Jackson MS Bankruptcy Law Blog

Residents of Jackson, Mississippi, who are faced with negative information on credit reports may wonder about how long these details will follow them. From a missed payment to a chapter 7 bankruptcy, an individual's credit score reflects a variety of negative activities that can be of concern. While the Fair Credit Reporting Act limits the amount of time negative information may remain on a report, the timing is dependent on the circumstances surrounding a debt.

Most late payments and bad debts remain on a credit report for seven years. A late payment generally doesn't show up unless it is at least one billing cycle behind. A debt that is sent to collections remains for seven years as well. Efforts to pay or make arrangements for payment can cause the seven-year timing to reset. Chapter 7 bankruptcy remains on reports for 10 years. At this point, details of the process and related debts should be removed from one's files. Any items related to the proceeding that remain or reappear after this 10-year mark can be disputed and removed.

Budgetary insufficiencies may mean that random audits of consumers filing bankruptcy are a thing of the past. The 2005 Bankruptcy Code amendments directed the United States Trustee Program (USTP) to investigate up to one of every 250 personal bankruptcy claims in each federal judicial district. Tightening budgets saw this rate drop to 1 in 1,000 cases after 2007 and further to one in 1,700 cases in 2011. Random audits are now suspended, but the agency is still authorized to audit cases showing unusual spending or income.

The Financial Services Roundtable, which is composed of financial company executives, is understandably concerned about audit suspension. They believe this "could lead to more instances of abuse of the Bankruptcy Code." A consumer credit group also stated that "bankruptcy fraud prevention is critical because it keeps the cost of credit affordable for everyone."

Although bankruptcy provides people with some relief in that they are exempt from certain financial obligations, it's not a simple exemption from all of one's responsibilities. Homeowners who signed mortgage agreements prior to going into bankruptcy, for instance, may find that their primary lenders write off their mortgages and transfer them to other credit collection agencies. While filing for Chapter 7 bankruptcy successfully exempts such homeowners from lawsuits, they're still responsible for repaying these mortgages.

The vital issue lies in the fact that lenders place liens against homes and properties when they proffer mortgage loan agreements. In order to regain complete ownership, loanees must take care of existing balances. If they fail to do so, their lenders may take advantage of the liens they own by reclaiming or foreclosing on properties without even having to bring the issue to court.

In recent years, the number of homeowners unable to make their payments has grown significantly. In 2012, the bank eventually repossessed nearly 85 percent of average homes where the owner was in default. Many Mississippi residents find themselves having to make a tough decision when changes in interest rates render them unable to afford their mortgages. With homes worth more than $1 million, more options may be available than some people think. In a remarkable contrast to the average home, luxury homes had only a 28 percent foreclosure rate after homeowners defaulted.

Some lenders are more willing to help luxury homeowners avoid foreclosure. The bank could extend payments or lower interest rates to allow borrowers to catch up. Some mortgage holders may be more amenable to negotiation of a short sale and will sometimes delay initiating foreclosure.