Chapter 7 Bankruptcy Lawyers in Baton Rouge
Chapter 7 Bankruptcy Code was created for the liquidation of a debtor’s nonexempt property so that the proceeds can be given to creditors. Unfortunately, bankruptcy is a common and serious problem, and even though the total number of bankruptcies declined between 2015 and 2019 by more than 100,000, it is still affecting individuals and businesses all over the U.S.
What is Chapter 7 Bankruptcy?
Chapter 7 bankruptcy allows for a trustee to be appointed to a debtor to liquidate all of their non-exempt assets in order to pay creditors. Once the proceeds are exhausted then the rest of the debt is discharged. Under Chapter 7, the debtor emerges from bankruptcy with a clean start, which is why bankruptcy lawyers often refer to Chapter 7 as a “fresh start bankruptcy.”
In order to file Chapter 7, the debtor must not have had another Chapter 7 discharged over the past eight years and the applicant has to pass a means test. A means test takes into account the debtor’s income, expenses, and family size to determine if the debtor has enough disposable income to pay back the remaining debts.
This is very different from Chapter 13 bankruptcy. Under Chapter 13, you enter a three to five year payment plan to the courts through your bankruptcy attorney. If you aren’t under Louisiana’s income threshold, Chapter 7 bankruptcy may not be available to you. If this is the case, your bankruptcy attorney may suggest that your file for bankruptcy under Chapter 13.
Chapter 7 Bankruptcy Process
Chapter 7 pays unsecured priority debt first, then secured debt, and lastly nonpriority unsecured debt. Unsecured priority debts consist of debts like personal injury claims against the debtor, unpaid taxes, and unpaid child support. Secured debts include mortgages, auto loans, and other loans that include items that can be used as collateral for debt repayment. Some common types of nonpriority unsecured debts are:
- Credit card debt
- Medical debt
- Utility bills
- Older Tax Debts
- Renting fees
- Personal loans
- Money judgments for contract breaches
- Health club dues
- Religious dues
- Union dues
Seeking debt relief under Chapter 7, however, may not get you completely out of debt under the law. If you have non-dischargeable debt, such as student loans or child support, you may still carry those after the bankruptcy. Your bankruptcy attorney may still recommend for you to file for bankruptcy because it can still help with debt relief.
Credit Counseling and Forms
Before a debtor can file Chapter 7, they must have undergone credit counseling within six months of filing. Debtors can forgo this step if there aren’t any approved counseling agencies in their district or there are other circumstantial reasons they can’t attend counseling. A Baton Rouge bankruptcy attorney
In order to file Chapter 7 bankruptcy, a debtor must petition the court, usually through a bankruptcy attorney, by filling out several forms to begin the process. These forms will collect information about the debtor including their:
- Personal Information
Upon the successful filing of the petition, an automatic stay is granted that temporarily prevents creditors, collections agencies, government entities, and individuals from pursuing debtors for amounts owed. This also prevents agencies from halting or garnishing your incomes under the law.
Trustees and Debt Repayments
After the petition is filed a trustee is appointed to oversee your bankruptcy. The trustee will confirm the information in your petition and arrange meetings between the debtor, and creditors.
The trustee will review the debtors and finances and determine which assets are exempt because they are necessary for the basic standards of living. Property exemptions can vary depending on the state. The non-exempt property then gets liquidated as payment to the creditors.
Most debts get discharged under Chapter 7 and upon the successful discharge of those debts, then the debtor is no longer obligated to repay the debts to the creditors. The creditors are no longer allowed to seek repayment for those debts. Certain debts are exempt from being discharged and can be found here. Debt discharges usually happen within a few months of the meeting of the creditors.
Bankruptcy Lawyers of Baton Rouge, LA
For years, the dedicated bankruptcy lawyers of Murray & Murray, LLC have helped Baton Rouge residents and businesses file for bankruptcy. If you’re in debt and unable to meet your obligations, filing for bankruptcy under Chapter 7 may help you get the fresh start you need. Call to talk to an experienced bankruptcy attorney today.