Bankruptcy FAQs

Answers from Experienced New Orleans Bankruptcy Attorneys

The attorneys of Grand Law Firm in Baton Rouge, Metairie, and New Orleans have 25 years of legal experience helping good people through hard times by means of bankruptcy. We pride ourselves on protecting our clients’ interests throughout the debt relief process and helping them achieve the “fresh start” they deserve.

Contact us or call (504) 608-5208for a free consultation at our Baton Rouge or Metairie law offices.

What is bankruptcy?

Bankruptcy is a legal process designed to assist consumers and businesses eliminate or repay some or all of their debts while under the protection of the federal bankruptcy court. For the most part, personal bankruptcies can be divided into two types: liquidation (Chapter 7) and reorganization (Chapter 13).

What is Chapter 13 bankruptcy?

Chapter 13 bankruptcy is commonly known as “consolidation or reorganization bankruptcy”. In a Chapter 13 bankruptcy case, your debt is organized into a repayment plan to be repaid over 3-5 years through a monthly payment made to your assigned bankruptcy trustee. The length of your Chapter 13 case and your monthly payments depend largely on the extent of your debt and monthly income and expenses. This is a complicated form of personal bankruptcy so it is critical to have an experienced bankruptcy attorney on your side.

What is Chapter 7 bankruptcy?

Chapter 7 bankruptcy is often known as “liquidation bankruptcy” and allows debtors who make under a certain amount of monthly income, to eliminate many of their unsecured debts entirely. Chapter 7 cases typically last between 4-6 months from the time of filing. This means that you could be as little as 4 months away from debt relief, While you will retain most of your possessions (typically furniture, clothing, wedding rings, and items that are necessary for day-to-day life) you may have to pay a small amount to your trustee to keep your assets or some of your assets could be sold by your trustee. You may also choose to continue to make payments on and maintain property related to secured debts like your house or car that you have chosen to reaffirm.

What is Chapter 11 bankruptcy?

Both small businesses and large companies file for Chapter 11 protection in order to reorganize debts and pay them off under court supervision. It is not uncommon for companies to emerge even stronger from Chapter 11 bankruptcy.

What is a bankruptcy trustee?

A trustee is a person appointed by the court to administer your bankruptcy case. In a Chapter 7 bankruptcy case, you will have far less interaction with your trustee than in a Chapter 13 bankruptcy case.

What does a bankruptcy trustee do, specifically?

It is your trustee’s job to oversee your bankruptcy case from start to finish. Your trustee will run your 341 meeting of creditors, collect money or non-exempt property for liquidation (in Chapter 7), or collect and disperse your monthly plan payments to your creditors (in Chapter 13). It is also the job of the trustee to ensure your bankruptcy filing complies with all of the rules of the Bankruptcy Code.

What is unsecured debt?

Unsecured debts are those relating to credit cards, medical bills, personal loans, or most debts that are not related to collateral property. These debts can typically be discharged through a Chapter 7 bankruptcy.

What is secured debt?

Secured debt is typically debt that has collateral attached to the financing such as a car or home loan.

How often can I receive an order of discharge?

If your previous case was a Chapter 7 and you would like to file a new Chapter 7 case, you will typically need to wait 8 years from your first filing date to file your second case. If your previous case was a Chapter 13 and you want to file a Chapter 7 case you will typically need to wait 6 years from the date of your first filing date to file your second case and receive a discharge.

There are circumstances in which it could be beneficial to file a new bankruptcy case even if you will not receive an order of discharge. If you are considering filing for bankruptcy and have previously filed, it is extremely beneficial to meet with an experienced bankruptcy attorney to better understand your options.

What is a reaffirmation agreement?

A reaffirmation agreement is an agreement made between yourself and a creditor through the Chapter 7 bankruptcy process. When you sign a reaffirmation agreement you agree to waive the discharge of that specific debt that would otherwise be discharged through the bankruptcy process.

Can I file for bankruptcy and still keep my car?

Typically, yes. In fact, many people file bankruptcy in order to prevent their car or truck from being repossessed by a creditor. If you file for Chapter 13 bankruptcy, the debt associated with your car will be worked into your repayment plan. If you file for Chapter 7 bankruptcy, you can choose to reaffirm your car loan through a reaffirmation agreement.

Can I file for bankruptcy and still keep my house?

Yes, if you file for bankruptcy you can still keep your home. In fact, filing for bankruptcy can actually stop your home from being foreclosed on and sold at a sheriff’s sale. Under Chapter 13 debt reorganization, you can elect to include any past-due mortgage debt in your court-approved repayment plan so you can keep your home. In a Chapter 7 case, you will have more time to negotiate a loan modification.

How long do I need to live in a state before I can file for bankruptcy?

To file bankruptcy in Louisiana, or any state, you must have resided in that state for the majority of the 180 days before your filing date.

