Filing Chapter 7 Bankruptcy In Louisiana
If you have few assets and you qualify to file Chapter 7 Bankruptcy, it is the most popular, least expensive and fastest type of bankruptcy. Filing Chapter 7 Bankruptcy will allow for an immediate discharge of your debts.
The first step in Chapter 7 Bankruptcy is to hire a bankruptcy attorney who will file your bankruptcy petition and a statement of your financial affairs in the correct Louisiana Bankruptcy Court. These bankruptcy forms will include a list of all your creditors, the amount of debt you owe them, your income, your expenses and all of your property. Most debt collection efforts will be at least delayed through an “automatic stay”. Debt collection efforts may begin again if a Bankruptcy Judge decides there is “cause”.
A trustee will be appointed to work with your creditors and he will use the proceeds from the sell of your assets to pay them. Priority creditors will be paid first according to federal bankruptcy law. It will take up to four to six months for your debt to be discharged. Not all unsecured debt will be discharged, but common debt that may be eliminated can include: credit card debt, hospital debt, and unsecured personal loans. Chapter 7 Bankruptcy may be available for an individual, corporation, partnership, and married couple.
In the last four years, it has become more difficult to file Chapter 7 Bankruptcy. The Bankruptcy Abuse Prevention and Consumer Act (BAPCA) was passed in 2005, and required individuals to pass an income test to qualify for Chapter 7 Bankruptcy. The goal of this legislation was to force more individuals to repay at least a portion of their debt by filing Chapter 13 Bankruptcy. The legislation also required individuals to take a credit counseling course prior to filing for personal bankruptcy and complete a financial management course before their debt is dismissed.
If you would like to file Chapter 7 Bankruptcy, your median income in most cases must be below the state average compared to other families of similar size in the state of Louisiana. If your income is higher, a Louisiana Bankruptcy Attorney can help you complete additional “means testing”. In general the means testing will review your ability to pay your creditors by subtracting certain expenses such as your house payment, car payment, taxes owed and a certain amount of school tuition from your income. If you income minus these expenses leaves you enough disposable income to pay up to $6,000 or $100 per month to your unsecured creditors in the next sixty months, you will most likely have to file Chapter 13 Bankruptcy. If you fail this test, but you have enough remaining disposable income to pay 25% toward debt repayment in the next 60 months, you still may have to file Chapter 13 Bankruptcy. This is general information. It is important to have a Louisiana Bankruptcy Attorney analyze your income and perform the means tests to determine if you can file Chapter 7 bankruptcy.
The median income for the state of Louisiana is published by the United States Trustee program. The State Median Income for the state of Louisiana after March 15, 2009, for a single wage earner is $36,945. For a family of two it is $46,741, for a family of three it is $52,628 and for a family of four it is 66,634.
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