Bankruptcy may be an option for Mississippi residents who have been overwhelmed by substantial debt. However, filing for bankruptcy can have a long-term impact on their credit. Before filing, they should consider several factors to decide whether it is the best option for them.
Debtors may want to try to negotiate a settlement with their creditors, who generally prefer obtaining a settlement rather than having the debt discharged in bankruptcy. Debtors may find it easier to negotiate a settlement if they are a few months behind on their payments, as creditors might not be inclined to reduce a debt if the payments are current.
Some debtors may benefit from credit counseling, particularly if they have been unable to reach a settlement with their creditors. With the assistance of credit counselors, it may be possible to get lower monthly payments and interest rates.
Lenders and creditors who have received judgements against debtors can be begin garnishing the wages of those debtors. If this occurs, filing for bankruptcy stop the wage garnishment and can even help debtors get some of the money that was garnished returned to them.
Medical bills that are not covered by insurance is another factor to consider in determining whether bankruptcy is the best way to resolve debt. Medical bills are the one of the main causes of bankruptcy because even with health insurance, people find it very difficult to pay those bills. By filing bankruptcy, people with substantial medical bills can pay them off using a 3-to-5-year payment plan or have them completely discharged.
A bankruptcy attorney may evaluate the financial circumstances of a client's situation and may recommend filing a certain type of bankruptcy to stop wage garnishment. Assistance might be provided with developing a multi-year payment plan to resolve credit card debts and medical bills.