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Bankruptcy FAQ

What does it mean to file for bankruptcy?

On Behalf of | Jun 30, 2015 | Chapter 7 Bankruptcy

Filing for bankruptcy is not something to be ashamed of. Our founding fathers made bankruptcy an option in our Constitution because they understood what a burden serious debt can be and they wanted Americans to be able to regain their freedom.

As you probably already know, filing for bankruptcy means asking for a fresh start, financially speaking. There are several types of bankruptcy processes, but the most common for individuals and families are Chapter 7 and Chapter 13.

Chapter 7 bankruptcy

When most people think about bankruptcy, they are thinking about Chapter 7 bankruptcy, which is also known as liquidation. Chapter 7 bankruptcy allows you to get rid of all of your dischargeable debt and have a fresh financial start.

In order to qualify for Chapter 7 bankruptcy, you must earn less than the median income level for the state that you live in. In Louisiana, the median income for a family of four is $65,778, according to the Department of Justice.

You can read more about the Chapter 7 bankruptcy process, including which property is not subject to liquidation, in this article. If you don’t think you qualify for Chapter 7 because you earn too much, Chapter 13 bankruptcy might be an option.

Chapter 13 bankruptcy

Chapter 13 bankruptcy allows you to pay back some or all of your debt through a repayment plan that lasts between three and five years. This option can be helpful for people who earn too much to qualify for Chapter 7 or don’t want to have their assets liquidated.

In the Chapter 13 process, you would make payments to a trustee that is appointed by the bankruptcy court instead of to your individual creditors, which can result in smaller payments. You can read more about the Chapter 13 process in this article.

Is filing for bankruptcy expensive?

At the McBride Law Firm, it is our mission to make bankruptcy affordable for those who need it most. For example, we offer a no-down-payment Chapter 13 service in which our clients just pay us along with their other creditors after their bankruptcy is complete.

We understand that bankruptcy was created for those with serious financial problems, which is why we offer bankruptcy relief services that cater to these individuals. Find out more about how much it costs to file for bankruptcy here.