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Posted by: National Bankruptcy Forum
Pecans, cotton, catfish, sweet potatoes — all have a huge, if not “capital,” presence in Mississippi. The nickname “Old Man River” is reserved for the Mississippi River, the largest river in the United States and the nation’s chief waterway. The Magnolia State also is rich in history, with the Mississippi Delta considered the birthplace of blues music while Vicksburg National Military Park preserves the site of a critical Civil War battle.
For those who live in Mississippi, they’ve no doubt felt the sting of the economic recession. The unemployment rate has remained at or above 5% throughout most of 2017. While the local economy has grown at a modest pace, it still remains behind the national average. It was one of only eight states with a lower employment rate in December 2016 than December 2007, the beginning of the Great Recession, and the second-lowest workforce participation rate in the nation.
Mississippi also is losing residents, with a state economist noting that “people are probably going where the jobs are.” The state’s adjusted per capita personal income from 2015 figures is just over $40,000 — the second-lowest in the nation.
Those who have found themselves struggling with debt in Mississippi may have options. They may be able to turn to bankruptcy for help.
- Bankruptcy Law Overview
- Filing Chapter 7 Bankruptcy in Mississippi: Can I keep my home?
- Mississippi Bankruptcy Exemptions
- Where are the bankruptcy courts in Mississippi located?
Bankruptcy Law Overview
Some people automatically hear the word “bankruptcy” and think that it’s bad. But, bankruptcy can be good. While bankruptcy cases have generally declined in the U.S., Mississippi has seen an 11.7% increase in total bankruptcy filings from January to September 2017 compared to the same time period the previous year.
Bankruptcy is a process under federal law that allows debtors to wipe their slate clean and get a fresh financial start. It’s organized by chapters, with Chapter 7 and Chapter 13 most popular for consumer bankruptcies. With Chapter 7, often referred to as a “straight bankruptcy” or “liquidation bankruptcy,” consumers have the opportunity to discharge their unsecured debts, such as credit card debt, medical bills, and mortgage debts. Your property becomes placed under the supervision of a bankruptcy trustee once you file, who may be able to sell some of your assets to pay back your debt, but this doesn’t usually happen. In many cases, bankruptcy filers get to keep all of their property through federal or state bankruptcy exemptions.
Under Chapter 13, debtors agree to pay back a portion of their debt over a period of 3 to 5 years. It’s referred to as a reorganization bankruptcy. Chapter 7 cases go much faster, typically lasting 4 to 5 months. Many people in debt opt to file Chapter 7 bankruptcy over Chapter 13, including residents of Mississippi.
Filing Chapter 7 Bankruptcy in Mississippi: Can I keep my home?
As mentioned above, many people can protect their property when they file for Chapter 7 bankruptcy protection. Some states allow debtors to use federal bankruptcy exemptions or state bankruptcy exemptions, without mixing or matching. In Mississippi, however, you must use the Mississippi bankruptcy exemptions.
That’s good news, in general. Mississippi’s homestead exemption, for example, is more general than the federal one. But how does it work?
Determining whether you can keep your home and file for bankruptcy is usually a fairly simple equation. First, determine home equity (value of your home minus any mortgage). Next, you’ll need to meet with a bankruptcy attorney to determine which state’s exemption laws will apply to your case. Note: A recent move may impact which state’s exemptions apply. State law varies as to how much home equity a debtor can retain while filing bankruptcy.
Mississippi bankruptcy laws allow $75,000 of equity in property owned and occupied by the debtor (primary residence) to be claimed as exempt, meaning the bankruptcy trustee can’t touch it. If the debtor is over 60 and married or widowed they may claim a former residence as exempt. Like many states, Mississippi limits the size of the homestead to be protected to 160 acres or less. Mississippi bankruptcy laws also allow the proceeds from the sale of a home to be exempted pursuant to the limitations described above.
In Mississippi, a mobile home can be exempted as personal property up to $30,000 (a mobile home does not qualify as homestead unless you own land on which it is located). Married couples filing a joint bankruptcy can double the homestead exemption if they live in separate residences.
Here are a few other popular bankruptcy exemptions in Mississippi.
