurate picture of your financial situation.  Listing everyone you owe does not mean you will lose your house or car or other property.  Listing everyone you owe does not mean all your debt will be wiped out.  You want to have all your creditors listed so they get notice of the bankruptcy and they leave you alone while you take the time to decide who you want to pay and who you want to get rid of.  You can always pay back the creditors you listed after the bankruptcy if you wish.

Leaving off a credit card because you want to continue to use the credit card is not a good idea and it won’t work anyway.  Credit card companies and other creditors are constantly checking your credit reports in national databases and they will find out about the bankruptcy.   They will  cancel the card anyway, whether you owe a balance or not, no matter how good your payment record may have been.

Intentionally leaving a creditor off your bankruptcy papers may result in perjury or it may make the debt non-dischargeable and you will have to pay it.   Let’s play it safe and list everyone.  That way you are protected from them and you can always pay them later if you desire.

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Within 90 Days of Filing Bankruptcy:

Luxury items charged to credit cards that total more than $550 within the 90 days of your bankruptcy filing are presumed to be non-dischargeable. Luxury items are defined as goods or services that are not reasonably necessary for the support or maintenance of your household. What does this really mean? Credit card charges made for food, gas, or diapers are not going to be a problem; but charges for a new stereo, a new HD TV, a ski trip, or summer vacation probably will.

Even though the law says that these charges are presumed to be non-dischargeable, the creditor would still have to file papers in your bankruptcy case to ask the court to declare the debt to be non-dischargeable.

There is a provision of the bankruptcy law that allows Mississippi homeowners to eliminate second mortgages.   Not widely known, this section of the bankruptcy code is becoming increasingly popular to bring the mortgage debt closer to the real value of the home.

Bankruptcy law prevents a homeowner from getting rid of the first mortgage if they want to keep the home, but the rules don’t apply to second mortgages.  The second mortgage can be stripped off (canceled)  if there is no equity to cover the debt, which is the case for thousands of Mississippi homes that are worth a lot less now.

The law has been in effect for years, but during the housing boom houses were worth much more and there was not much occasion to use it.  This is only available in Chapter 13 bankruptcy.

First, a little history about bankruptcy.  Bankruptcy originates from the Bible.  The Lord told the Israelites in the Old Testament to forgive their debts every seven years and our founding fathers incorporated this into what we know as bankruptcy.

These laws are designed to help honest people get a fresh start in life without losing everything they have worked for.  There is no absolute rule on who should file bankruptcy, but most people wait until it is too late to contact a lawyer to see if they will benefit from filing for bankruptcy.

Here  are some of the alarm signals you should consider as warnings that it is time to contact a Mississippi lawyer for information about bankruptcy: