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Chapter 7 bankruptcy may be simpler than you thought

When Mississippi residents feel the burdensome strain of large debt and monthly payments relative to their financial wherewithal, the thought of bankruptcy may cross their minds. Some, in fact, get the fleeting thought and then dismiss it immediately.

The fear of having to liquidate their assets is too much to bear. However, it need not be worrisome at all for many.

Mississippi exempt assets not subject to liquidation

As stated by the Mississippi Bar Association, there are many assets that are exempt from liquidation. Such assets include $10,000 worth of personal property, such as a car or household items. Insurance payments on exempt property are also exempt. If a person is receiving disability insurance benefits, these too may be exempt, as may be pension or retirement benefits.

The home may be exempt up to $75,000 in equity beyond the mortgage balance. However, although one can keep the house, the debtor will need to keep paying that mortgage. The filing debtor of a Chapter 7 bankruptcy can also keep his or her car so long as he or she makes those car payments timely. Personal injury awards are also exempt up to $10,000, as may be workers’ compensation awards.

Personal property exemption

The $10,000 exemption in personal property does not mean determining how much it would cost to replace the item. It is not the cost of buying a new item. Rather, the figure used is the fair market value of the used item. What dollar amount can that used item bring in if sold? When using that latter definition, $10,000 may cover a lot of personal property. Also, when figuring out the car value, it is the value of the car minus the balance of the car loan to determine the equity counted towards that $10,000 limit. If the car market value is $15,000, and the owner owes $10,000 on the loan, the countable equity is only $5,000. Of the $10,000 exempt limit, saving the car would still leave $5,000 of other personal property.

In fact, many people eligible for Chapter 7 do not have any non-exempt assets. Many may already have sold valuable property to make ends meet prior to considering bankruptcy. Others just never got far enough ahead financially to gain exempt assets. This reality may make filing for Chapter 7 a relatively simple matter. It can lead to a future of financial relief and ability to live without the constant feeling of treading water.

 

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