Everyone gets down on their luck sometimes, but when money troubles seem to escalate with no end in sight, it might be time to consider filing for bankruptcy. Bankruptcy is governed by federal law, and there are two main types. The more traditional "wiping away of debts" is Chapter 7. It involves selling, or liquidating, assets to pay the debtor's creditors as much as possible. Chapter 13 doesn't erase debts in quite the same way. It reorganizes them into a payment plan over a certain number of years. Even though federal law sets bankruptcy rules, Louisiana residents who are considering filing should keep some key facts in mind that are unique to that state.
Where Should You File Bankruptcy?
Louisiana has three districts for filing personal bankruptcy:
- The Eastern District court is located in New Orleans.
- The Middle District court is located in Baton Rouge.
- The Western District has locations in Alexandria, Lafayette, Monroe, Lake Charles and Shreveport.
You must file in the district in which you live.
Are Your Eligible for Chapter 7?
Your eligibility for Chapter 7 bankruptcy depends on your income. If you earn less each month on average than the Louisiana monthly median income, you can file for Chapter 7. If you earn more than Louisiana's median income, you must pass a stringent means test to be eligible for Chapter 7.
How Long Will a Chapter 13 Plan Last?
If you file for Chapter 13 bankruptcy, the length of your repayment plan also depends on your income. Debtors who earn less than the Louisiana monthly median income can expect a duration of no more than 36 months, unless they can prove good cause exists to extend the plan. If the court allows you to extend your plan, the limit will generally be 60 months. For those who earn more than Louisiana's monthly median income, Chapter 13 repayment plans typically last 60 months.
Do You Get to Keep Your Property?
Each state has its own rules for what property you can keep when you file for a Chapter 7 bankruptcy. These exemptions are also a factor in determining your repayment plan if you file a Chapter 13. Some states allow you to use federal exemptions instead, but if you live in Louisiana, you must use the state's list. Louisiana's exemptions include:
- The property where you live, valued up to $25,000 or the amount it was worth the year before you filed, if your bankruptcy is due to catastrophic illness or injury
- A motor vehicle valued up to $7,500
- Engagement and wedding rings valued up to $5,000
- Personal and household items, including appliances, clothing and furniture
There are also exemptions for wages, retirement and insurance accounts, pets, and items you need for your work, among others.
A Personal Bankruptcy Lawyer Can Help
For specific information regarding bankruptcy laws in Louisiana, please contact a local bankruptcy lawyer.