Chapter 7 bankruptcy may initially seem like a devil’s trade-off where you give up your properties, in exchange for wiping your debt slate clean. That is until you learn about bankruptcy exemptions. In Louisiana, certain exemptions will allow certain assets to be excluded from the bankruptcy estate which the trustee sells and liquidates to pay back your creditors. You should familiarize yourself with bankruptcy laws on exemptions as these were created to protect consumers like you against unsecured creditors.
Filing Chapter 7 Bankruptcy in Louisiana
Once you submit your bankruptcy petition in Louisiana, you will need to declare all assets, properties, and income you own to the court. The bankruptcy court will then assign a bankruptcy trustee to manage these properties. Liquidation may involve selling it off or auctioning it and all net proceeds will go to each of your creditors with a certain percentage going to the trustee as his or her commission. In exchange for these lost assets, all of your dischargeable debts will be eliminated.
However, before you even consider bankruptcy Chapter 7, you should first consult a bankruptcy attorney to know early on if the debts you want to go away are indeed permitted to be discharged. This is because certain types of debts cannot be wiped by the court. Non-dischargeable debts include your legal obligations such as alimony or child support, debts arising from fraudulent activities, tax dues, and student debt, among others.
Individuals often file bankruptcy to eliminate their credit card debt, utility bills, and unsecured loans. In these cases, declaring bankruptcy can eliminate 100% of the filer’s debts. In some cases, the filer chooses to keep certain debts and reaffirms those to avoid losing the property such as your home or your car. In such cases, a voluntary reaffirmation agreement is signed. Reaffirming the debt means acknowledging your responsibility to continue paying back what you owe. If you’re unsure what this means, make sure to contact a Louisiana bankruptcy lawyer.
Bankruptcy Exemption Laws in Louisiana
Each state has its own exemption rules when it comes to bankruptcy cases. For those living in Monroe or other parts of Louisiana, you are entitled to seek bankruptcy protection for exempt property categories. If you want to know the updated dollar amount for each exempted property, it is best to visit the US court district in your jurisdiction. Again, take note that certain debts cannot be erased by filing for bankruptcy.
First, the exemption limit on your state will be applied to the property’s equity, which refers to the difference between the current property value and how much is owed on the property. For example, if your vehicle is valued at $4000 and your loan is $3000, the equity is $1000.
Second, if you have a secured property that you want to keep, and you are not behind on payments, as long as the equity is covered by exemptions, you can choose to continue being current on payments to keep the property even after bankruptcy.
Third, married couples are entitled to file a joint bankruptcy and double their exemption limit, unless they choose otherwise.
Fourth, there are additional federal exemptions you can claim when you file bankruptcy in Louisiana. Ask Lousiana bankruptcy lawyers to enlighten you on the other exemptions.
Below are the usual categories for properties that are exempted:
- Homestead – occupied property less than 5 acres in the city, or at most 200 if outside. This can be claimed by the surviving spouse or dependent child of the owner.
- Insurance – such as group insurance policy, disability benefits and other accident claims, life insurance claims
- Miscellaneous – any property belonging to a minor
- Pensions – received by both the employee and his or her heirs
- Personal property – including, but not limited to arms, bedroom furniture, kitchenware, clothing, family heirloom, pets, appliances
- Public benefits – such as workers’ compensation or crime victims’ restitution
- Wages – up to a certain limit depending on the state
Filing bankruptcy in Louisiana? It is important to be informed on the bankruptcy process from the get-go in order to achieve debt relief. Get to know which exemptions apply to you by having your case reviewed by our experienced Monroe bankruptcy lawyers. Contact E Orum Young Law bankruptcy to schedule your free consultation and case review today!