For many families in Northeast Louisiana, debt becomes overwhelming, and they need a fresh start to get their finances under control. Chapter 7 is one of the more common methods of consumer bankruptcy that can offer you federal protection and resolve your major debt.
If you’re thinking about Chapter 7 bankruptcy, you must take a means test that examines your assets, expenses, and income to determine your eligibility. It is also important that you have not already completed a Chapter 7 case during the last eight years or a Chapter 13 filing in the past six years.
How Does Chapter 7 Work?
Chapter 7 bankruptcy is a consumer liquidation bankruptcy. It involves the selling of non-exempt assets by a trustee in order to collect payment to distribute across all your creditors. The trustee is also paid a commission for overseeing the distribution.
When you file for Chapter 7 bankruptcy in Louisiana, most of your debts will be discharged. Debts that can be discharged include credit card debt, medical bills, personal loans, business debts, civil court judgments, utility bills, and more. However, your unpaid alimony, child support, fraudulent debts, student loans, and some taxes cannot be discharged through this type of bankruptcy.
Take note that a Chapter 7 bankruptcy will seize your tax break to pay off debt. Still, it is possible to keep some types of secured debts like your vehicle or home. But to do this, you will have to sign a “Reaffirmation Agreement.”
If you seek to file a Chapter 7, but found out that you are not eligible, you may file for a Chapter 13 instead. There are some who may be eligible but find that this is not the right bankruptcy for them after all factors are considered. Speak with our bankruptcy lawyers to determine which bankruptcy procedure is right for you and your family.
What Assets are Exempt from Seizure?
When determining which of your assets are protected from creditors in a Chapter 7 bankruptcy, the state of Louisiana has a bankruptcy exemption chart to reference. This chart shows the exemption limits for equity in property, which is the difference between the debt on an asset and its value. Below are some key points to keep in mind when deciding what is or is not protected.
- Property secured by loans that are current in payments and has equity covered by exemptions can be kept if you agree to keep it current.
- Assets secured by loans that are current in payments but has equity not covered by exemptions can potentially be liquidated by the trusted.
- Married couples are allowed to file together and claim full sets of exemptions.
- If you have non-exempt property you want to keep, usually the trustee must be paid the value of that property.
- There are some federal exemptions you may use along with the Louisiana exemptions.