Articles Tagged with Chapter 7 Bankruptcy

homeNot unless you would like to! It is understandable to be concerned about your home when thinking about filing bankruptcy to deal with other debt concerns. As long as you are current on your payments, the mortgage company cannot and will not foreclose.  They will send out a Reaffirmation Agreement (and more than likely offer you a loan modification as well).  The Reaffirmation Agreement is a document where you “sign back up” for your home loan either with the same loan/note details or possibly better if a loan modification is offered.

We also need to check and see if the equity in your home is over the Mississippi exemption or not.  If it is not over, your home is fully protected. If it is over, depending upon how much, there will be options to discuss.For example, your home is worth $100,000. You owe $90,000. Your equity is $10,000.  This easily falls under the Mississippi exemption ($75,000).  But if your home is worth $100,000 and is paid off, then you are over the Mississippi exemption by $25,000 and we would need to discuss options prior to filing your bankruptcy case.  It doesn’t mean that you cannot file, it simply means we have some things to take a stronger look at and discuss first.

Exemptions are protections for your property given to you by Mississippi Law. Exemptions are not the same in every state.  These protections allow you to keep the stuff that you already have, so you don’t have to start all over again with nothing.

Filing a chapter 7 bankruptcy can eliminate unsecured debts such as credit cards or credit accounts, all medical bills, any payday loans or other types of signature loans, etc.  It stops lawsuits, no matter what stage the lawsuit is in.  It stops wage garnishments.  It stops harassing phone calls and letters from debt collectors.  It gives you a new beginning, a true, financial fresh start.

In some instances, it may be advisable to file Chapter 7 bankruptcy to stop repossession, foreclosure, student loan collection efforts, and other types of debt related activity that might normally be handled through a Chapter 13 bankruptcy.  It’s a matter of what you need short term and long term.  Your attorney will discuss the pros and cons of both types of bankruptcy.

Being free from overwhelming debt is possible for you.  Take advantage of the opportunity the law allows to be debt free. The government understands that people have financial problems because they have experienced a job loss, hours cut, a failed business, divorce, illness, severe injury, or other unforeseen financial hardship.

Most unsecured debts will be wiped out in a Chapter 7 bankruptcy.  Unsecured means that the debt does not have any property pledged as security.  This includes credit cards, medical bills, lines of credit, payday loans, overdraft protection, signature loans, and personal loans.  There are certain types of unsecured debts that cannot be eliminated in bankruptcy.  The two most common types of debt that people think cannot be done away with are student loans and taxes.  These can be wiped out, but only if you meet special circumstances.  Student loans are not wiped out in bankruptcy, unless you can prove that paying them would create an undue financial hardship for you or your family.  Income tax debts can be eliminated, under certain circumstances, if they are more than 3 years old before the date you file the bankruptcy.

Secured debts are debts that have some sort of property pledged as security. When you get a loan to buy a car or a house, you take out a secured loan.  The car or the house is the security or collateral for the loan.  Secured debts can either be wiped out in a Chapter 7 bankruptcy or not – you have a choice with secured debts.  You can keep the car, house, or property and continue to pay the debt or you can give the property up and walk away, owing nothing.

A secured loan creates two obligations for the loan.  The first obligation is the security interest that allows the lender to repossess or foreclose the property if you stop making payments.  The second obligation is your obligation to pay the loan.  If the car is repossessed or the house is foreclosed, the loan company can come after you for the money you still owe on the loan.  This is known as the deficiency balance.  Chapter 7 bankruptcy eliminates your personal obligation to pay the loan and if the property is repossessed or foreclosed, the company cannot come after you for the deficiency.  If you choose to continue paying and retain the car, house, etc – the creditor provides what is called a Reaffirmation Agreement.

car loveNot unless you want to! It is unusual for someone to lose a car or any other property that they do not want to lose in a bankruptcy case.  It’s common for people to file bankruptcy in order to get rid of a vehicle.  They lose it because they want to lose it. The payments may be too high or the vehicle is simply not worth keeping due to the current condition and/or when comparing the current condition to the amount still owed on that vehicle.   For example, your car is worth $5,000 but you owe $10,000 because of interest, high mileage, and/or other current issues with the vehicle that has decimated the value.

But if you want to keep your vehicle and other debts are the issue needing to be addressed, as long as you are current on your car payments, the finance company will not repossess your car as a result of filing bankruptcy.  The creditor (finance company) will send you a Reaffirmation Agreement that outlines your current loan (amount owed/monthly note amount, etc) and you will sign the Reaffirmation Agreement to keep the vehicle. It goes through the bankruptcy untouched.

The finance company wants you to keep the vehicle and pay for it.  They really don’t want it back – that’s why many people end up filing a chapter 7 bankruptcy to force them to take the vehicle back and to wipe out the responsibility of any further debt related to that vehicle.