Louisiana Bankruptcy Exemptions

If you file for bankruptcy in Louisiana, you won't lose everything. You can protect the things you'll need to work and live using Louisiana's bankruptcy exemption laws. Read on to learn about the property covered by Louisiana's bankruptcy exemptions.

Louisiana Bankruptcy Exemption List

You'll find some of the more common Louisiana exemptions below. Here are a few things to keep in mind:

• Louisiana debtors use state exemptions. Bankruptcy filers in Louisiana can exempt property only using the Louisiana state exemptions. Louisiana is an "opt-out" state that doesn't allow residents to use the federal bankruptcy exemptions.
• Spouses can double Louisiana exemptions. Married couples filing a joint bankruptcy in Louisiana can each claim the full exemption amount for most property that they own together. For instance, if both spouses own household goods, they can double the personal property exemptions (everything other than real estate) and protect more property equity. Spouses can't double the homestead exemption.
• Finding the law. Unless otherwise noted, all references are to the Louisiana Revised Statutes Annotated.

Louisiana COVID-19 Exemption

Louisiana is the first state to exempt stimulus payments related to COVID-19. You'll use the new law to protect your payments from all creditors other than those collecting spousal or child support. This law doesn't apply to increases in unemployment compensation received due to COVID-19, however. La. Rev. Stat. Ann. §13:3881(A)(10).

Louisiana Homestead Exemption

You can protect up to $35,000 in equity in the home in which you live and the land on which it sits. The Louisiana homestead exemption is limited to five acres if it's located in a town or city and up to 200 acres outside of the metro area. For obligations arising as a direct result of a catastrophic or terminal illness or injury, you can exempt the full value of the home. Spouses cannot double the Louisiana homestead exemption. La. Rev. Stat. Ann. § 20:1

For more details, see The Louisiana Homestead Exemption.

Louisiana Motor Vehicle Exemption

To $7,500 of equity in one motor vehicle used by you and your family. You may also exempt up to $7,500 of equity in one motor vehicle which is modified or fitted to assist you or a family member with a physical disability. La. Rev. Stat. Ann. § 13:3881(A)(7), (8)

To learn more, see The Louisiana Motor Vehicle Exemption in Bankruptcy.

Other Louisiana Exemptions

Insurance Benefits

You can protect some life insurance benefits, including the insurance proceeds for exempt property damaged by a natural disaster, fraternal benefit society benefits, and accident and health insurance proceeds. La. Rev. Stat. Ann. §§ 13:3881, 22:558, 22:564, 22:646, 22:647.

Personal Property

The household goods and furnishings, appliances, clothing, family portraits, arms and military accouterments, musical instruments, poultry, fowl, one cow, dogs, cats, other household pets, and wedding or engagement rings up to $5,000 in value. La. Rev. Stat. Ann. § 13:3881

The money you receive from the Federal Earned Income Tax Credit is exempt, as well as your guns and ammunition up to a value of $2,500. La. Rev. Stat. Ann. § 13:3881

You can also protect cemetery spaces and a spendthrift trust. La. Rev. Stat. Ann. §§ 8:313, 9:2004

Pension, Retirement, and Life Insurance Benefits

All qualified pensions, tax-deferred arrangements, annuity contracts, and proceeds of and payments under tax-deferred arrangements and annuity contracts, except as needed to satisfy support obligations. La. Rev. Stat. Ann. § 13:3881

Retirement benefits are also exempt for:

• State employees. La. Rev. Stat. Ann. § 11:405
• Teachers other than for support obligations. La. Rev. Stat. Ann. §§ 11:704, 20:33(1)
• Orleans Parish School employees. La. Rev. Stat. Ann. § 11:951.3
• Louisiana State University employees. La. Rev. Stat. Ann. § 11:952.3
• School employees other than for support obligations. La. Rev. Stat. Ann. § 11:1003
• Judicial members other than for support obligations. La. Rev. Stat. Ann. § 11:1378
• La. Rev. Stat. Ann. § 11:1403
• County clerks other than for support obligations. La. Rev. Stat. Ann. § 11:1526
• District attorneys. La. Rev. Stat. Ann. § 11:1583
• Municipal employees other than for support obligations. La. Rev. Stat. Ann. § 11:1735
• Parochial employees. La. Rev. Stat. Ann. § 11:1905
• Registrar of voters. La. Rev. Stat. Ann. § 11:2033
• Municipal police. La. Rev. Stat. Ann. § 11:2228
• Firefighters, sheriff, and police (other than for support obligations in some cases). La. Rev. Stat. Ann. §§ 11:2182, 11:2263, 11:3140, 11:3513, 33:2035
• City of Alexandria employees. La. Rev. Stat. Ann. § 11:3014
• City of Monroe bus driver. La. Rev. Stat. Ann. § 11:3770
• City of Monroe electrical workers. La. Rev. Stat. Ann. § 11:3770
• City of New Orleans Sewage and Water Board. La. Rev. Stat. Ann. § 11:3823

