How to Qualify for Bankruptcy in Louisiana

Qualifying for bankruptcy in Louisiana involves understanding the eligibility criteria and following specific legal procedures. The two primary types of bankruptcy individuals typically file are Chapter 7 and Chapter 13. Each has distinct requirements and implications.

To qualify for Chapter 7 bankruptcy in Louisiana, you must pass the means test. This test compares your average monthly income to the median income for your household size in Louisiana. If your income is below the median, you automatically qualify for Chapter 7. If it exceeds the median, you will need to demonstrate that you have insufficient disposable income to pay off your debts.

To conduct the means test, begin by calculating your average income over the last six months. Be sure to include all sources of income, such as wages, bonuses, and any benefits. Then, compare your average monthly income to the median income for your state. The U.S. Trustee's website provides updated median income figures for Louisiana, which can help you determine your eligibility.

If you’re ineligible for Chapter 7, you may consider filing for Chapter 13 bankruptcy, which is designed for individuals with a regular income. To qualify for Chapter 13, your secured debts must be less than $1,257,850, and your unsecured debts must be less than $419,275. At the time of writing, these amounts are subject to change, so always verify current figures. Unlike Chapter 7, Chapter 13 involves a repayment plan that lasts three to five years, during which you will make monthly payments to a bankruptcy trustee.

Another crucial factor in qualifying for bankruptcy is completing credit counseling. Before filing your bankruptcy petition, Louisiana residents must obtain credit counseling from an approved agency. This counseling session will help you explore alternatives to bankruptcy and provide you with a debt management plan. Failure to complete this requirement could result in your bankruptcy case being dismissed.

Once you've determined which chapter of bankruptcy you qualify for and completed the necessary credit counseling, the next step is to gather all required documentation. This includes financial statements, tax returns for the past two years, and a list of your assets, debts, income, and expenses. Accurately compiling this information is critical for the success of your bankruptcy filing.

After preparing your documents, you will need to file your bankruptcy petition with the United States Bankruptcy Court for the Eastern District of Louisiana. Filing fees apply, but in some cases, you can request to have them waived based on your financial situation. Upon filing, an automatic stay will go into effect, preventing creditors from pursuing collection efforts against you.

It’s advisable to consult with a bankruptcy attorney who is familiar with Louisiana law to guide you through the process. An attorney can help ensure that you meet all eligibility requirements, complete paperwork accurately, and represent you in court if necessary. Having professional assistance can significantly streamline the bankruptcy process and increase your chances of a favorable outcome.

Overall, qualifying for bankruptcy in Louisiana requires awareness of your income, assets, and debt levels, along with careful preparation and adherence to legal obligations. Whether you proceed with Chapter 7 or Chapter 13, understanding the qualifications and processes involved will pave the way for a fresh financial start.