Deciding to file for bankruptcy can take a toll on an individual or business, but it does not mean being stripped of all your assets and possessions. On the contrary, filing for bankruptcy can help you turn over financial hardships you are currently facing and prevent succumbing to eternal debt. Bankruptcy is not a one-size-fits-all ordeal. In fact, there are several different models of bankruptcy that cater to the most common or unique monetary conditions.
Chapter 7 bankruptcy is the most common form of bankruptcy filed. The purpose of Chapter 7 is the forgiveness of debt or debt discharge in exchange for non-exempt assets (assets viewed to the federal government as non-practical to start anew) such as:
- Bank accounts
- Stocks or bonds
- Vacation properties
- Antique collections
- … and much more
Chapter 7 is the shortest form of bankruptcy with an average duration of four to six months. The process begins by drafting a list of debt, assets, and creditors to the court for liquidation. The only factor that usually extends the filing process is when the individual fails to supply all of the required information.
Chapter 13 is the second most common type of bankruptcy filed. It focuses more on the rearrangement of finances as opposed to the eradication of debt. It is a favored option for those who have fallen behind on payments due to job loss, illness or any other situations and requires assistance from the court system.
Unlike Chapter 7, Chapter 13 is not as quick as it requires monthly payments to a trustee which can last 3 to 5 years. The court-appointed trustee then disperses the payments to the creditors. Consolidating debts into salaries based on monthly disposable income is a common option and this feature requires a detailed petition. There are a few reasons why Chapter 13 may be the favorable option for a debtor:
- More time to catch up on home payments.
- Asset protection. Certain items that Chapter 7 does not protect can be kept under Chapter 13.
- Debts that can be discharged in Chapter 13 may not be in Chapter 7.
Debt can pose a life-long issue and be a never-ending battle. If you are considering filing for bankruptcy in the state of Louisiana, contact the attorneys at E. Orum Young Law Office to get your free consultation. With over 20,000 cases filed, we have handled more bankruptcies than any other law firm in Northeast Louisiana. Our experienced bankruptcy attorneys can help you weigh your options, guide you through the legal process, and see to it that you return to a debt-free life.