What Property Is Protected?

by Lars Laban Levy on Jan. 09, 2019

Bankruptcy & Debt 

Summary: What Property Is Protected?

Exempt property is that property you can keep if the property is not secured by a debt or if the debt is paid in full. Even if this property is not paid for, you may retain the property in a Chapter 13 by paying the value of the property plus a reasonable rate of interest over the term of the plan. In a Chapter 7 you may be able to retain the property if you continue to make the required payments. One purpose of bankruptcy is to allow a person who has become overburdened with debt to get a "fresh start." and retain necessary property

Bankruptcy also provides an equitable distribution of property to your creditors. The law allows you to keep exempt property. The exemptions are in various categories. Individuals who file bankruptcy in Louisiana are usually entitled to those exemptions allowed by Louisiana law and certain federal exemptions. Among the exemptions a person is entitled to claim are the following:

Residence
Assuming Louisiana law applies, you may keep up to $35,000 of equity in your residence, if you're the owner of the property, individually or with your spouse. "Equity" is the value of the property less all of the mortgages and liens against the property. If a husband and wife both own the residence, both spouses are entitled to share the same $35,000 exemption. You must also continue making the monthly mortgage payments.

Household Goods
The clothing, bedding, linen, chinaware, non sterling silverware, glassware, living room, bedroom and dining room furniture, cooking stove, heating and cooling equipment, one non-commercial sewing machine, equipment for required therapy, kitchen utensils, pressing irons, washers, dryers, refrigerators, deep freezers, electric or otherwise, used by you or a member of your family are exempt (R.S. 13:3881 A(4)(a)).

Vehicle

  • One vehicle per household with $7,500 or less equity

Tools Of Trade
That property which fits any of the descriptions below, which is used by you or your spouse in the exercise of the trade, calling, or profession by which you or your spouse earn your livelihood.

  • Tools

  • Instruments

  • Books

  • One utility trailer

Life Insurance/Annuities
The cash value of life insurance and the payments under annuity contracts are generally exempt. However, there are exceptions. You should discuss these exemptions with the attorney.

Pensions/Retirement Accounts/IRAs/401(k)s/Etc.
Generally, all pension funds, all individual retirement accounts, all KEOGH plans, all simplified employee pension plans, and other plans qualified under Sections 401 or 408 of the Internal Revenue Code are either not property of the bankruptcy estate or are exempt; however, there are a number of exceptions. You should discuss this with your attorney.

Miscellaneous Exemptions
Miscellaneous exemptions include the family portraits, one or two up to 2,500 of firearms and accessible per person, musical instruments played or practiced on by you or a member of your family, wedding rings or engagement rings worn by either spouse — provided that the ring does not exceed $5,000 in value. There are other less-common exemptions available to you, and there are exceptions to the exemptions identified above. You should discuss these exemptions with one of the attorneys.

You may also keep non-exempt property in a Chapter 13 by paying the value of the property over the term of the plan to unsecured creditors.

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