Qualified retirement accounts are exempt under the federal rules and can be used in every state, regardless of the exemption scheme used. For current amounts, see Your Retirement Plan in Bankruptcy.

Wages

75% of disposable earnings or 30 times the federal minimum wage, whichever is greater. La. Rev. Stat. Ann. § 13:3881

Tools of the Trade

Tools, instruments, books, and one utility trailer. La. Rev. Stat. Ann. § 13:3881

Miscellaneous Louisiana Exemptions

• Fraternal benefit society benefits. La. Rev. Stat. Ann. §§ 22:558, 22:564
• Workers' compensation other than support obligations. La. Rev. Stat. Ann. § 23:1205
• Unemployment compensation. La. Rev. Stat. Ann. § 23:1693(A)
• Public assistance. La. Rev. Stat. Ann. § 46:111
• Crime victims' compensation. La. Rev. Stat. Ann. § 46:1811

Confirming Louisiana's Bankruptcy Exemptions

You should be aware that additional exemptions exist and that Louisiana's exemption amounts adjust periodically. To make sure you have the most recent figures, be sure to check for any updates at the website of the Louisiana Legislature at www.legis.state.la.us or by consulting with a local bankruptcy lawyer.

What Will Happen to Nonexempt Property

Whether you'll lose or keep nonexempt property depends on the bankruptcy chapter you file.

• In Chapter 7 bankruptcy, the bankruptcy trustee appointed to your case sells any property you can't exempt and uses the funds to pay debts, such as credit card balances, personal loans, and utility bills.
• In Chapter 13 bankruptcy, you don't lose your nonexempt property. Instead, you'll pay the value of nonexempt property to unsecured creditors through your three- to five-year repayment plan in return for being able to keep all of your assets.

Not sure which chapter to file? Start by reading Is It Better To File A Chapter 7 or 13 Bankruptcy?

The Trustee Can Object to Your Exemptions

If you don't exempt your property carefully, you could lose it, or pay for it, depending on the bankruptcy chapter. You'll want to steer clear of these common issues.

• Do I get to exempt property automatically? In most cases, you'll be allowed to exempt property that you'll need to maintain a job and household, such as furnishings, clothing, and some equity in a vehicle. You must list the assets you can protect official bankruptcy form Schedule C: The Property You Claim as Exempt and file it along with other required paperwork.
• Will someone check my exemptions? The bankruptcy trustee—the court-appointed official responsible for managing your case—will review Schedule C to ensure that you have the right to protect the claimed property.
• What if I make a mistake? Most trustees won't file an objection unless it's clear that the debtor is trying to pull something over on the court—at least not without trying to resolve the issue first. If there's a minor exemption problem, the trustee will likely call you to work the issue out informally. If unsuccessful, the trustee will file an objection with the bankruptcy court. The judge will decide the outcome.

Example. Mason owns a rare, classic car worth $15,000 but the state vehicle exemption won't adequately protect it. Believing that the car qualifies as art—at least in his mind—Mason exempts it using his state's unlimited artwork exemption. The trustee reviews Schedule C disagrees with Mason's characterization and files an objection to the exemption with the court. After consideration, the judge will likely side with the trustee and determine that the vehicle doesn't qualify as a piece of art.

Avoiding Bankruptcy Fraud

You don't want to finesse exemptions. Not only do you have an obligation to supply correct information on your bankruptcy forms, purposefully making inaccurate statements could be considered fraudulent. Bankruptcy fraud is punishable by up to $250,000, 20 years in prison, or both.

You can learn more about filing for bankruptcy in Louisiana in Filing for Bankruptcy and Louisiana Bankruptcy Information.