When considering bankruptcy in Louisiana, it’s essential to understand the cost differences between Chapter 7 and Chapter 13. Both types of bankruptcy come with their own set of fees and expenses, which can significantly impact your financial planning.
Chapter 7, often referred to as liquidation bankruptcy, typically involves a quicker process and lower costs. The filing fee for Chapter 7 bankruptcy in Louisiana is currently set at $338.00. However, this does not include the attorney fees, which can range between $1,000.00 and $2,000.00, depending on the complexity of your case. Additional costs may include credit counseling or financial management classes and the cost of pulling your credit report. It’s important to note that the entire fee for Chapter 7 must be paid up-front. This requirement creates a potential conflict of interest, as attorneys cannot collect fees after filing since unpaid fees are discharged as unsecured debts. At Simon Fitzgerald, we understand the need for flexibility. That’s why we are willing to work with you on creative solutions that may allow you to pay for Chapter 7 in installments. While we cannot file your case until the fee is paid in full, we will begin preparing it and advise you on how to handle your creditors during this time.
Chapter 13, also known as reorganization bankruptcy, generally has lower up‑front costs to file. The filing fee for Chapter 13 bankruptcy is $313.00. This makes Chapter 13 the most popular bankruptcy filed because you are typically only required to pay $330.00 upfront, which is the court costs, credit counseling, and a credit report fee. Attorney fees and costs for Chapter 13 are typically higher than for Chapter 7, but because they can be paid through your Chapter 13 plan, the increased fees, which range from $2,500.00 to $4,700.00, often feel easier to afford since you don=t have to pay them upfront. The increased fee is due to Chapter 13 cases involving the creation of a repayment plan, which requires more court filings and paperwork. Additionally, the representation lasts 36B60 months rather than 4B6 months. Keep in mind that in almost all our Chapter 13 cases, we don’t charge any legal fees upfront. Those are typically paid monthly through your Chapter 13 plan payments. For anyone needing immediate relief from creditor’s collection efforts, Chapter 13 is a great option to file a case and get protection.
In conclusion, while Chapter 7 bankruptcy may have lower up‑front costs, the total cost of your bankruptcy will depend on various factors, including the complexity of your case and the type of bankruptcy you choose. It’s crucial to consult with an experienced bankruptcy attorney to understand all the potential costs and choose the best path for your financial situation. Remember, the decision to choose an attorney should not be based solely on price. All attorneys in Louisiana typically charge about the same amount. The decision should be based on who you feel will do the best job explaining your options and creating a solution that solves your financial issues.
Besides the attorney fees, filing fees, and other costs, are there other factors that might make Chapter 13 bankruptcy more expensive than Chapter 7 bankruptcy in Louisiana?
When you have a lot of debt and are considering bankruptcy in Louisiana, it’s important to know the differences between Chapter 7 and Chapter 13. These are two types of bankruptcy that have different costs and payment arrangements, and they affect your financial situation in different ways.
Chapter 7 bankruptcy is often called “liquidation bankruptcy.” It’s a faster way to get financial relief. It helps you get rid of debts like credit cards, medical bills, and money judgments in about 4‑6 months. But you have to pay fees and costs at the beginning. The filing fee for Chapter 7 bankruptcy in Louisiana is currently $338. You also have to pay the lawyer, which can be between $1,000 and $2,000, depending on how complicated your case is. There may be other costs too, like taking classes or getting your credit report. One thing to remember is that you have to pay everything up-front because lawyers can’t collect fees later.
Chapter 13 bankruptcy is known as a “wage earner’s plan.” It’s a way to stop foreclosures, repossessions, and debt collectors. With Chapter 13, you make a plan to pay back some of your debts over 3‑5 years based on how much money you make. The filing fee for Chapter 13 bankruptcy is $313. Attorney fees and costs for Chapter 13 are usually higher than for Chapter 7, but the good thing is you don’t have to pay them all up-front. You can include them in your payment plan.