Mississippi Bankruptcy ExemptionsThe top 5 exemptions under Mississippi state law.
|Type of exemption||Mississippi law|
|Homestead||$75,000 in equity under 160 acres; $30,000 in a mobile or manufactured home|
|Personal property||Up to $10,000 in personal property other than real estate; plus $10,000 in personal injury awards; $5,000 in earned income credit, federal or state tax refunds; and tax-exempt education savings and health savings plans; plus a $50,000 wildcard exemption on any property if you're over age 70|
|Vehicle||No motor vehicle exemption, but a $10,000 personal property exemption can protect your car|
|Wages||100% of earned but unpaid wages owed for 30 days, 75% thereafter of earned but unpaid weekly disposable earnings (or 30 times the federal hourly minimum wage, whichever is greater)|
|Pension/retirement||Of those deposited more than a year before bankruptcy: IRAs, Keoghs, and ERISA-qualified benefits|
Mississippi Homestead Exemption
We’ve already given the amount, but how does the Mississippi homestead exemption work in the context of a Chapter 7 bankruptcy? Let’s say Jim, from Jackson, owns a home worth $100,000 with a $75,000 mortgage. In this example, Jim has $25,000 of home equity. If he were to file bankruptcy, the $75,000 Mississippi homestead exemption would completely shield his home from sale by the trustee. Jim would be able to shed burdensome debt and still keep his home. Miss. Code Ann. § 85-3-21
Mississippi Motor Vehicle Exemption
Mississippi bankruptcy laws allow debtors to protect up to $10,000 of personal property through a wildcard exemption. While Mississippi does not specifically provide an exemption for cars, the $10,000 wildcard exemption can be used to protect a car from the bankruptcy trustee. Miss. Code Ann. § 85-3-1(a)
For example, let’s say Bill from Oxford owns a Ford F-150 with an appraised value of $15,000 and an $8,000 loan. When we subtract the $8,000 loan from the $15,000 appraised value, we see that Bill has $7,000 of equity in his truck. If he were forced to file bankruptcy, he could allocate $7,000 of the Mississippi wildcard exemption to protect his truck and prevent its sale by the trustee. In other words, Bill could file for bankruptcy and keep his car.
Personal Property Exemption
As mentioned, the personal property exemption in Mississippi allows for $10,000 in personal property not including real estate. This can be your car, or any of the following items, up to $10,000 equity:
- Furniture and household goods
- Wedding rings
- Tools of the trade
- Health aides
Additionally, if you’ve won a personal injury award, up to $10,000 is exempt. Miss. Code Ann. § 85-3-17
You also may exempt up to $5,000 in earned income credit, federal or state tax refunds. Miss. Code Ann. § 85-3-1(i), (j), (k)
Wages Exemption in Mississippi
If you’ve earned money but haven’t been paid it in the last 30 days, it’s 100% exempt from the bankruptcy trustee. Past 30 days, 75% of your weekly disposable earnings (or 30 times the federal hourly minimum wage) are protected from wage garnishment.
Pension and Retirement Accounts
In Mississippi, you may protect IRAs, Keoghs, and ERISA-qualified benefits that were deposited a year before you filed for bankruptcy. Federal non-bankruptcy exemptions also protect retirement account assets. Miss. Code Ann. § 85-3-1(e)
Wildcard Exemption for Seniors
Aside from the $10,000 wildcard exemption for all bankruptcy filers, those over the age of 70 have a wildcard exemption that allows them to exempt up to $50,000 of any property. Miss. Code Ann. § 85-3-1(h)
Where are the bankruptcy courts in Mississippi located?
Before you file for bankruptcy, you’ll need to know a little bit more about what’s expected of you. You may need to show up in court to file your case or for a 341(a) Meeting of Creditors. In Mississippi, the bankruptcy courts are divided into two districts.
United States Bankruptcy Court, Northern District of Mississippi
There is one location for filing cases in Aberdeen, while the other two locations in the Northern District of Mississippi are for hearings only.
Aberdeen: United States Bankruptcy Court, Northern District of Mississippi, Thad Cochran U.S. Courthouse, 703 Hwy 145 North, Aberdeen, MS 39730
Greenville: Federal Building, 305 Main St., Greenville, MS 38701
Oxford: Federal Building, 911 Jackson Ave., Oxford, MS 38655
United States Bankruptcy Court, Southern District of Mississippi
In the Southern District of Mississippi, you also may appear at one of three locations. Hattiesburg is only for hearings.
Gulfport: 2012 15th St., Suite 244, Gulfport, MS 39501
Hattiesburg: 701 Main St., Hattiesburg, MS 39401
Jackson: 501 E. Court St., Suite 2300, Jackson, MS 39201
When filing for bankruptcy protection, be sure to seek the services of an experienced Mississippi bankruptcy attorney. He or she will go over which chapter of bankruptcy is most appropriate for your financial situation and review the bankruptcy exemptions with you. It’s much easier to file bankruptcy with a good lawyer at your side — and these cases have a better discharge rate than people who choose to file without an attorney.