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Louisiana Bankruptcy Laws

Louisiana Bankruptcy Laws should be known by every resident of the state of Louisiana. Before making one of the most important decisions in your life that will not only affect yourself but your family as well, be informed about the whole bankruptcy process. In 2005, President Bush approved the bill that intensified the application for bankruptcy protection. Now, you can’t just file for Chapter 7 or Chapter 13 because of some minor debts you failed to pay. These recent changes in federal laws are applicable to Louisiana bankruptcy laws too.

The foremost requirement in the new law passed in 2005 is to attend a credit counseling session from an organization duly approved by the bankruptcy court in your district. This credit counseling should be attended 180 days prior to your bankruptcy petition.

Why do you need to take credit counseling? Representatives of the counseling program will orient you on how to manage your money and debts, teach you to develop a budget, and provide educational materials and workshops that are useful to credit management. After the said counseling if you are still bent on declaring for bankruptcy, then here are some of the basic points you should familiarize.

Chapter 7 bankruptcy protection is an enticing offer for debtors swamped with credit card bills and mortgage payments. Most debtors assume that filing Chapter 7 will eliminate all of the debt loads in just one instance; this is true, but together with this stipulation is the truth that you may be devoid of assets, even exempt assets may be sequestered, if the trustee assigned to your case makes an arbitrary decision to do so. It is the trustee’s duty to oversee the whole proceeding including the liquidation of your assets.

Before filing for bankruptcy, it is good to be informed about the latest median income level of the state of Louisiana. You can get this information from the US Census Bureau or in their website. This will be the basis of comparison against your monthly income. Should your income exceed the median level, your application will be denied. Furthermore, if a means test administered will show that you can dole out $100 per month to pay your creditors despite the insurmountable debts you are facing you will not qualify for Chapter 7.

Another bankruptcy program option for those denied Chapter 7 is Chapter 13. Under the provisions of this bankruptcy type a debtor will undergo a debt reorganization program. Under the supervision of the court-appointed trustee, the terms of your debts, even those secured, will go through a rework.

A repayment plan is also proposed by the debtor and will require the approval of the court. It is the duty of the trustee to help you work out a budget to repay all your creditors in a period of 3 to 5 years. While you are on this repayment plan, the court issues an automatic stay to your creditors preventing them from taking any legal action and to stop bugging you with annoying phone calls and flooding your mail box with due payments.

Although federal laws have specified exemptions that are applicable to all US states, Louisiana bankruptcy laws have also come up with their own exemptions to augment the non-existent exemptions of the federal government. Louisiana courts specify the following:

• Your home with an equity of up to $25,000 or up to 200 acres of real estate property outside the city;
• A single vehicle up to $7,500;
• Wedding rings worth up to $5,000;
• 75% of earned, unpaid wages; and
• Personal belongings of any amount and other benefits that include life insurance and insurance proceeds.

All the things mentioned here are just part of the complexities of bankruptcy laws. You may choose to hire a bankruptcy expert lawyer or not. In the end, the final decision still lies in your hands.