Are Chapter 13 bankruptcy rules stiffening?

The last few years have been tough ones for Mississippi residents. The economy has been sluggish and jobs have been hard to find. Some people have had to rely on credit cards to pay their bills and to be able to make ends meet. The rising cost of gas, food and other commodities has not helped. This has left many hardworking people burdened with more debt than they can pay back. These people are constantly dealing with harassment from creditors.

Thankfully, there are debt relief options that can help Mississippians in need of financial help. For some, Chapter 13 bankruptcy is a good option. Under Chapter 13, a repayment plan is created. People keep their belongings but make payments on their debt for a period of three or five years. Once the payment plan is complete, the rest of the debt is discharged. Those who have filed for Chapter 13 also get the benefit of the automatic stay, which keeps creditors from harassing them during the proceedings.

Recently the Ninth Circuit U.S. Court of Appeals, which hears appeals from federal courts in the western U.S., ruled on a Chapter 13 case. Under this ruling, people who make more money than their state's median income must pay on their repayment plans for five years, whether or not they have disposable income under the plan. Prior to this ruling, if people made more than their state's median income but had no disposable income then they may only have to pay for three years.

Although the ruling does not apply directly to Mississippi residents, it could signal a trend towards stiffening Chapter 13 rules. Those considering filing for Chapter 13 bankruptcy should make sure they understand what they are going to have to pay and for how long. However, with the right help, these people can get the long-term financial fresh start that they need.

Source: Courthouse News Service, "9th Circuit Stiffens Its View of Chapter 13 Plans," Annie Youderian, Aug. 29, 2013

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