If you’re struggling with debt, there are many tactics to regain control of your finances. One such option may be to present a bankruptcy petition to a Louisiana judge. In most cases, you will seek protection under Chapter 7 or Chapter 13 of the bankruptcy code. Take a closer look at what you need to know before choosing which type of case to pursue.
What you should know about Chapter 7 bankruptcy
Chapter 7 bankruptcy is also known as a liquidation bankruptcy because non-exempt assets will likely be taken and sold. Any funds that are raised through the sale of these items are used to pay back your unsecured creditors. It’s worth noting that any portion of a debt that remains after assets are liquidated will typically be eliminated. In the event that you don’t have any eligible property to sell, you might have your debts discharged without paying anything to your lenders.
What you should know about Chapter 13 bankruptcy
A Chapter 13 bankruptcy is generally reserved for those who have secured debts such as a car or home loan. When you file your bankruptcy petition, you will also submit a payment plan that lasts for three or five years. Generally speaking, lenders cannot move to repossess assets or foreclose upon your home during the repayment period. To qualify for a reorganization bankruptcy, you’ll need to have a steady source of income to make your monthly plan payment.
In most cases, you will obtain an automatic stay when your bankruptcy petition is received by the court. This means that creditors must cease most credit collection activities. In this way, filing for bankruptcy may make it easier to regain control of your finances while also retaining control of your assets.