You Will Not “Lose Everything” During Bankruptcy
The majority of people who file for personal bankruptcy in Louisiana are able to keep all or most of their assets, including their home, vehicles, retirement savings and household possessions.
Whether you will forfeit any property depends on which type of bankruptcy you file and the nature of your assets. The knowledgeable bankruptcy lawyers of Simon Fitzgerald LLC, will steer you right and work to retain as much of your estate as possible under the law.
Find Out What Assets You Can Keep
We can explain the exemptions that apply to your assets in a free initial consultation. Arrange a meeting at one of our five offices across Louisiana:
Louisiana Bankruptcy Exemptions
You can’t go by what happened in someone else’s bankruptcy. The law is very specific, making every case unique. As a general rule, a Chapter 13 bankruptcy filing protects virtually all your assets because you are repaying at least some portion of your debts, and Chapter 7 liquidation bankruptcy protects most of what you own but may require you to sacrifice some assets to discharge debts.
The following property is just a portion of property protected under Louisiana’s exemptions (with some exceptions):
- Your home — If your home is sold, you may keep up to $35,000 of equity in your residence, provided you are the owner (individually or with your spouse). “Equity” is the value of the property less all the mortgages and liens against the property. If you are keeping your home, you must also continue making the monthly mortgage payments.
- One vehicle per household up to $7,500 in equity. A married couple living together cannot exempt two vehicles, but may be able to retain a second vehicle by paying for it over time in a Chapter 13.
- Household goods — Your clothing and bedding, furniture and appliances, heating and cooling equipment, kitchenware, sewing machine, therapeutic equipment and other goods are exempt, up to a limit.
- Wedding/engagement rings — Up to $5,000 in value.
- Retirement accounts — Generally, all pensions, 401(k), 403(b), ERISA plans, IRA and Keogh plans and other qualified retirement plans are 100 percent protected.
- Tools of a trade — You can retain equipment necessary for you or your spouse’s livelihood such as mechanic’s or carpentry tools, instruments, books, and one utility trailer.
- Life insurance/annuities — The cash value of life insurance and the payments under annuity contracts are generally exempt.
- Miscellaneous exemptions — There are many other exemptions for such things as firearms, musical instruments and family portraits. We can determine if a certain item is exempt or not.
What Assets Are Not Exempt?
If you own your home outright or it is mostly paid off, the excess equity above $35,000 is not protected in a Chapter 7. Equity in a second home or rental property is not exempt. You cannot keep cash and savings accounts in a Chapter 7. Although most of your household possessions are protected, most electronics are not exempt — this includes TVs, stereos and DVD players; however, Chapter 7 trustees rarely take such items. You can protect nonexempt items by paying their market value as part of your Chapter 13.
Our attorneys will review everything you own and help you look at the “big picture.” Is it worth it to forfeit some property in Chapter 7 in order to discharge thousands or tens of thousands of dollars in debt? Or are you better off filing Chapter 13 to protect certain assets while paying only what you can actually afford of the unsecured debt.