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Why do many consumers choose to file Chapter 7 bankruptcy?

| Nov 7, 2016 | Chapter 7 |

Overwhelming debt can cause high levels of stress. Sometimes Louisiana consumers take impulsive action that may turn out to cause more harm than good. The most appropriate step to take under such circumstances may be to consult with a legal professional who can explain the various options — including bankruptcy relief — along with the pros and cons of each potential remedy. The right advice can help a consumer to make informed decisions.

When it comes to bankruptcy, many people choose Chapter 7 over Chapter 13 — if they meet certain requirements. Although they may lose some assets in Chapter 7 bankruptcy, filers can be almost (or even totally) debt-free within two to three months. A court-appointed trustee will supervise the sale of nonexempt assets at an auction to pay creditors, and the court will discharge unsecured debts such as credit card debt and medical debt. Creditors may not pursue any debt collection action after the consumer has filed for bankruptcy without the express permission of the court.

Debts that will remain payable include most student loans, alimony, child support and certain tax responsibilities. However, with credit card and medical debt discharged and no longer an obligation to pay, the consumer may have enough funds available to pay any nondischargeable debts. After filing for Chapter 7 bankruptcy, the consumer will keep future income, and property acquired post-bankruptcy is typically also safe. However, exceptions exist with certain assets acquired in the first 180 days after the bankruptcy filing.

For this reason, an experienced Louisiana bankruptcy attorney can provide can be invaluable advice and assistance. After assessing the client’s circumstances, a lawyer can explain the requirements and the intricacies of each option and provide advice about the most suitable way forward. With skilled support and guidance, a fresh start and possible future financial stability may be just around the corner.

Source: FindLaw, “Reasons to File for Chapter 7 Bankruptcy Instead of Chapter 13“, Accessed on Nov. 6, 2016

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