Louisiana Exemptions for Your Peace of Mind in Bankruptcy

Are you drowning in debt? Are you also considering bankruptcy to get a fresh financial start? If you live in Louisiana, understanding Louisiana bankruptcy and property exemptions is crucial. While bankruptcy wipes away your eligible debts, it doesn’t mean you lose everything you own. The state offers exemptions that allow you to protect certain assets, ensuring you have a foundation to rebuild your financial future. 

Bankruptcy exemptions let you keep essential things you need during Chapter 7 or Chapter 13 bankruptcy. Those include your house, car, and furniture, among other things. These rules are even more critical in Louisiana because you must follow the state’s exemptions, not the federal ones. 

Short Summary: 

  • Louisiana’s bankruptcy exemptions allow you to keep your home (up to $35,000 value), some car value (up to $7,500), and essential household items.
  • Unlike some states, Louisiana requires following its bankruptcy exemptions, not federal ones. This includes retirement savings, tools of the trade, certain tax credits and benefits, and more. 
  • While you can keep most everyday items, you need to file a specific form (Schedule C) to claim exemptions. A bankruptcy trustee will review your list.
  • Bankruptcy fraud is a serious crime with hefty fines and potential jail time. Be honest with the court and consult a lawyer if unsure about anything.

How Does Louisiana Bankruptcy and Property Exemptions Work?

Exempt property lets you hold onto some things, even after you file for bankruptcy. However, these rules aren’t automatic. You must tell the court what you want to keep by filing a list (Schedule C). The court might sell your stuff to pay your creditors if you don’t.

Exemptions work differently depending on where you live. In Louisiana, you must follow the state’s bankruptcy exemptions. Knowing the right rules is crucial because using the wrong ones could mean you lose your stuff.

Did you know you can shield your home from creditors in some situations?

Louisiana’s homestead exemption protects up to $35,000 of value in your house and land. This shield is limited in size: within city limits, it covers only 5 acres, while outside the city limits, it goes up to 200 acres. 

There’s also an exception for severe illness or injury: you can protect the entire value of your home. Note that married couples cannot just add their exemptions together to get double the protection.

Did you know you can save money on taxes for one car you and your family use?

Louisiana law lets you exempt up to $7,500 of its value. The motor vehicle exemption also applies to one car designated to help you or a family member with a disability.  

Are There Other Louisiana Bankruptcy and Property Exemptions?

Aside from those stated above, other Louisiana bankruptcy and property exemptions are available: 

Insurance Benefits

Some life insurance money is safe from creditors. That includes payouts for repairs to your home from a natural disaster, benefits from certain clubs, and money from accident and health insurance.

Personal Property

Louisiana law protects certain belongings from creditors. That includes furniture, appliances, clothes, family pictures, instruments, pets, and even a single cow! You can also keep wedding rings worth up to $5,000. Guns and ammo valued under $2,500 are protected. Money from your Earned Income Tax Credit is exempt as well. Lastly, this exemption covers burial plots and a spendthrift trust fund.

Retirement Savings

Louisiana law protects your retirement savings from creditors. That includes money in your pension plan, 401(k)s, IRAs, and annuities. 

However, there’s an exception: some of your retirement savings might be used to pay child support or alimony if you owe them. 

Your retirement benefit also applies to specific government worker pensions, like those for teachers, firefighters, police officers, and more.


By law, creditors can’t take more than a certain amount of your paycheck. The limit is either 75% of your earnings after taxes and deductions or 30 times the federal minimum wage, whichever is higher.

Tools of the Trade

The law protects your work tools, any instruments you use for your job, books you need, and even one small trailer for hauling things.

Other Things Louisiana Protects

Louisiana law also protects things like:

  • Money from certain clubs or societies
  • Payments for work injuries (workers’ compensation) 
  • Unemployment benefits
  • Welfare benefits
  • Money for crime victims

What Will Happen If My Property Was Not Exempted?

What happens to things you can’t protect (nonexempt property) depends on which bankruptcy type you file: 

  • Chapter 7: In this option, a court-appointed person sells your nonexempt property and uses the money to pay back your debts.
  • Chapter 13: You get to keep everything, but you have to make a payment plan (three to five years) that includes the value of the nonexempt property.

Can the Bankruptcy Trustee Disagree to My Exemptions? 

Yes. Bankruptcy can be tricky, so be careful when claiming exempt property (stuff you get to keep). Here’s how to avoid problems:

  • Do I Automatically Keep Things? Yes, usually. You can keep most things you need for everyday life, like furniture, clothes, and your car. But there’s a form (Schedule C) to list everything you want to protect. Don’t forget to file it!
  • Will Someone Check My List? Yes, a court official or trustee will review your list to ensure everything qualifies for protection.
  • What if I Mess Up? Most trustees understand if it’s an honest mistake. They’ll usually try to talk it out with you first. If it’s a big mistake, they might object to your list in court, and a judge will decide.

Should You Cheat on Bankruptcy Forms?

Certainly not. Filing for bankruptcy is serious, so be honest on all the paperwork. Trying to trick the court by hiding assets or lying on your forms can be considered bankruptcy fraud. It can lead to big fines (up to $250,000) or even jail time (up to 20 years). Be upfront with the court about your finances. If you’re unsure about something, ask your bankruptcy lawyer for help.

Don’t Lose Your Properties in Bankruptcy!

Louisiana bankruptcy and property exemptions are highly complicated for average individuals to understand. That is entirely normal. Bankruptcy lets you erase some debts, but you don’t lose everything. The state has special rules that protect certain belongings, like your house, car, and furniture. This way, you have a chance to rebuild your finances. Our  Louisiana bankruptcy lawyer can help you understand these rules.

Drowning in debt? E. Orum Young Law can help! We handle bankruptcy, including all concerns with Chapter 7 and Chapter 13. We’ve been helping people for over 30 years get a fresh financial start. If you need bankruptcy help, get a free case review now!