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Bankruptcy FAQ

How can Chapter 13 help Louisiana residents who are in debt?

On Behalf of | Sep 24, 2019 | Chapter 13

Drowning in debt creates stress for many Louisiana residents. Unfortunately, it isn’t a problem that is likely to go away anytime soon. Some individuals can’t manage to keep up with the minimum payments, and they think that they won’t ever get out of debt.

For some, the way to address this overwhelming debt is to file bankruptcy. What many people don’t realize is that you might have to pay for the filing. If you need to file a Chapter 7 liquidation bankruptcy, you must pay the attorney fees up front. This isn’t the case for Chapter 13, which has the option of including the attorney fees in with the debts.

What makes a Chapter 13 bankruptcy different?

In a Chapter 7 bankruptcy, the bankruptcy trustee can liquidate the non-exempt assets that you own. When you file Chapter 13, you will be set on a repayment plan that lasts three years to five years.

If you have secured debts besides your mortgage on your primary residence, those debts can be included in the filing. This might lower the payments. Since you are making payments on debts, people who co-signed on them are usually protected from legal collection activities.

How do creditors handle bankruptcies?

Your creditors won’t be able to contact you once you file a Chapter 13. The court issues an automatic stay, which prevents the creditors from initiating contact. Instead, they deal with the bankruptcy trustee. When you make your payments, the trustee distributes them under the laws.

Who can file for Chapter 13?

People who can make the payments to the trustee can file. They must be self-employed, have regular income or have a paying job. The maximum unsecured debt is $394,725, and the secured debt limit is $1,184,200. Other conditions also apply, so finding out how the laws impact your case is essential.

You do have some responsibilities when you file Chapter 13. Not only do you have to make the payments as required, but you also need to go through credit counseling and debtor education.

Making sure that you comply with the terms of the bankruptcy helps to ensure that you get a  discharge. Once the case is over, you can move forward with a fresh start.