The thought of filing for bankruptcy may fill you with a sense of dread. This is because you may believe that doing so could result in the loss of your Louisiana home, a car or other assets. However, the truth is that you may be able to discharge your debts without making any payments to creditors or losing any of your property.
What happens when you file for Chapter 7 bankruptcy?
When you file for Chapter 7 bankruptcy, a trustee will be assigned to your case to oversee the process of liquidating your assets. However, it’s worth noting that you are allowed to keep a portion of the equity that is present in a home, car or other important items. Therefore, it’s possible that your trustee may decline to seize any of your property. Generally speaking, a liquidation case takes about six weeks to complete, and most unsecured debts are eligible to be fully eliminated by a bankruptcy court.
What happens when you file for Chapter 13 bankruptcy?
Filing for Chapter 13 bankruptcy allows you to reorganize your secured debts into a single payment that you’ll make for either three or five years. As long as you stay current on that payment, you will be able to retain your house, car and other assets that still have a lien on them. If you owe more than an asset is worth, it may be possible to have the negative equity converted into an unsecured debt.
Bankruptcy may be an effective way to eliminate or reduce outstanding loan balances. Although it may reduce your credit score in the short term, you will likely be able to apply for new lines of credit within months of doing so.