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What to know about filing for bankruptcy

Consumers who are having trouble keeping up with their debts may want to think about filing for bankruptcy. This could be especially true for Mississippi residents who have no savings or assets to pay off their debts with. Those who want protection from creditors may be able to file for Chapter 7 bankruptcy. In a Chapter 7 case, an individual is allowed to sell assets and use the money to pay off their debts.

Emergencies and daily expenses can drive people into debt

A medical emergency or a costly car repair can begin a Mississippi resident's slide into debt. A survey from CreditCards.com showed that various emergencies, medical bills, auto repairs and daily expenses resulted in one-third of respondents leaning on their credit cards too much. On the whole, the nation has accumulated over $1 trillion in credit card debts according to WalletHub.

Bankruptcy rates double when health insurance is lost

Mississippi had the fourth highest per-capita rate of personal bankruptcies in the nation in 2018, and the data suggests that more than two-thirds of them were filed because of overwhelming doctor and hospital bills. Comprehensive health insurance provides protection against spiraling medical debt, but many Americans find themselves without this crucial coverage each year after going through a divorce or losing their jobs. A recent study conducted by University of Missouri and University of Denver researchers reveals that individuals are twice as likely to file a Chapter 7 or Chapter 13 bankruptcy after going without health insurance for just two years.

Different bankruptcy types have different credit impacts

One of the main concerns for people in Mississippi who are considering bankruptcy is how long the filings will stay on their credit report. Depending on the type of bankruptcy filed and the other specific facts of the case, the filing might be listed on a person's credit report for up to 10 years. There are two main types of bankruptcy for individual filers, Chapter 7 and Chapter 13, and each of them has different impacts on the filer's credit report.

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.

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.

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.

The role of student loan debt in bankruptcy filings

People in Mississippi who are struggling with debt may be among the nearly one-third of people who filed for Chapter 7 bankruptcy with student loan debt. This was one finding in a study by LendEDU. The same study also found that among that group, on average, almost half of their total debt constitutes student loans. These figures do not include people who filed for Chapter 13 bankruptcy, which involves creating a payment plan.

Credit card delinquencies on the rise among younger borrowers

Young people in Mississippi and around the country are finding it increasingly difficult to manage their revolving debt according to the New York Federal Reserve's most recent Quarterly Report on Household Debt and Credit. The report reveals that more than 8% of the credit card balances owed by Americans between 18 and 29 years of age are 90 days or longer past due. This is the highest rate of delinquency since 2011 when the economy was still recovering from the Great Recession.

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