In Youngsville, Louisiana, bankruptcy is a legal proceeding in which a person or business has some or all of their debts legally absolved, when they are unable to pay them. This hopefully allows them to start over with a clean slate and move on, after having learned to better manage their use of credit in the process. However, bankruptcy should not be treated as a way to avoid debt that one simply doesn't feel like paying. It is meant to be a safety net for people or businesses who are honestly unable to pay off their debts. Because bankruptcy is not without negative consequences (such as a severely damaged credit rating for many years afterward), it should be viewed as an option of last resort.
Therefore, it is prudent to consult with an experienced Youngsville, Louisiana bankruptcy attorney, who can advise you of the costs and benefits of bankruptcy. Because the decision to file for bankruptcy depends very heavily on the facts of each individual case, the advice of a Youngsville bankruptcy attorney cannot be substituted.
Types of Bankruptcy in Youngsville, Louisiana
There are three basic bankruptcy schemes that are most commonly used in Youngsville: Chapters 7, 13, and 11. Bankruptcy is a creation of federal law, so the procedure for filing for bankruptcy in Youngsville, Louisiana will be roughly the same as it would be anywhere else in the U.S. Chapter 7 bankruptcy involves liquidation of many of the debtor's assets in order to pay off as much of the debt as possible. This sounds harsh, but there is an upside: once the liquidation is complete, the debts are legally viewed as having been paid in full, whether or not the full amount was covered by the liquidation. Liquidation involves selling some personal property, and using the proceeds to pay off debt. Varied types of property are exempt from liqudiation, and therefore may not need to be sold. They include homes, cars, and insurance policies, among others. You should know that some types of debt cannot be discharged in Chapter 7 bankruptcy, including taxes, student loans, and child support.
Under Chapter 13 bankruptcy in Youngsville, most of the debtor's debt is not discharged. Instead, the bankruptcy court, working with the debtor and participating creditors, work out a payment plan that allows the debtor to pay off most of his or her debts over a prolonged period of time, thus theoretically making the debt far more manageable. Once a payment plan is approved by the court, creditors are prohibited from attempting to collect payment under their original agreements that gave rise to the debt in the first place. Though accessible to individuals, Chapter 11 bankruptcy is generally used by businesses. Like Chapter 13, Chapter 11 requires the restructuring of debts. Under this system, the debtor must come up with a plan to reduce debt, cut costs, and improve operations. Once this plan is presented, it is submitted to the participating creditors, who must approve it by a majority vote before it can be implemented.
During the Chapter 11 process, a business can normally continue its operations, and the stock can be traded, even if it is de-listed from a major stock exchange.
How Can a Youngsville Bankruptcy Lawyer Help?
The need to consider all the options and consider the costs and benefits of filing for bankruptcy in Youngsville cannot be overstated. If you are considering filing for bankruptcy, it would be a good idea to speak with a Youngsville bankruptcy attorney beforehand.