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Lafayette Bankruptcy Law Blog

Waiting too long to file bankruptcy may be debt relief mistake

Making the decision to file for bankruptcy is a considerable step to take. While this debt relief option can be immensely beneficial for those struggling financially, it can also be a complex process to complete. Therefore, Louisiana residents wanting to follow this path may want to watch out for common mistakes.

One mistake that many people fall victim to is waiting too long to file. They may think that putting off bankruptcy will give them the opportunity to address their financial issues on their own, but typically, individuals will not have a sudden event that allows them to immensely improve their financial situations without help. Additionally, waiting to file may only mean that collectors continue calling and that wages may still be garnished. Filing sooner may also provide the chance to work on improving credit more quickly.

Considerable debts may have companies considering Chapter 11

Running a business is a significant financial risk. Many Louisiana business owners feel ready and willing to take this risk in hopes of having a successful venture. Unfortunately, not every business operation proves successful, and a considerable amount of debt may be accrued. As a result, companies may need to file for Chapter 11 bankruptcy.

It was recently reported that the owners of a hotel-condominium project in another state filed a bankruptcy petition due to outstanding debts. Apparently, renovations on the project had been put on hold three years ago, and the goal of the bankruptcy filing is to remove liens and other legal issues against the hotel project in order to sell the building. The proceeds from that sale would then go toward repaying creditors.

What kinds of property can you keep during bankruptcy?

Many myths surrounding bankruptcy can make people who need the protection think twice about filing their case. One of the areas that seems to be the source of a lot of untruths or misunderstandings is what type of property you can keep when you go through bankruptcy.

Anyone who is thinking of filing for bankruptcy should find out how it might impact their assets. This can be the key factor that helps them decide if they are going to move forward with the case.

Sudden financial hardships may lead to bankruptcy need

Sudden financial hardships can happen to anyone. Some Louisiana residents may find themselves struggling due to job loss, divorce, medical emergencies or other issues that cause their finances to take a hard hit. These predicaments can often also lead to an increase in credit card use and the accumulations of other debts, which may lead to a need for bankruptcy.

In order to determine the best course of action, parties may first want to assess their situations. For instance, they may want to see on what the majority of their spending takes place and where they may be able to reduce costs. Considering a budget and sticking to that budget could also help parties have a better idea of their income and spending habits.

Chapter 11 bankruptcy can offer businesses protection

Businesses often face times of struggle. In some cases, business owners and operators may find themselves facing considerable financial difficulties due to a variety of reasons. As a result, they may end up in need of protections in order to keep their doors open, and many companies may choose to utilize Chapter 11 bankruptcy protection.

Louisiana residents may be interested in this type of situation taking place with a company in another state. Reports indicated that the aerospace company is currently involved in a contract dispute and has had to suspend production on certain components that they manufacture due to the dispute. It was unclear whether this issue has caused a considerable amount of financial setbacks for the company or if it has others reasons for wanting to protect business operations as the company contends with the problem.

Many people hope to reach debt relief with bankruptcy discharge

Having financial struggles can place an immense burden on anyone. In some cases, Louisiana residents may have the chance to get back on track on their own, but it is not unusual for individuals to become so consumed by their debt that they need to take more drastic actions. Many people use bankruptcy as a way to pursue debt relief.

The major aspect of bankruptcy that most people look forward to and hope to gain is the discharge of debts. However, it is important to understand that there are may steps involved before discharge can occur, and not all debts can be discharged through bankruptcy. For instance, individuals going through Chapter 7 bankruptcy cannot have child support, alimony, court fees, unlisted debts and certain taxes forgiven. 

Louisiana business files for Chapter 11

Starting their own businesses is a dream that many people have. Of course, this dream can hit many bumps along the way, and even if individuals do manage to get their companies off the ground, they may end up facing financial struggles that put their businesses at risk. For many, the way to address this type of situation is Chapter 11 bankruptcy.

Part of the bankruptcy process involves presenting a repayment plan to the court and having it approved in order to move forward with the process. It was recently reported that a repayment plan for a Louisiana restaurant chain was approved by the bankruptcy court. Apparently, the owner of the company had filed for Chapter 11 earlier this year. In total, their outstanding liabilities exceeded $846,000, and approximately $248,000 of that amount was unsecured debt owed to smaller creditors.

Benefits of an automatic stay during bankruptcy

If you're worried about your finances, one of the things you may consider is bankruptcy. If you cannot afford to make your monthly payments and don't see a way to emerge from underneath a mountain of debts, bankruptcy can be a viable debt relief option.

One benefit of bankruptcy is that it comes with an automatic stay. Automatic stays put an end to collection actions for those struggling with creditors calling to pester them to make unaffordable payments.

Chapter 7 or Chapter 13 may help those looking for debt relief

Substantial debt can make anyone feel as if there are no options for getting back on financial track. Fortunately, there are debt relief options, like bankruptcy, that interested and qualified Louisiana consumers could take advantage of to help them reduce and potentially eliminate their debts. Whether filing for Chapter 7 or Chapter 13 bankruptcy, understanding specific parts of the process can be useful.

In order to begin the bankruptcy process, individuals will need to file the proper paperwork with the court. Once accepted, a bankruptcy trustee will be assigned to the case, and that trustee will conduct a means test to determine where the individual's income falls and to ensure that the bankruptcy filing is not fraudulent. Overall, the purpose of the means test is to ensure that a person is eligible for bankruptcy.

Waiting too long to seek debt relief may only make matters worse

Many people across the country, including in Louisiana, struggle with debt for years. The reasons for facing these prolonged hardships can differ from person to person, but often, parties are hesitant to move forward with major debt relief steps, such as filing for bankruptcy. However, individuals may face greater financial difficulties the longer they wait to file.

A recent report indicated that individuals with debt who waited two or more years to file for bankruptcy showed considerably greater financial difficulties than those who filed sooner. These individuals, known as long strugglers, typically have half the average amount of assets than those who did not wait as long to file. Additionally, nearly half of the long strugglers who participated in a research project indicated that debt collection lawsuits had been filed against them.

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