Posted On: September 6, 2017
Posted by: Deborah Kurfiss
Before we discuss exemptions in bankruptcies filed in Louisiana, let’s take a look at this fascinating state. The Gulf of Mexico, the Mississippi River and Louisiana’s extensive bayous frame the backdrop to Louisiana’s unique melting pot that include Cajun and Creole cultures. We owe a debt to New Orleans for giving birth to jazz, and, of course, it’s also famous for Mardi Gras, the French Quarter, the Garden District and some of the best food in the country. Originally named for King Louis XIV, Louisiana became a state in 1812, the first to be formed from the 1803 Louisiana Purchase, which almost doubled the size of land owned by the United States.
In 2016, Louisiana ranked 36th in the country for per capita personal income (PCPI) at $43,487, which was 88% of the national average of $49,571. Louisiana’s PCPI increased 1.2% from 2015 compared to the national increase of 2.9%. Louisiana ranks 24th in the United States for gross domestic product (GDP) at $235.1 billion. Louisiana’s GDP grew 1.1% in 2016, compared to the national change of 1.5%. Louisiana’s largest industry is nondurable goods manufacturing followed by finance, insurance, real estate, rental, and leasing.
From April 2015 to March 2016, Louisiana saw a bankruptcy filing rate of 292 per 100,000 residents, a bit higher than the median bankruptcy rate of 224 filings per 100,000 across the country. Particularly high rates per 100,000 residents were found in Ouachita Parish (615.64), Caddo Parish (497.79), Rapides Parish (489.41), Calcasieu Parish (426.79), and Bossier Parish (411.75).
In this post, we’ll discuss how to file Chapter 7 bankruptcy in Louisiana, what property you can keep through Louisiana’s bankruptcy exemptions, and where the bankruptcy courts in Louisiana are located.
Chapter 7 Bankruptcy in Louisiana: The Basics
Bankruptcy is primarily a federal action governed by Title 11 of the U.S. Code. When you file a Chapter 7 bankruptcy, which is a liquidation bankruptcy, the bankruptcy trustee can sell your property to help pay your debts unless that property is exempt. That’s why it’s extremely important to understand what property is exempt and therefore safe from a trustee sale.
Even though bankruptcy is filed in federal court, some state laws do apply and exemptions are among those. A list of exemptions may be found in the U.S. Bankruptcy Code, but states are free to compile their own lists of exemptions.
The limits on the value apply to the equity in the property, not the value of the property as a whole.
Louisiana Bankruptcy Exemptions: Can I keep my house?
Some states allow you to choose between their list of exemptions and the federal exemptions list, but Louisiana is not one of those states. If you file for bankruptcy in Louisiana, you must use the Louisiana bankruptcy exemptions list.
Remember: Exemptions refer to your equity in the property rather than the total value of the property. If you are married and filing a joint bankruptcy with your spouse, both of you can use your exemptions in a Chapter 7 bankruptcy, if you qualify. That means, in effect, that you can get double exemptions for marital property.
Let’s look at some of the most popular exemptions available in Louisiana.
Louisiana Bankruptcy ExemptionsThe top 5 exemptions under Louisiana state law.
|Type of exemption||Louisiana law|
|Homestead||$35,000 on up to five acres within city limits, 200 acres outside city limits; can be doubled if married and filing jointly|
|Personal property||Certain household goods, furniture, pets, and more; $5,000 in wedding and engagement rings; $2,500 in firearms|
|Vehicle||$7,500, can double if married|
|Wages||75% of disposable earnings or 30 times the federal minimum wage, whichever is greater|
Homestead or Residential Property
Louisiana allows an exemption up to $35,000 for a home that is your residence under La. Rev. Stat. Ann. § 20:1. The exemption is limited to five acres if the residence is within the city limits, or up to 200 acres if it’s outside city limits.
Example: If you have $34,000 in equity in your $250,000 home on four acres within city limits, it will not be sold, because there is a $35,000 exemption. But if you have $70,000 in equity in that same $250,000 home, the bankruptcy trustee could sell it in order to help pay your debt if you filed bankruptcy as an individual.
If you filed bankruptcy jointly with your spouse and the house is marital property, you can each use a $35,000 exemption and the house would just make it to be safe from the bankruptcy trustee in this case.
Under La. Rev. Stat. Ann. § 13:3881 certain personal property is exempt. This includes household goods, furniture, household pets, family portraits, musical instruments, kitchen utensils, and more. It also includes firearms and ammunition up to $2,500, and wedding or engagement rings up to $5,000.
You can exempt one motor vehicle up to an amount of $7,500 in equity under La. Rev. Stat. Ann. § 13:3881.
Example: You are filing bankruptcy as a single person, and you have a car valued at $25,000. Your equity in the car of $14,000 far exceeds the allowable exemption of $7,500. The trustee can sell your car to pay your debts.
On the other hand, if you are filing a bankruptcy jointly with your spouse and the car is marital property, the trustee could not sell the car under these circumstances, because you and your spouse can each use a $7,500 exemption for the car, totaling $15,000. Your equity of $14,000 would be less than the $15,000 allowable exemption.
You are allowed to exempt 75% of your disposable earnings or 30 times the federal minimum wage, whichever is greater, under La. Rev. Stat. Ann. § 13:3881.
You can protect some life insurance benefits under Title 22 of the Louisiana Revised Statues, including fraternal benefit society benefits, group insurance policies, accident and health insurance proceeds, and life insurance or endowment policies. La. Rev. Stat. Ann. §§ 22:298, 22:944, 22:1015, 22:912.
Under La. Rev. Stat. Ann. §20.33, pensions, tax-deferred arrangements, and annuity contracts are exempt as are gratuitous payments made by employers to employees such as payments for length of service and more.
Under La. Rev. Stat. Ann. §46.111, all assistance is “exempt from levy or execution.”
Under La. Rev. Stat. Ann. §46.1811, payment from the Crime Victims Reparations Fund is exempt.
Where are the Louisiana bankruptcy courts located?
When are considering filing bankruptcy, you already have more than enough stress in your life. In order to make the process as smooth as possible and keep all the property to which you are entitled, it is smart to consult with a Louisiana bankruptcy attorney. If you are not sure whether or not bankruptcy is your best option, don’t hesitate to call. A good attorney may be able to help you find another way out of your financial troubles.
If you do decide to file Chapter 7 bankruptcy in Louisiana, it’s important to know where you’ll file. Your attorney can also advise you of the entire process including how to file, getting a discharge, and rebuilding your credit after bankruptcy.
Louisiana has three bankruptcy court districts: Eastern, Middle, and Western. We’ve provided website links and phone numbers below.
Louisiana Eastern District
Louisiana Middle Bankruptcy Court
Louisiana Western Bankruptcy Court
You may think you can save money by filing your own bankruptcy, but a good Louisiana bankruptcy attorney knows how to protect your assets. Learn more about why filing a pro se bankruptcy is a bad idea here. An experienced bankruptcy attorney can help you to make the best of your situation and get your financial life back on track.