Mississippi may see rise in foreclosures and bankruptcy

As is the case in a neighboring state, Mississippi may soon see bankruptcies on the rise. Officials believe the sharp rise in personal bankruptcies is related to the fact that many banks are returning to pursuing foreclosure actions. Lenders had halted pursuing foreclosure proceedings after being accused of improper practices. In recent days, though, banks are again moving forward with foreclosures and those affected include contractors, doctors and other affluent residents who never expected to face insolvency. Many of these individuals are facing large mortgage payments, credit card debt and medical expenses like so many other Americans.

There are two types of personal bankruptcy. A Chapter 7 bankruptcy can wipe out the debt of the party filing within three to six months. Known as the "liquidation bankruptcy," the party filing bankruptcy may face the loss of some of their property which may not be exempt. Additionally, there are rules related to what type of debt can be extinguished in this type of bankruptcy.

The court will issue a stay following a filing for bankruptcy which will halt all collection activities. Following that, a trustee will be assigned and the creditors will meet. A court will then hold a discharge hearing and discharge unsecured debt. Secured debt, including a loan on a car or a mortgage loan, is treated differently.

Earlier in the process, the person filing for bankruptcy may have agreed to pay the replacement value of the property, return the property or to "reaffirm" and agree to a new contract to pay for the property. Child support, tax debt in most cases and student loan debt in many cases are not dischargeable.

Chapter 13 bankruptcy is a debt reorganization bankruptcy. For those that have reliable income, this may be an alternative they wish to consider. A repayment plan will be negotiated; however, those seeking this form of bankruptcy must meet certain eligibility requirements.

For those facing financial challenges and looking to eliminate debt, there are options available. These options can sometimes come as a huge relief to those suffering in this struggling economy.

Source: The Huffington Post, "More South Floridians Filed For Bankruptcy In October As Banks Resume Foreclosures," Donna Gehrke-White, Nov. 2, 2012.

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