No one ever plans on filing for bankruptcy, but sometimes life throws you a curveball that you can’t recover from. If you’re finding yourself in a situation where bankruptcy is your only option, don’t worry – you’re not alone. This guide will walk you through everything you need to know about filing for bankruptcy in Louisiana. Read on to learn more about the process and what to expect.
What Is Bankruptcy and How Can It Help You?
When you file for bankruptcy, an automatic stay is put into place. This means that creditors can no longer try to collect on debts from you. The automatic stay will stop foreclosures, wage garnishments, and other collection actions. Bankruptcy can give you a fresh start by wiping out your debt and giving you a chance to rebuild your credit.
Signs You May Need to File for Bankruptcy
If you’re facing the prospect of bankruptcy, it’s crucial to understand that it’s not suitable for everyone.
Here are some signs that you may need to file for bankruptcy:
- You’re behind on your mortgage payments and can’t find a way to catch up.
- You’ve tried negotiating with your creditors, but they can’t provide a solution.
- You’re using your credit cards to pay for your basic living expenses.
- You’re receiving calls from debt collectors or being threatened with foreclosure.
Alternatives to Bankruptcy
If you’re considering filing for bankruptcy, it’s important to understand all of your options first. Debt settlement or credit counseling might be good alternatives to bankruptcy. Still, you should always consult a financial advisor to pick the best option.
Another option involves consolidating your entire debt into a single monthly payment to save money on interest and help pay your debt faster. Finally, you can try to negotiate with creditors. Though this can be a complicated process, you can avoid bankruptcy if an agreement is reached.
The Different Types of Bankruptcy
There are two types of bankruptcy that consumers can file: Chapter 7 and Chapter 13.
Chapter 7
Chapter 7 bankruptcy is also known as liquidation bankruptcy. This type of bankruptcy allows you to discharge or eliminate your debt. To qualify for Chapter 7 bankruptcy, you must pass a means test. This test looks at your income and compares it to the median income in Louisiana. If your income is below the median, you can qualify for Chapter 7 bankruptcy.
Chapter 13
Chapter 13 bankruptcy is also known as a reorganization bankruptcy. This type of bankruptcy allows you to keep your property and repay your debt over a three- to five-year period. In order to qualify for Chapter 13 bankruptcy, you must have a regular source of income, and your unsecured debt must be below $394,725.
How to File for Bankruptcy in Louisiana
If you are considering filing for bankruptcy in Louisiana, it is important to understand the process. The first step is to take a credit counseling course. This course must be completed within six months of filing for bankruptcy.
After completing the course, you must file a petition with the bankruptcy court. The petition will list your assets and liabilities, as well as your income and expenses. You will also need to file a plan for how you will repay your debts.
Once your petition is filed, you will need to attend a meeting of creditors. This meeting gives your creditors the chance to object to your bankruptcy. If your creditors do not object, your bankruptcy will be granted.
If you are granted bankruptcy, you will be required to make payments to a trustee. The trustee will then distribute the payments to your creditors. You will need to make these payments for three to five years. After you have made the required payments, your debts will be discharged.
What Happens After You File for Bankruptcy?
After you’ve filed for bankruptcy, most of your unsecured debts will be absolved, allowing you to stop paying them back. However, student loans, child support, and alimony are among the obligations that cannot be forgiven through bankruptcy. Depending on the sort of bankruptcy you apply for, you may also have to give up some of your belongings.
Does Bankruptcy Affect Your Credit?
When you file for bankruptcy, it will stay on your credit report for seven to ten years. This can make it difficult to get approved for loans and lines of credit. However, bankruptcy does not have to end your financial life. You can rebuild your credit by making on-time payments and maintaining a good payment history.
Rebuilding Your Credit Post Bankruptcy
There are a couple of things you can do to help rebuild your credit after filing for bankruptcy:
- Apply for a secured credit card.
- Become an authorized user on someone else’s credit card.
- Apply for a small loan from a lending institution.
- Pay your bills on time.
- Check your credit report regularly to ensure there are no errors.
Sell Your House for Cash to Avoid Bankruptcy
If you’re facing the possibility of filing for bankruptcy, selling your house for cash is a great option. At Favor Home Solutions, we buy houses as-is so you can sell your home without needing to make repairs.
We’ll work under your preferred timeline and handle any closing fees so you can focus on getting back on your feet as soon as possible.
Put cash in your pockets in as little as 14 days and avoid bankruptcy from hitting your credit score by working with us! Contact us to learn more.
