When Louisiana consumers face unmanageable debts, they will likely explore the options available to remedy the situation. While there are various methods to obtain debt relief, most of them are time-consuming and offer no protection against creditor harassment during that time. Personal bankruptcy is a solution that offers debt relief and freedom from creditor action. Although filing for bankruptcy will have a severe impact on the filer’s credit score, so will months and months of struggling to get relief while debts get further behind.
The U.S. Bankruptcy Code offers consumers two options. Chapter 7 provides almost immediate debt relief but involves assets sold in liquidation to pay debtors and the discharge of unsecured debts such as credit card and medical debt. Chapter 13 allows a consumer to continue paying debts over an extended period of between three and five years and no liquidation of assets. If payments are maintained properly, the outstanding balances remaining after the reorganization period may be discharged.
Bankruptcy filings remain on the filer’s credit records for a long time — 10 years for Chapter 7 and seven years for Chapter 13. However, qualifying for a mortgage or car loan in the future may be easier for those who went through Chapter 13 bankruptcy. If payments were kept current, the lender might even agree to extend a loan before the end of the seven-year period because the consumer had shown the responsibility to pay his or her debts.
An experienced Louisiana bankruptcy attorney may provide information and answer questions related to personal bankruptcy that will allow the consumer to make an informed decision. Understanding the choices is vital because the client’s future financial stability may depend on it. A lawyer can also explain the means test that must be completed to determine for which bankruptcy chapter the individual will qualify.
Source: bellinghamherald.com, “Your chances of getting a home loan after bankruptcy are better with Chapter 13“, David W. Myers, Aug. 28, 2016