Even though Chapter 13 costs more overall, many people choose it because it has lower up-front costs. In most Chapter 13 cases, you don’t have to pay the lawyer’s fees up-front. You pay them monthly as part of your payment plan. This makes Chapter 13 a good option if you need help right away from the people you owe money to.
In the end, the total cost of your bankruptcy depends on different things, like how complicated your case is and which type of bankruptcy you choose. It’s really important to talk to a bankruptcy lawyer who knows what they’re doing. They can help you understand all the costs and figure out the best plan for your financial situation. And remember, the decision to pick a lawyer shouldn’t just be about the price. All lawyers in Louisiana usually charge about the same amount. You want to find someone who will explain your options well and come up with a solution that solves your money problems.
For more information, you can visit: What is the cost difference between filing for Chapter 7 and Chapter 13 bankruptcy?
What are the benefits of choosing Chapter 13 over Chapter 7 bankruptcy in Louisiana despite the cost difference?
Choosing Chapter 13 over Chapter 7 bankruptcy in Louisiana, despite the cost difference, can offer unique benefits that make it a preferable option for certain individuals. Both options provide a legal pathway to overcome overwhelming debt, but they cater to different financial situations and needs.
Chapter 7 bankruptcy, often referred to as “liquidation bankruptcy,” involves selling off your non‑exempt assets to repay your creditors. It’s a quicker process, typically lasting three to six months, and it allows you to discharge most of your unsecured debts. However, you may have to part with some of your property, and it’s only available to those who pass a means test, proving they genuinely can’t repay their debts.
On the other hand, Chapter 13 bankruptcy, known as “reorganization bankruptcy,” allows you to keep your property while you repay your debts over a three‑ to five‑year period. This option is particularly beneficial for individuals with a regular income who can afford to make monthly payments towards their debt.
So, why might someone in Louisiana choose Chapter 13 over Chapter 7, despite the higher costs? Here are some key reasons:
- Property Protection: Chapter 13 allows you to keep all your property, including non‑exempt assets that would be sold in a Chapter 7 bankruptcy. This is particularly beneficial if you have significant equity in your home or other valuable assets that you want to keep.
- Flexible Repayment: Chapter 13 involves creating a repayment plan based on your income, living expenses, and types of debt. This plan lets you catch up on missed mortgage or car payments, potentially preventing foreclosure or repossession.
- Co‑signer Protection: If you have co‑signed loans, Chapter 13 can protect your co‑signers from being pursued by creditors, as long as you keep up with your repayment plan.
- More Debts Can Be Discharged: Certain debts that can’t be discharged in Chapter 7 may be wiped out in Chapter 13. These include some types of tax debt, marital debts from a divorce settlement agreement, and debts from willfully damaging property or causing injury.
- Lien Stripping and Cramdowns: Chapter 13 offers the possibility of removing secondary mortgages or reducing the principal loan balance on secured debts under certain conditions.
- Preventing Foreclosure or Repossession: Chapter 13 allows you to avoid foreclosure or repossession and catch up on missed mortgage or car loan payments through the repayment plan.
- Managing Certain Types of Debts: Chapter 13 provides a valuable tool for managing certain types of debts that are not dischargeable in Chapter 7, such as certain tax debts or past‑due child support.
- Stability and Control: Chapter 13 provides stability and control over your financial situation by allowing you to create a reasonable and manageable repayment plan.
Remember, every situation is unique, and what works best for one person might not work for another. It’s important to consult with an experienced bankruptcy attorney to understand your options and make an informed decision. At Simon Fitzgerald LLC, we’re here to help you navigate these complex decisions and find the best path toward financial stability.
Understanding Chapter 7 and Chapter 13 doesn’t have to be difficult. Don’t worry, we’ve got you covered with our free, easy‑to‑understand guide. And to stay informed about the latest in bankruptcy law, why not sign up for our newsletter? When you’re ready to take the next step, we’re here for you. Schedule your free consultation now.