Mississippi Bankruptcy Law (MS)

Options For Mississippi Discharge of debts with federal assistance

Now, more than ever before in the history of the state of Mississippi in the last 100 years, wide spread financial losses and devastation threaten the economic survival of average citizens. New Mississippi laws became effect in late 2005, and severely restrict the right and options of state residents to discharge unaffordable debts. Because of these new laws (contained in the federal Code), no one earning above the Mississippi median income level will be allowed to file Chapter 7. For these people, a five year Chapter 13 plan is mandatory while contributing all disposable income toward repayment of debts.

The standard of living allowed is determined by a new national standard for living allowances promulgated originally by the IRS for the collection of back taxes from taxpayers found guilty of evasion. The Code adopted this standard, as amended from time to time, and enforces this standard of living upon all people filing Chapter 13. This standard has been criticized in both the US House and the Senate, as imposing poverty upon helpless people similar to a prison term, while struggling to pay debts that simply can not be repaid.

The justification of these new laws is that all people should pay at least according to their means, to the extent possible from their personal income. Few people truly disagree with this laudable purpose, but in practice, the ability to repay became highly controversial. The debates in Congress drew fire across party lines, and ultimately, Republican majorities prevailed in establishing a new, lower threshold for poverty. Be aware, with careful bankruptcy planning, a few opportunities exist to circumvent these new requirements. While they last, all Mississippi residents should carefully consider their options.