Will bankruptcy ruin my credit?

Filing for bankruptcy does not ruin your credit score but it will appear on your credit report. If you file for Chapter 7 bankruptcy, the fresh start that you receive through discharging your debt will allow you to rebuild credit over time without having the concern of previous debt hanging over your head. If you file Chapter 13 bankruptcy, your credit repair begins with your first plan payment (so shortly after your case is filed, as long as you continue to make you plan payment your credit will build through-out your bankruptcy case.

How long does bankruptcy ruin my credit report?

Bankruptcy can stay on your credit report for 7-10 years but so do delinquent or past-due debts.

Can I leave a creditor out of my bankruptcy?

No, you are required to list all of your debts and creditors when you file for bankruptcy.

Can I leave my spouse out of my bankruptcy case?

Many potential clients come to our firm with this question and the simple answer is yes, you can file for individual bankruptcy even if you are married. However, you will still need to disclose certain aspects of your spouse’s finances (typically his or her income) to the bankruptcy court. Even if your spouse does not file, they may receive the benefit of a community discharge.

If I get back into debt, can I file for bankruptcy again?

Yes, after receiving a discharge, you are not eligible for another discharge for 8 years. However, you may be able to file Chapter 13 bankruptcy, if there is debt that you need to consolidate or if you are behind on your mortgage or car payments.

Will I have to go to court when I file bankruptcy?

Yes, you will need to appear in court when you file bankruptcy but don’t worry. It isn’t as intimidating as it sounds and you typically only need to appear once.

When you declare Chapter 7 or Chapter 13 bankruptcy, you must attend the 341 creditors’ meeting conducted by your bankruptcy trustee. In a Chapter 7 case, you will only need to appear in court before your trustee once and your bankruptcy attorney will ensure that you are well-prepared to answer any questions. In a Chapter 13 bankruptcy case you may need to appear in court to attend a confirmation hearing in addition to your 341 meeting with your trustee and the bankruptcy judge. Again, your attorney will ensure you are prepared to answer any questions about your case.

What type of questions will I need to answer when I go to bankruptcy court?

Yes, you will need to appear in court when you file bankruptcy but don’t worry it isn’t as intimidating as it sounds and you typically only need to appear once.

What type of questions will I need to answer when I go to bankruptcy court?

Your trustee may ask you questions that relate to your situation and bankruptcy case such as: How the situation evolved, questions about debts listed in your case, any property that you own or have recently sold, and more. Your attorney will go over these questions with you as part of your filing and typically nothing that you have not covered will come up.

Can I pay someone back even if the debt I owed them was already discharged in my bankruptcy case?

Absolutely! You may voluntarily pay back anyone you would like once your case is complete; however, a creditor cannot demand payment once a debt has been discharged.

How much debt do I need to be in to file bankruptcy?

There is not a specific dollar amount of debt that an individual or couple must reach before filing for either a Chapter 13 bankruptcy or Chapter 7 bankruptcy; however, some situations may not warrant filing for bankruptcy. The best way to determine if bankruptcy is the best form of debt relief for your situation is to meet with a qualified New Orleans bankruptcy lawyer from our firm.

What happens to my co-signers when I file for bankruptcy?

The lender may require the co-signer to make payments on a loan once the principal signer has declared bankruptcy.

It is important to note that your non-spouse co-signer will not be discharged of the debt through your bankruptcy case and if he or she would like to have the debt discharged then he or she will need to file his or her own bankruptcy case.

If your co-signer does not wish to continue to make payments on the loan he or she must reach an agreement with the lender and/or you as to what to do with the property/debt.

Can bankruptcy stop a garnishment?

Yes, almost all wage garnishments will be stopped when you file your bankruptcy case as part of the automatic stay.

Can bankruptcy stop a foreclosure sale on my home?

Yes.

Can bankruptcy stop a creditor from suing me?

Yes, as part of the automatic stay, creditor lawsuits will be put on hold as the related debt will be included in your bankruptcy case.

Can I change from one chapter of bankruptcy to another if my situation changes?

Generally, you can convert a case one time to any other chapter of bankruptcy if your situation changes. It is important to consult with an attorney if you are considering converting your case.

I filed my bankruptcy case without a lawyer, but now I think I need one; can I still hire an attorney?

Yes, if you filed your case pro se (without the help of a lawyer) an attorney may enroll in your case to assist you. Bankruptcy is a complicated process with hundreds of rules and requirements and the best way to ensure your case is successful is to work with a lawyer from start to finish.

Can I file bankruptcy more than once?

Yes, you can file Chapter 7 and Chapter 13 bankruptcy more than once, however there are limitations for how often you may file and receive an order of discharge.

What debt cannot be discharged in bankruptcy?

