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Bankruptcy in Louisiana

The resilience of the people of Louisiana has been truly amazing. When faced with devastation caused both by nature and man, they rebuild, regroup, and move on. Fortunately, bankruptcy laws have been and continue to be there to help.

Bankruptcy laws offer folks a chance to let go of the past and start anew. If you are considering bankruptcy, you’ll benefit from reading this article. We’ll tell you how Louisiana bankruptcy laws protect your property differently than other states, talk about the consequences of filing Chapter 7 and Chapter 13 bankruptcies, and guide you choosing and working with a bankruptcy attorney.

How Louisiana Bankruptcy Law Differs from the Laws of Other States

Some parts of bankruptcy law are the same wherever you go because they’re based upon federal law. How and where you file bankruptcy as well as the rest of the process is based upon federal law so the procedure is the same from state to state.

On the other hand, most property protections are state based, though some federal protections for retirement plans such as 401(k)s, 403(b)s, IRAs, Roth IRAs, and pensions are the same from state to state.

In Louisiana, you can protect up to $25,000 of equity in your home, up to $7,500 in a motor vehicle, disaster relief funds, personal property, furniture, appliances, and engagement and wedding rings up to $5,000.

Louisiana allows spouses filing bankruptcy jointly to double the exemptions for motor vehicles and rings, but not home equity.

In all states, including Louisiana, you can choose to file either under Chapter 7 or Chapter 13 of the Bankruptcy Code. Some people file under Chapter 11, but that’s very rare.

Your Choices in Filing Bankruptcy in Louisiana: Chapter 7 or Chapter 13

If you file bankruptcy, there are consequences. Specifically, the filing stays on your credit report for 10 years. But, if you’re considering bankruptcy, your credit report has likely already been negatively affected and bankruptcy offers a clean slate so good credit can be rebuilt.

  • When you file Chapter 7, unsecured debts such as credit card, medical bill, and personal loans are discharged, meaning that you never have to pay them back. Some debts such as alimony, child support, student loans, and most taxes are not dischargeable. The Chapter 7 process takes about 6 months.

  • If you have large debts that aren’t dischargeable, or you don’t meet the “means” test to qualify for Chapter 7, Chapter 13 is likely the best way to go.

  • In Chapter 13, which takes 3 to 5 years, debts are reorganized so that you can manage the payments. Often, contract terms are renegotiated so that you pay less principal and interest.

How to Choose a Bankruptcy Attorney

It’s okay to ask friends and family for referrals if you know that they’ve filed bankruptcy. In fact, it’s likely the best way to ensure a good experience.

Alternatives would be to ask professional advisors (i.e. CPA, estate planning attorney, or financial advisor) or the local bar association for referrals. Or, you can enter “Find a Louisiana Bankruptcy Attorney” in your search engine and peruse the Internet.

Most bankruptcy attorneys will offer a free, no obligation consultation or phone interview so you can determine whether that attorney is a good fit for you.

How to Prepare to Work with a Bankruptcy Attorney

Filing bankruptcy is very labor intensive at first; it’s a ton of paperwork for both you and your attorney. But, never fear, the paper work tapers off, at least for you.

It’s important to gather and organize all of your financial documents. You’ll need to fill out the forms your attorney gives you. You’ll need documentation for all your credit card bills, mortgages, car payments, monthly bills, student loan statements, debts, assets, and anything else related to your finances.

Just as important is getting your questions answered, so jot down all of your questions and concerns and chat with your bankruptcy attorney.

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