These are some Frequently Asked Questions and are intended for informational purposes only.  Each person or family’s  financial situation is unique.  In order to understand how bankruptcy laws might affect your situation please contact and visit with any attorney experienced in bankruptcy law.

What is Chapter 7 Bankruptcy?

Chapter 7 Bankruptcy is available in Louisiana for many people with debt (debtors) to liquidate or eliminate most of a person’s unsecured debt for which no collateral is used as a mortgage, examples include most credit card debt, signature loans, open accounts and medical bills.

In Chapter 7 Bankruptcy, a person can usually keep their home as long as they are current with any mortgage notes and the amount of equity in their home is $25,000 or less; or keep an unmortgaged home valued at $25,000 or less.  One may also keep any vehicles as long as they are current with any mortgage notes and the amount of equity in the vehicle is $7500 or less, or keep a unmortgaged vehicle worth $7500 or less.

Many other items such as household goods and furnishings, appliances and clothes are also exempt as established under Louisiana law.  Retirement and other financial accounts may also be exempt from seizure by creditors or the bankruptcy trustee and are therefore protected.

One advantage of Chapter 7 over 13 is that Chapter 7 is generally the quickest as one may receive a discharge from debt approximately 120 days after filing. A debtor receives a complete discharge from most unsecured debt without repayment, and the cost is considerably less.

What is Chapter 13 Bankruptcy?

Chapter 13 Bankruptcy is a “wage earner plan” where “projected disposable income” or net income less reasonable monthly living expenses, results in a fixed monthly payment to the Chapter 13 trustee, who distributes payments to your creditors.  In some cases payments can be restricted or lowered.  Payment plans range from 36 months to 60 months and may involve payment to unsecured payment of anywhere from nothing to 100% of the debt owed.

Some advantages of Chapter 13 over Chapter 7 are that vehicle payments can be reduced, most of your assets can be kept, creditors can be required to allow you to catch up on past due debts and past due taxes can be paid without interest or additional penalties.

How do I know if I will qualify for Chapter 7 or 13 Bankruptcy?

It is strongly recommended that you make an appointment with an experienced bankruptcy attorney to determine whether you might qualify for either.  Generally, if a person or family’s income (as determined by the U.S. Census Bureau) does not exceed the median annual income for your state they are presumed to qualify.  If income exceeds the median annual income then “means testing” is used to determine eligibility to file a Chapter 7 case. A means test involves calculating available funds after subtracting permitted monthly expenses (using IRS federal and local allowances) from income.  If a debtor is able to pay a minimum of $100 per month for 60 months to creditors, then the debtor must show special circumstances to remain in a Chapter 7, otherwise, the case will be dismissed or converted to a Chapter 13.

What is the cost for a Chapter 7 Bankruptcy?

There is no cost for the initial visit at the Gill Law Firm to discuss whether bankruptcy is right for you.  If you qualify for consumer bankruptcy then fees normally run between $800 and $1200, or sometimes more depending on the complexity of a case or considering whether extraordinary time is needed in a case.  Additionally, court cost must be paid at the time of filing which are usually set by the bankruptcy clerk’s office.

How will Bankruptcy affect my credit?

The effect bankruptcy will have differs from creditor to creditor.  Each creditor may give more or less importance to such factors as your income, employment history, amount of other debt and whether that debt is secured by a mortgage and how long since your bankruptcy.

Many people have damaged credit before they file for bankruptcy, although the fact that you filed bankruptcy will also appear on your credit history.  Although, most information that could affect your credit negatively should be deleted after seven(7) years, Chapter 7 Bankruptcy will usually remain on your credit for 10 years.