General Information About Bankruptcy

What is a bankruptcy?

Bankruptcy is a federal law which permits people to get protection from their creditors in order to get a "fresh start" and preserve their assets. Some bankruptcy cases are reorganization cases, which restructure debt and permit repayments, and some cases are liquidation cases, which eliminate the debt and allow retention of a certain amount of property.

What is a Chapter 7 bankruptcy?

Chapter 7 is a liquidation case, which discharges all the debtor's debt, with some exceptions. A trustee of the court is appointed to liquidate the debtor's property and to take the money and pay it to the creditors. The debtor is allowed to keep that property which falls under the limits provided by the Louisiana State exemption laws. Creditors who hold liens on the debtor's property continue to hold those liens, and will have to be paid or be permitted to repossess their collateral.

What is a Chapter 13 bankruptcy?

Chapter 13 is a reorganization case, in which the debtor makes a monthly payment to a bankruptcy trustee over a period of three to five years, at which time the debtor receives a discharge of debt. A Chapter 13 case works best for debtors who would lose something with a Chapter 7 straight bankruptcy, since the debtor in the Chapter 13 case gets to retain all of his or her property.

What is a Chapter 11 bankruptcy?

Chapter 11 is a business reorganization case in which a business gets relief from its creditors while it gets approval of a repayment plan.

What type of bankruptcy should I file?

Each case is different depending on the amount and type of debt, the value of assets, and the client's objectives. The only way to get a complete answer is to review all of the facts with the bankruptcy attorney.

Who can file bankruptcy?

There are no eligibility requirements for filing bankruptcy, although generally speaking anyone who cannot pay his or her bills as they fall due is a candidate for bankruptcy. With some exceptions, the fact that you filed bankruptcy in the past will not keep you from filing bankruptcy now.

What happens to my property?

In a Chapter 13 or a Chapter 11 case, you are allowed to keep all of your property, since you are
repaying the creditors under a court approved plan. In a Chapter 7 case, you may keep all property which is exempt under the Louisiana exemption laws, as well as that property which has liens which you are paying, so long as that property is worth less than the amount of the liens.

What property is exempt?

The Louisiana Exemptions provide that a debtor may keep $35,000 in equity in real estate which serves as the residence and $7,500 in value in a motor vehicle. Certain other types of property may also be exempt, such as retirement accounts and cash value in life insurance policies.

What happens to property that is collateral for a debt?

In a Chapter 13 reorganization case, usually the secured creditors are provided for in the debtor's plan, and are paid with the money deposited with the Chapter 13 Trustee. In a Chapter 7 case, the secured creditors are paid directly by the debtor, if the property is being retained by the debtor.

What debts are not dischargeable under bankruptcy?

Most taxes, child support and alimony, student loans, and certain debts incurred as a result of fraudulent behavior are generally not dischargeable in a bankruptcy case.

Is it possible to be denied a discharge of all my debts?

There are only a few ways you may be denied a discharge of debt, such as committing fraud in connection with your bankruptcy or otherwise abusing the bankruptcy process.

What effect will bankruptcy have on my credit?

There are few things worse that you can do to your credit than filing a bankruptcy case. However, for most people considering bankruptcy, their credit is already bad due to pending judgments, foreclosures, and repossessions. A bankruptcy will not improve your credit, although it does provide a way of managing debt so that credit, over time, may be improved.

Can I be discriminated against in areas other than credit if I file bankruptcy?

The fact that you filed bankruptcy cannot be used to discriminate against you in employment.

What effect will bankruptcy have on someone who cosigned a loan with me?

Cosigners are protected in Chapter 13 cases, but in Chapter 7 cases, the cosigner may be called on to pay debt which has been discharged in the Chapter 7 case.

Can bankruptcy stop a foreclosure or repossession?

Many bankruptcies are filed to stop foreclosures. So long as the bankruptcy petition is filed before the day the real estate is sold, the foreclosure can be stopped. Bankruptcy can also stop a repossession. A court order is entered automatically upon filing of the bankruptcy case which prohibits creditors from taking any action to collect their debts, including repossessions.

Can bankruptcy stop harassing calls from creditors?

From the time you file a bankruptcy case, no one can contact you for any reason regarding your debts, and it is a violation of the bankruptcy law for them to do so.

Who is informed when a bankruptcy is filed?

Filing bankruptcy is like filing any other legal action, and is a matter of public record. On the other hand, only certain newspapers publish bankruptcy filings, and the only people who will be contacted about the bankruptcy directly will be the ones to whom you owe money.

How long does it take before the benefits of filing bankruptcy become effective?

The bankruptcy case begins on the day that it is filed. That is the day that the relief from creditors begins, and it is the established date for determination of assets and debts, in most cases.

FAQ for Debt Settlements

What is Attorney Debt Settlement?

Debt settlement is where a creditor agrees to accept a reduced amount in satisfaction of an outstanding debt. Most companies that you owe money to realize that if you were to file bankruptcy they would receive very little if any money. Consequently, these companies are often willing to accept a lesser amount. In return, you pay off your debt at a reduced rate and avoid filing bankruptcy.

What Kind of Debt Can Be Settled?

Credit card debt, business debt, medical bills, finance company debt, payday loans, personal loans, SBA loans, and more.

Can I Afford Debt Settlement?

If you have an income or have money set aside you will likely qualify for debt settlement. Debt settlement involves making a lump sum payment to each of your creditors. Some individuals have money set aside such as money in savings or a retirement account, while others require a payment plan.

Do I Need a Debt Settlement Attorney in Louisiana?

There are many companies out there advertising "debt settlement." Unlike a lot of these companies that either favor the credit card companies or are a complete scam, we are a firm of licensed Louisiana attorneys working within rules of professional conduct. With our firm you will have the assurance of knowing your matter is being handled by an experienced Louisiana debt settlement attorney.

Is Debt Settlement the Best Solution for my Financial Troubles?

If you meet with a debt settlement specialist he will likely tell you that debt settlement is your best option, and if you meet with a bankruptcy attorney he will often persuade to file bankruptcy. Tom St. Germain handles both debt settlement and bankruptcy. Therefore, we are able to give you an unbiased opinion that other firms are unable to offer.