Bankruptcy refers to the legal proceedings that occur when a person or business is unable to pay outstanding debts. This process gives the debtor freedom from paying their debts while assisting creditors in receiving some type of payment for the debts. In the U.S., the federal court deals with bankruptcy cases as indicated in the national bankruptcy code. The laws for bankruptcy in Louisiana are the same as in other states. These laws determine when and how to satisfy debts to relieve both the debtor and the creditor. Here are some important things to know if you’re considering filing bankruptcy in Louisiana.
Louisiana bankruptcy laws
Louisiana law considers bankruptcy a legal process that restructures, eliminates or decreases a debtor’s outstanding financial obligations. A person, married couple or business struggling with making payments to a creditor can declare bankruptcy and take the case to U.S. federal court.
The judge and a court trustee will assess the plaintiff’s case and dissolve the debtor’s assets to ensure that the creditor is paid and all outstanding debts are dismissed. Some bankruptcy cases involve a repayment plan that typically last between three and five years.
Types of bankruptcies in Louisiana
According to bankruptcy laws in Louisiana, there are several types for debtors to choose from. These types are called chapters, and most bankruptcy cases are Chapter 7, 11 or 13. Less common bankruptcy chapters include Chapters 9, 12 and 15.
The type of bankruptcy that is best for a debtor depends on the reason for filing the claim, the type of debts involved and the people involved in repaying the debt. Regardless, the goal is a fresh financial start for the debtor.
