There are benefits and drawbacks to each kind of bankruptcy. Some of the risks and challenges are universal. Bankruptcy often leads to an immediate closure of someone’s revolving lines of credit. Their credit score will drop, and it will usually take years to qualify for high-quality financing options again.
Other drawbacks depend on the type of bankruptcy someone pursues. Those considering Chapter 7 bankruptcy in Mississippi often worry about whether their resources will be vulnerable. Chapter 7 bankruptcy sometimes requires the liquidation of certain assets to pay creditors before someone’s discharge.
The more assets someone has, the more likely they are to have property they cannot exempt from liquidation. The resource most people worry about protecting is the home where they live. How much home equity can someone typically protect from liquidation during a Chapter 7 bankruptcy in Mississippi?
Several factors determine what people can protect
Not everyone who lives in Mississippi can file for bankruptcy while using Mississippi state exemptions. The law currently requires people to live in Mississippi for at least 730 days before their bankruptcy filing if they want to use state exemptions. Those who have moved to Mississippi in the last two years often have to use the exemptions that apply in the state where they previously lived.
Someone who qualifies to use Mississippi exemptions can use the state’s generous homestead exemption. They can preserve up to $75,000 worth of home equity in a traditional, stick-built home. The protection will extend both to the edifice and to any acreage. The law does limit someone to protecting no more than 160 acres of property.
Those who live in manufactured homes or trailers have different exemptions. People can protect up to $30,000 worth of equity in a trailer or manufactured home, but doing so will not fall under the traditional homestead exemption. Those preparing for bankruptcy often need to look carefully at their personal resources, including the current value of their home and how much equity they have accrued while living at the property.
Making use of state bankruptcy exemptions can help people make the most of a bankruptcy filing while preserving as much of their resources as possible.