Many Mississippi homeowners, like others throughout the country, are currently facing financial distress. In some cases, an adjustment of spending habits or an increase in income is all it might take to fix the problem. Other financial challenges may be more difficult to resolve, which is where various debt relief programs, such as filing for bankruptcy, may be helpful.
No two financial crises are exactly the same. There are several bankruptcy programs. The two petitions filed most frequently by homeowners are Chapter 7 and Chapter 13. Before filing for one or the other, it is important to understand the differences between the two.
Chapter 13 bankruptcy is for wage earners
When applying for Chapter 13 bankruptcy, an individual must have enough income to continue to making payments to lenders who are owed a debt. For this reason, this type of bankruptcy is commonly referred to as ”wage earners’ debt relief.” Lenders are often willing to work with someone who is experiencing a financial crisis by agreeing to a restructured payment plan, which enables the wage earner to continue paying off the debt that is owed. This is especially helpful in mortgage loan situations.
The Chapter 7 program typically includes liquidation
As opposed to a restructured payment plan, Chapter 7 bankruptcy differs from Chapter 13 because it usually entails the liquidation of assets. The net proceeds of the liquidation are then used to pay back creditors. This form of bankruptcy is most often used by people who do not have enough reliable income to sustain continued payments to resolve debt issues. A Mississippi bankruptcy law attorney can provide legal support to anyone who has encountered complications regarding bankruptcy, foreclosure or other debt-related issues.