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Understanding Chapter 7 Bankruptcy

Understanding Chapter 7 Bankruptcy

Bankruptcy can be a scary concept.   Over the years, the word “bankruptcy” has earned a negative stigma.  For that reason, many people feel that filing for bankruptcy means they somehow failed.  And, creditors don’t hesitate to make them feel that way.  Creditors work hard to make sure bankruptcy gets a negative reputation, because bankruptcy prevents them from making a profit on your escalating interest fees and penalties.

Bankruptcy is not bad.  In reality, bankruptcy is merely a method for responsible and honest people to get out from under their growing debt.  It is a tool to help people – people just like you – level the financial playing field and regain control of their finances.

Most often consumers use two types of bankruptcy. Chapter 13 bankruptcy consolidates your debts into manageable payments and Chapter 7 gives you a fresh start.


Chapter 7 bankruptcy, locally referred to as a fresh start or liquidation bankruptcy, can be a very useful tool for those who are able to successfully file.  It liquidates a debtor’s nonexempt and unnecessary assets (such as a second vehicle or home, cash, family heirlooms and expensive “nonessentials”) to pay creditors, and discharges much, sometimes all, of the remaining debt.  In reality, because the liquidation does not force you to get rid of things you need (such as appliances, furniture, and even vehicles and jewelry up to a certain value), you may not have to part with much.

A Chapter 7 fresh start bankruptcy is truly a fresh start, but it does not always work for everyone.

There are certain debts that are considered “nondischargeable” in this type of bankruptcy and will not be erased.  These include student loans, debts from court judgements related to wrongful injuries or theft,  and divorce debts, such as alimony and child support.  If these are the primary debts plaguing you, a Chapter 13 bankruptcy may be right for you.


If the majority of your debts are from things such as credit cards and medical bills, and your monthly income does not provide you the means to pay your debt, a Chapter 7 fresh start bankruptcy may be the right choice for you.  There is now a test that can help determine your eligibility.    But, with new bankruptcy laws that began in 2005, the process to qualify and file for a Chapter 7 fresh start bankruptcy has become much more complex.  Therefore, it is vital to achieving a successful result that you find a skilled and experienced lawyer who is dedicated to bankruptcy law.

Contact Us Today

Don’t let that mountain of debt ruin your life and that of your family.   There is a solution to this stressful situation.  Through Chapter 7 fresh start bankruptcy or Chapter 13 bill consolidation bankruptcy, we can help you end your financial nightmare and put you back on the road to becoming debt free.

Call Robert Raley Bankruptcy Attorney today at 318-747-2230 or set up an appointment by visiting our contact page.

Learn more about chapter 7 bankruptcy by viewing our frequently asked questions.