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How to File Bankruptcy in Louisiana

Deciding Whether to File Bankruptcy

The choice to file bankruptcy can be a very difficult decision to make. For some, the decision may be beneficial while for others the aftermath succeeding bankruptcy can be more severe.  For example, the loss of a home can result under Chapter Seven bankruptcy since certain loans require it to be used as collateral.

Chapter 7 Bankruptcy or Chapter 13 Bankruptcy in Louisiana

In Louisiana, Chapter Seven bankruptcy laws authorize various exemptions to be applied including a home exemption as one of them.  However, if the equity in the home exceeds the allowable amount to be protected in the exemption then the home could be lost. Therefore Chapter Thirteen would be more advantageous since it provides the option of creating payment plans.

There are two types of bankruptcy in Louisiana, Chapter Seven and Chapter Thirteen. Under Chapter Seven, the petitioner is essentially given the chance to start their credit over and delete all major credit problems.  This occurs by naming a trustee and allowing them to sell all the necessary belongings that are not considered exempted to pay off any unresolved debt.  The trustee will also be compensated from the value of the assets for their role in the liquidation of the property. Either a married couple or an individual may file their credit card debts and unsecured debts under this chapter. Student loans, child support, alimony, certain taxes, and fraudulent debts cannot be eradicated.

Bankruptcy Exemptions in Louisiana under Chapter 7

There are different categories established within Louisiana bankruptcy law that determine what property and up to what value can be exempted.  These properties are then considered protected from creditors.  However, a non-dischargeable debt is formed when not all the value of the property can be eliminated through bankruptcy.  The equity in homes and cars may also be exempted with certain limitations if the property has been secured through a loan and the payments are current.  Payments will continue to be made even after bankruptcy.

When Chapter 13 Bankruptcy is the Best Option

The second type of bankruptcy in Louisiana is Chapter Thirteen. Unlike Chapter Seven where debt is eliminated, this chapter affords the chance to become debt-free within a certain window of time, such usually within 3 to 5 years.  A monthly payment plan is created based upon the persons overall income and specific factors of each household. This is perfect for avoiding foreclosure and paying off any missed mortgage or car payments.

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