Louisiana Bankruptcy Law: What Happens to Your Property After Filing
Filing for bankruptcy in Louisiana can be a significant life decision that affects various aspects of your financial future, including your property. Understanding how Louisiana bankruptcy law functions is crucial for anyone considering this option. When you file for bankruptcy, there are vital processes, protections, and outcomes concerning your property that you should be aware of.
In Louisiana, the two main types of bankruptcy filings are Chapter 7 and Chapter 13, each having different implications for your property.
Chapter 7 Bankruptcy
Chapter 7 bankruptcy, often referred to as "liquidation bankruptcy," involves the selling of non-exempt assets to repay creditors. However, Louisiana law provides certain exemptions that can protect your property from being sold during the bankruptcy process. Some of the key exemptions include:
- Homestead Exemption: Homeowners can exempt up to $35,000 of equity in their primary residence, or $70,000 if married and filing jointly.
- Motor Vehicle Exemption: Debtors can exempt up to $7,500 in equity for one vehicle, with additional exemptions possible for certain circumstances.
- Personal Property Exemption: Items such as household goods, clothing, and some personal effects can be exempted up to a certain value.
If the property you own exceeds the allowed exemptions, a bankruptcy trustee may decide to sell those non-exempt assets to satisfy your debts. However, secured debts, like mortgages or car loans, may require you to continue making payments to keep those items.
Chapter 13 Bankruptcy
Chapter 13 bankruptcy, also known as the "wage earner's plan," is designed for individuals with a steady income who wish to restructure their debt. Unlike Chapter 7, Chapter 13 typically allows you to keep all your property, including non-exempt assets, as long as you adhere to the repayment plan.
In this process, you will work with the court to create a repayment plan that lasts between three to five years. During this time, your creditors must refrain from taking action against your property, allowing you to catch up on missed payments and keep your assets.
Property Rights After Filing
Upon filing for bankruptcy, an automatic stay goes into effect, which immediately halts most collection activities by creditors. This means that your property cannot be repossessed, foreclosed on, or garnished during the bankruptcy process. However, it's crucial to comply with the bankruptcy regulations and make payments on any secured debts to protect your property from repossession or foreclosure once the automatic stay is lifted.
Conclusion
Filing for bankruptcy in Louisiana can provide a fresh financial start, but it’s important to understand the implications it could have on your property. Knowing how exemptions work and which type of bankruptcy suits your situation best will help you navigate the process more effectively. Always consider consulting with a qualified bankruptcy attorney to explore all options and ensure that your rights are protected throughout the process.