Typically student loans, tax debt, child support, and other government fines (traffic tickets, etc.) cannot be discharged in bankruptcy. However, in a Chapter 13 case, those debts will be included in and paid off by your repayment plan in manageable increments.

Who will know I filed bankruptcy?

Creditors included in your bankruptcy will be notified of your case, as well as the credit bureaus.

What is a financial management course?

An online course that anyone who wishes to file for bankruptcy is required to complete after filing a case and before receiving a discharge. This course is required as part of the Bankruptcy Code and our office will cover this expense as part of your retainer fee. The course can typically be completed in less than an hour.

Can bankruptcy stop a creditor from repossessing my car or truck?

Yes, vehicle repossession is prevented through the automatic stay that is enacted when you file your bankruptcy case with the court.

Can creditors keep calling me once I file for bankruptcy?

Creditors cannot contact you directly from the time you hire an attorney.

What is the automatic stay?

This is the court order that protects debtors once they decide to file for bankruptcy. The automatic stay gives the debtors some breathing room while they begin their bankruptcy proceedings and keeps creditors from being able to contact or collect from the debtor.

What is covered in the automatic stay?

The automatic stay prohibits creditors from beginning or continuing collection lawsuits, collection calls, repossession of vehicles, foreclosure sales, and garnishment of wages

Will I lose any property when I file for bankruptcy?

You can typically retain all of your property in bankruptcy. Depending on the chapter, you may have to pay a small amount of work a certain property debt into the repayment plan.

What is exempt property?

If you want to keep your property in a Chapter 7 bankruptcy case it is important to understand exemption claims. Exempt property is that which the court deems necessary for day-to-day life and thus may be kept by the debtor. This property includes household goods and personal effects. This property is exempt from being collected and sold in order to repay debts. The purpose of Chapter 7 bankruptcy is to give debtors a fresh start and claiming exempt property helps ensure the debtor has something to begin that fresh start with. In order to maximize the property you are able to claim as exempt, it is critical that you hire an attorney with a high level of bankruptcy experience.

In a Chapter 13 bankruptcy case, you will also use the federal exemptions to protect your property.

Can I buy a car or make other large purchases right before I file bankruptcy?

There is nothing in the bankruptcy laws that prohibit you from borrowing money prior to filing a bankruptcy as long as YOU INTEND TO PAY IT BACK. If you borrow money and do not intend to pay it back, it would be considered bankruptcy fraud.

Can I sell my_____ right before I file bankruptcy?

It depends on what you are selling, to whom you are selling it to, and how much money you receive. The main thing you need to be aware of is that you cannot sell something for a lot less than it is worth. This is called a fraudulent conveyance and a bankruptcy trustee can sue the person you “sold” it to in order to recover the property. Generally, if you sell something for a fair price and keep good records to show where the money was spent, there is no law that states you cannot sell the property before bankruptcy. However, it is always advisable not to sell anything without first consulting with your New Orleans bankruptcy lawyer.

Can I give away some of my property right before I file for bankruptcy?

Maybe, but probably not. Just like with a sale for less than fair market value, giving something away will probably be considered a fraudulent behavior under the Bankruptcy Code and your trustee could sue to recover the property. Just like with selling items directly before filing for bankruptcy, you should consult with your Bankruptcy Lawyer before giving away property.

What chapter of bankruptcy should I file?

Deciding what chapter of bankruptcy you need to file depends on many factors of your personal circumstances. Generally speaking, what chapter of bankruptcy you need to file depends largely on your income and if you are behind on a house or car that you want to keep. The best way to know what chapter is best for you is to meet with an attorney and review your circumstances. Our offices offer free consultations for this very reason and our staff would be more than happy to help you schedule an appointment today.

What will happen to my tax refund when I file bankruptcy?

In a Chapter 7 bankruptcy case, you may be required to turn over any tax refund you receive while your case is open (for this reason some people choose to file after receiving their refund). Your refund will be used to repay unsecured creditors. If you received your tax refund within 90 days of filing your Chapter 7 case, your trustee will require documentation on how you spent your refund. Your bankruptcy lawyer will advise you on what the trustee would see as acceptable spending.

In a Chapter 13 bankruptcy case, you will be required to turn over your tax refund to your trustee every year that your case is open. Your refund may be used to help you complete your plan more quickly. In the event that you need to spend all or part of your tax refund while in a Chapter 13 case, you should consult with your bankruptcy lawyer about documentation for the trustee that may allow you to keep the refund.

What is a bankruptcy discharge?

A bankruptcy discharge releases the debtor from personal liability for certain specified debts. In other words, the debtor is no longer legally required to pay any debts that are discharged.

What is a bankruptcy credit counseling course?

An online course that anyone who wishes to file for bankruptcy is required to complete within 180 days of filing a bankruptcy case. This course is required as part of the Bankruptcy Code and our office will cover this expense as part of your retainer fee. The course can typically be completed in less than an hour.