Filing for bankruptcy in Louisiana can significantly impact your credit card debt, providing a pathway to alleviate your financial burdens. But how exactly does bankruptcy affect your credit card debt? Let’s delve into the details.
When you file for bankruptcy, most of your credit card debts can be discharged, meaning you are no longer legally required to pay them. This is true for both Chapter 7 and Chapter 13 bankruptcy. In a Chapter 7 bankruptcy, your non‑exempt assets are liquidated to repay your debts, and any remaining credit card debt is typically discharged. In a Chapter 13 bankruptcy, you enter into a repayment plan to pay back a portion of your debts over a period of 3 to 5 years, and any remaining credit card debt may be discharged at the end of your repayment plan.
However, not all credit card debts are dischargeable. For instance, if the credit card debt is due to fraudulent activity, such as making charges on your credit card when you had no intention of repaying them, or if the charges were for luxury goods or services purchased within 90 days before filing for bankruptcy, these debts may not be discharged.
It’s also important to note that while bankruptcy can discharge your credit card debt, it will also have a significant impact on your credit score. However, with time and responsible financial management, you can rebuild your credit.
At Simon Fitzgerald LLC, we understand that dealing with overwhelming credit card debt can be stressful. Our team of experienced bankruptcy attorneys is here to guide you through the bankruptcy process, helping you understand how it affects your credit card debt and assisting you in making informed decisions about your financial future.
What is the difference between how Chapter 7 and Chapter 13 bankruptcy handle credit card debt in Louisiana?
Bankruptcy has different implications depending on the type of bankruptcy you file: Chapter 7 or Chapter 13.
Chapter 7 bankruptcy, often referred to as “liquidation bankruptcy,” involves the sale of non‑exempt assets to repay creditors. However, credit card debt is typically considered unsecured debt, meaning it is not backed by collateral. In most cases, credit card debt is dischargeable in Chapter 7 bankruptcy, allowing you to eliminate or significantly reduce the debt without the requirement to repay it. This provides you with a fresh financial start, freeing you from the burdensome credit card debt and allowing you to rebuild your financial future.
Chapter 13 bankruptcy, also known as “reorganization bankruptcy,” involves creating a repayment plan that spans three to five years. Under this plan, you make manageable monthly payments to a bankruptcy trustee, who distributes the funds to your creditors, including credit card companies. The amount you repay depends on factors such as your income, expenses, and the value of your assets. Chapter 13 bankruptcy provides an opportunity to catch up on missed payments while protecting your assets from being sold. It allows you to regain control of your financial situation, giving you the chance to restructure your debts and make affordable payments.
It’s important to consult with our experienced bankruptcy attorneys at Simon Fitzgerald LLC to evaluate your unique circumstances and determine the best course of action. We will provide personalized guidance, explaining how bankruptcy will specifically impact your credit card debt and assisting you in making informed decisions to achieve a brighter financial future.
Are there any limitations on discharging recent credit card charges or cash advances in bankruptcy in Louisiana?
When considering bankruptcy in Louisiana, it’s crucial to be aware of limitations regarding recent credit card charges or cash advances. If you make substantial charges or cash advances within 70 to 90 days before filing for bankruptcy, the bankruptcy court may view them as fraudulent and non‑dischargeable. The court carefully examines these transactions to prevent individuals from incurring debts with the intention of immediately discharging them through bankruptcy.
Our dedicated team of bankruptcy attorneys at Simon Fitzgerald LLC will provide you with detailed information and expert guidance tailored to your unique circumstances. We will ensure that you fully understand the implications and limitations related to your credit card debt in bankruptcy, allowing you to make informed decisions about your financial future.
For more information, you can visit: Federal Trade Commission ‑ Coping with Debt
Concerned about your mounting credit card debt? Our easy‑to‑understand e‑book is here to help. If you have any specific questions, our bankruptcy experts are always ready to assist here. When you’re ready to explore your options, schedule your free consultation with us.
