Louisiana Bankruptcy Law Explained: A Beginner’s Guide

Understanding Louisiana Bankruptcy Law can be daunting, especially for beginners. This guide aims to simplify the complex legal landscape of bankruptcy in the state of Louisiana.

Bankruptcy is a legal process that helps individuals and businesses unable to pay their debts. In Louisiana, like other states, bankruptcy is governed by federal law, but certain state-specific rules also apply.

Types of Bankruptcy in Louisiana

There are several types of bankruptcy filings available, primarily categorized under Chapter 7 and Chapter 13.

Chapter 7 Bankruptcy

Chapter 7, also known as “liquidation bankruptcy,” is designed for individuals and businesses that cannot pay their debts. Under this chapter, a trustee is appointed to liquidate (sell) non-exempt assets to pay creditors. Louisiana allows for certain exemptions, which can protect specific types of property, such as your home, car, and personal belongings.

Chapter 13 Bankruptcy

Chapter 13 is often referred to as “reorganization bankruptcy.” This option is available for individuals with a regular income who want to keep their assets while repaying all or part of their debts over a three to five-year repayment plan. This chapter allows debtors to create a plan to make installment payments to creditors, which must be approved by the court.

Eligibility Requirements

Eligibility for filing bankruptcy in Louisiana depends on various factors, including your income, types of debts, and the chosen bankruptcy chapter. In general:

For Chapter 7, you must pass the "means test," which compares your income to the median income of a similarly sized household in Louisiana.
For Chapter 13, you must have a regular source of income and meet specific debt limits set by federal law.

The Bankruptcy Process in Louisiana

Filing for bankruptcy in Louisiana involves several steps:

Credit Counseling: Before filing, individuals must complete a credit counseling course from an approved provider.
Filing the Petition: You must submit a bankruptcy petition along with the necessary schedules and statements to the court. This includes information about your debts, income, expenses, and assets.
Automatic Stay: Once you file, an automatic stay goes into effect, temporarily stopping creditor actions against you.
341 Meeting: A meeting of creditors, known as the 341 meeting, will be scheduled where you will answer questions about your finances and the bankruptcy process.
Debt Discharge: Upon successful completion of the required processes, your eligible debts will be discharged, meaning you are no longer legally required to pay them.

Exemptions in Louisiana Bankruptcy

Louisiana has its own set of exemptions that determine what property you can keep during bankruptcy. Common exemptions include:

Homestead Exemption: Protects a primary residence up to a certain value.
Motor Vehicle Exemption: Allows for protection of a vehicle up to a specified limit.
Personal Property Exemption: Includes household items, clothing, and jewelry.

Benefits of Filing for Bankruptcy

Filing for bankruptcy in Louisiana can offer several benefits, including:

Debt Relief: Bankruptcy can relieve individuals from overwhelming debt and give them a fresh start.
Protection from Creditors: The automatic stay stops creditors from continuing collection actions.
Manageable Payments: Chapter 13 allows for manageable repayment plans based on your income.

Conclusion

Navigating Louisiana Bankruptcy Law can be complicated, but understanding the basics can help you make informed decisions about your financial future. It's advisable to consult with a qualified bankruptcy attorney who can guide you through the process and answer any specific questions you may have.