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.

Those who are unable to file Chapter 7 bankruptcy may be able to file under Chapter 13. Chapter 13 bankruptcy is sometimes called reorganization bankruptcy as it involves the reorganization of debts so that the petitioner can afford to pay them over a period of three or five years.

An attorney with experience practicing bankruptcy law may help individuals who are having trouble keeping up with debts and expenses. An attorney might be able to negotiate with creditors or draft and file a petition to begin bankruptcy proceedings. An attorney may also help the client understand the means test for Chapter 7 or represent the client during the required meeting of creditors.

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