People considering bankruptcy often worry about the long-term financial implications of that choice. Asset liquidation is sometimes necessary during bankruptcy, and people tend to worry about losing the resources that allow them to care for their families or that provide them with financial stability.
Both vehicles and homes are critical for maintaining employment and meeting the needs of dependent family members. Those contemplating a Chapter 7 bankruptcy filing may worry about the courts forcing them to sell or liquidate their homes and vehicles as part of the bankruptcy process. They may delay filing and look into other, less effective debt solutions as a result.
Are those considering a Chapter 7 bankruptcy in Louisiana truly at risk of losing their homes and personal transportation?
State bankruptcy exemptions can protect certain property
Bankruptcy exemptions allow people to exclude specific assets from the liquidation process in a Chapter 7 filing. There are both state and federal exemptions available.
However, Louisiana is an opt-out state, which means that filers in Louisiana cannot choose the federal exemptions, as the state has opted out of allowing filers to select federal exemptions. Chapter 7 filers in Louisiana can only use the state exemptions to protect their property. Thankfully, there are exemptions for both vehicles and home equity.
Filers who own their primary residences can exempt up to $35,000 in equity during a Chapter 7 bankruptcy. They can protect up to five acres of land attached to a home inside municipal limits or up to 200 acres if they live in a rural area.
Chapter 7 filers can protect up to $7,500 in vehicle equity for one vehicle they use for any purpose. They may also be able to preserve $7,500 in vehicle equity if they have a vehicle specifically modified to accommodate a physical disability that affects the filer or a member of their family.
Evaluating personal holdings and overall debts with a skilled legal team can help people determine what type of bankruptcy is effective for them and what property could be vulnerable to liquidation if they pursue a Chapter 7 filing. Working with an attorney makes it easier for people to understand and properly claim exemptions that reduce the long-term financial impact of a Chapter 7 bankruptcy.