Louisiana Bankruptcy Help
Louisiana government officials offer several types of debt relief to its financially struggling residents. The most common legal debt resolution, bankruptcy, enables people to either partially repay their consumer debts or eliminate many pre-existing debts such as credit cards and medical bills. Not everyone will qualify for bankruptcy and must complete a number of steps before even filing legal paperwork.
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The Chapter 7 Option
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Economically-eligible Louisiana residents can file Chapter 7 to permanently eliminate many of their pre-existing debts. But not everyone qualifies. The standard of economic measure is the state's median income that corresponds with the petitioner's household size. For example, as of 2011 a single person living in Louisiana must earn less than $37,464 annually to economically qualify for Chapter 7, while a family of four could bring in up to $66,256 annually, according to the U.S. Trustee Program. People who earn more money must either prove their lack of resources through a federally-derived means testing formula or partially repay debts under Chapter 13.
Chapter 13 Debt Restructuring
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People who earn regular income and live in Louisiana can apply for a partial debt repayment plan under Chapter 13. Once a court official approves the payment plan, the debtor repays the debts as agreed in three or five years. Chapter 13 filers suffer less credit rating damage than Chapter 7 petitioners, since bankruptcy filings reflect on credit reports for 10 years from the date of filing in Chapter 7 and seven years in Chapter 13. But Chapter 13 petitioners cannot get any new credit without court consent while actually partially repaying their debts in Chapter 13.
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Asset Considerations
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People filing bankruptcy can't lose all of their assets to offset creditor losses under Louisiana state bankruptcy exemption laws, notes the Bankruptcy Action website. As of 2011, a debtor filing bankruptcy in Louisiana could preserve $25,000 in real estate equity, a single motor vehicle necessary for work transportation valued up to $7,500 and $5,000 of property including stocks, household pets and personal possessions. Court officials are not allowed to seize retirement accounts to offset creditor losses.
Ineligible Debts
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Unless you're approved for a fee waiver, you cannot include your bankruptcy court fees in your case. As of 2011, it cost $299 to declare Chapter 7 and $274 to file Chapter 13. Other ineligible debts include future obligations, child support, alimony, court fines, monetary damages due to illegal activities, tax bills less than three years old and debts incurred right before filing bankruptcy. Only in rare cases involving a serious disability or a college going out of business will a Louisiana bankruptcy judge forgive federally-backed student loans.
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