When a person is facing an overwhelming amount of debt, certain unfortunate consequences may come along with it. For example, debt collectors may call or a creditor may initiate the wage garnishment process. In order to regain a strong financial footing and put the pieces back together, it may be appropriate to file for Chapter 7 bankruptcy, which is known as a liquidation bankruptcy.
Filing for Chapter 7 bankruptcy will halt all collection efforts underway against a person. It can also lead to the discharge of certain debts, allowing the filer to emerge from the process with the prospect of a better financial future. However, there are some potential drawbacks to this process that a Louisiana consumer may want to consider before moving forward.
Chapter 7 bankruptcy may require the liquidation of nonexempt debts. The proceeds of this will go toward paying certain debts. A bankruptcy will also stay on a person’s credit for years, which can impact things like getting a credit card or securing financing to buy a house down the road. For some people in Louisiana, the benefits offered by this process far outweigh any potential drawbacks.
It’s not always easy to know if filing for liquidation bankruptcy is the right choice. Every person’s situation is different, which is why it is helpful to seek an assessment of the individual case before making a decision that will impact a person in the long term. In many circumstances, Chapter 7 bankruptcy provides a way to deal with certain types of debt once and for all.