A lot of people start to worry when they look into Chapter 7 bankruptcy. It is true the process involves selling some of your belongings and assets in order to pay off portions of your debt. But it is not a free-for-all.
You won’t have a stranger waltz into your home one day, get rid of everything and leave you empty-handed.
Louisiana’s bankruptcy exemptions
Under Louisiana state law, people that file Chapter 7 bankruptcy can protect many of their most valuable belongings. This exempt property can not be sold off through bankruptcy to pay back the people who are owed money (which the law refers to as “creditors”).
Which belongings and assets are exempt? Some of the most commonly used exemptions include:
- Up to $35,000 of equity in your home and land
- $7,500 in equity or less in a motor vehicle
- Personal property, including certain household goods, furniture, pets, musical instruments and more
- Up to $2,500 in firearms and ammunition
- Wedding or engagement rings valued up to $5,000
- Tax-exempt retirement accounts
- Property of a minor child
- Tools needed for a trade, up to $7,175
All of these assets – and others we have not listed – can be protected during bankruptcy. If done correctly, this means they will not be sold off and you get to hold on to them.
Bankruptcy can still be challenging
There is a lot of fear surrounding bankruptcy. Much of this fear is driven by long-lasting myths that continue today – including the belief that someone will come to your home, kick you out and take everything.
That is, quite simply, not how it works. A fresh start does not mean starting over with nothing. There are laws in place that protect you, your loved ones and many of your precious belongings.