Louisiana Bankruptcy Law: What to Expect After Filing
Filing for bankruptcy can be a daunting process, especially in Louisiana where specific state laws come into play. Understanding these laws and the expectations following your filing can help ease your mind and guide you through the process.
When you file for bankruptcy in Louisiana, you must choose between Chapter 7 and Chapter 13 bankruptcy. Each has its distinct procedures and outcomes.
Chapter 7 Bankruptcy
Chapter 7 bankruptcy, often referred to as liquidating bankruptcy, allows individuals to eliminate most unsecured debts. This includes credit card debt, medical bills, and personal loans. However, certain assets may be sold to repay creditors.
In Louisiana, you may be able to keep your primary home and vehicle, depending on their value and your equity in them. Louisiana has specific exemptions that help protect certain assets from being seized. For instance, you can exempt up to $35,000 in equity in your homestead and a vehicle up to $7,500, which varies based on your situation.
Chapter 13 Bankruptcy
Chapter 13 bankruptcy is ideal for those looking to reorganize their debts rather than discharge them outright. This option allows individuals to create a repayment plan to pay back their debts over three to five years. Unlike Chapter 7, Chapter 13 permits you to keep your property, provided that you adhere to the repayment plan approved by the bankruptcy court.
In Louisiana, the repayment plan must be feasible and ensure that unsecured creditors receive at least as much as they would have in a Chapter 7 proceeding. It is crucial to work closely with a bankruptcy attorney to create a viable plan for your finances.
What to Expect After Filing
After filing for bankruptcy, you will be assigned a bankruptcy trustee who will oversee your case. You’ll have to attend a 341 meeting—also known as the meeting of creditors—where you will answer questions regarding your financial status and intentions. Creditors have the option to attend but often do not.
Your credit score will be affected by the bankruptcy filing, typically resulting in a decrease. A Chapter 7 bankruptcy remains on your credit report for 10 years, while Chapter 13 remains for 7 years. However, many individuals find that their credit scores improve within a few years post-bankruptcy as they begin to rebuild their financial standing.
Financial Education and Counseling
As part of the process, you will be required to complete a credit counseling course before filing and a debtor education course after filing. These courses aim to provide you with valuable financial management skills that will help in avoiding future financial pitfalls.
Post-Bankruptcy Considerations
After your bankruptcy is complete, it is essential to begin rebuilding your credit. Strategies for rebuilding may include:
- Applying for a secured credit card.
- Making timely payments on all bills.
- Keeping credit utilization low.
Additionally, it's important to review your credit report for inaccuracies and dispute any mistakes to ensure your creditworthiness is accurately reflected.
Louisiana bankruptcy law is designed to provide relief to individuals struggling with overwhelming debt. Understanding the process and what to expect after filing can create a smoother transition into financial recovery.
Consulting with a qualified bankruptcy attorney can provide personalized guidance tailored to your unique situation, ensuring that you navigate Louisiana's bankruptcy law effectively.