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Seniors increasingly in debt, filing bankruptcy

Statistics show that older people are filing for bankruptcy at higher rates than ever before, in Mississippi and across the country. According a 2018 report by the Consumer Bankruptcy Project, more than 10% of people who filed for bankruptcy protection in 2016 were 65 years old or older; this was a significant increase over the number in 1991.

The elderly population of the country also grew over that time span, but only by 2.3%. There are a number of economic and social factors contributing to the rise in elder bankruptcy. People are living longer, and they need more medical care in their later years. The cost of medical care has been increasing for decades.

Incurring debt while in Chapter 13 bankruptcy

A person in Mississippi who has an open Chapter 13 bankruptcy may be able to get a vehicle loan, but there are several steps that must be taken to do this. Moving ahead without getting the approval of the court puts the bankruptcy itself in jeopardy. The person could also face a lawsuit from creditors, and the vehicle could be repossessed.

The first step is going to a dealership and talking to the special finance manager. If the manager agrees, the person can choose a car, and a sample buyer's order is created. This form should include such information as the monthly payment, the interest rate and the maximum term. The form should say that the person will purchase this car or a similar one. The reason for this is that if the car sells before the process is complete with the court, the person would have to start the process all over again unless "or similar" is included on the form.

Different circumstances call for different bankruptcy types

People in Mississippi who are struggling to pay off their debts might consider bankruptcy as an option to reduce or eliminate them. For most individual filers, there are two options when it comes to filing bankruptcy: Chapter 7 and Chapter 13. It is important to know the differences between the two options as one or the other may be better for the petitioner in a particular case.

Chapter 7 bankruptcy is sometimes referred to as liquidation bankruptcy because it involves the liquidation of the petitioner's assets in order to pay off as much debt as possible. At the conclusion of a successful Chapter 7 bankruptcy, any unsecured debts will be wiped out, and the petitioner may be able to keep important assets like a home, vehicle or tools used for work. In order to qualify under Chapter 7, the person must pass the means test, which begins with a comparison of the person's income to the state's median income. If the person's income is at or below the statewide median, he or she is free to file for Chapter 7. There are cases in which people with higher incomes may also be able to file for Chapter 7.

Many feel as if they will die in debt

Research from CompareCards.com found that credit card debt may be a bigger problem than student loans for many millennials in Mississippi and around the country. Among those who participated in the study, 67% reported having credit card debt while only 36% had student loan debt. It found that among individuals in this age group who had credit cards, only 13% had no debt. Furthermore, about a quarter of respondents said that they would die in debt regardless of how old they currently were.

Among those who made such a claim, 16% had an annual household income of $100,000 or more. Women were more likely than men to say that they would likely pass away still owing money to creditors. However, the average millennial respondent said that he or she would be out of debt by age 49. Parents who had children under the age of 18 were more likely to have credit card debt compared to those who had no children at all.

Bankruptcy during divorce

Studies show finances as a strong catalyst for divorce in today's society. For those in severe financial strains, bankruptcy may be a beneficial consideration.

However, both divorce and bankruptcy have specific protocols that can affect each other. It is important to understand the implications of bankruptcy during divorce.

Is debt settlement a good alternative to bankruptcy?

Despite its many benefits, bankruptcy, unfortunately, comes with a negative connotation, which may make you hesitant to file. You want to try to protect your reputation with both loved ones and future creditors. As you have explored other options, one you may have looked at is debt settlement.

Debt settlement services are very alluring because they promise to eliminate most of your debt, so you pay pennies on the dollar. They say they will talk to creditors and take care of everything for just a simple fee. Can you trust these services if you want to avoid bankruptcy?

Women struggle with hefty credit card debt

Many women in Mississippi are struggling with costly credit card debt, even more than men in the state. Of course, people in general have accumulated significant debt associated with revolving consumer credit. According to one study, total credit card debt has hit its second-highest point following the financial crisis of 2008. In one quarter in 2018 alone, people accumulated another $30 billion in consumer debt. Still, women have shown more anxiety about their credit card balances than men. One study said that over one-fourth of women participants were not confident that they could pay off their cards compared to 14% of men.

One factor is the generally lower incomes that women have. Women have 80% of the median annual income of men, which means that women may have greater struggles in getting out of credit card debt. While the median salary for a woman is $41,554, the median for a man is $51,640. In addition, 20% of men said that they had only paid their credit card balances in full once or never in the last six months. Over 30% of women said the same, meaning that they are accumulating larger amounts of interest charges as a result.

Filing for bankruptcy may improve financial position

For many people in Mississippi who are struggling to pay down debts, filing for bankruptcy is a viable option to improve their financial position. During the peak of the recent financial downturn, almost 1.6 million bankruptcies were filed. The majority of those filings were made by consumers. The total number of annual filings dropped to under 800,000 by the time ten years had passed. People who have credit card debt may be able to get a fresh start via bankruptcy.

If the person is in a position where he or she has a lot of debt and does not own major assets like a home, a bankruptcy filing can clean the slate. As part of the bankruptcy process, petitioners are required to complete finance classes. These classes, which are taken both before and after the bankruptcy, can provide education, information and perspective that can be useful to the person going forward.

Rights of debtors facing lawsuits from debt collectors

All types of people in Mississippi might experience financial hardship and fall behind on paying their debts. When debt collectors start to contact these people, they might use harsh tactics that inspire fear. The Consumer Financial Protection Bureau reports that 25% of debtors have felt intimidated by collection agencies. Although debt is a serious matter, people have legal rights that potentially give them the ability to limit aggressive collection practices.

Being served with papers for a lawsuit from a debt collector ranks high on debtors' fears. Even when people feel helpless when confronted by lawsuits, they should never ignore them. They should supply their official answer to the court within the deadline stated in the lawsuit. When people fail to tell the court their side of the story, judges side with debt collectors. They issue judgments against debtors that could enable drastic actions like wage garnishment or asset seizure.

Filing for a Chapter 13 bankruptcy

Some people in Mississippi who are struggling with debt might want to consider filing for Chapter 13 bankruptcy. This can allow a person to keep some of his or her assets.

In a Chapter 13 bankruptcy, an individual works with the court to create a payment plan for paying off his or her debts over a period that lasts three to five years. People who are able to stick to the payment plan and make mortgage payments may be able to keep their homes. They might be able to keep other major assets as well as long as they can keep up with their payments. It may be possible to discharge the bankruptcy earlier if the payment plan is completed in less time than originally planned.

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