Louisiana Bankruptcy Exemptions: Home, Vehicle, and Wages

If you file bankruptcy in Louisiana, the Louisiana bankruptcy exemptions decide what property you keep. The state protects up to $35,000 of equity in your home, $7,500 of equity in one vehicle, a defined list of household goods, most retirement accounts, 75% of your wages, life insurance values, and the specific tools you use to earn a living. Louisiana requires you to use its own exemption system instead of the federal one, and it offers no wildcard exemption you can apply to whatever falls outside those categories.¹

You Must Use Louisiana’s Exemptions, Not the Federal Set

Louisiana has opted out of the federal bankruptcy exemptions in 11 U.S.C. § 522(d). Filers here use the state exemptions in Louisiana Revised Statutes 13:3881, plus protections scattered through other state statutes and a few federal laws that apply regardless of the opt-out.¹

Exemptions are not automatic. You have to list every asset you want to protect on Schedule C when you file. Property you leave off can be sold by the trustee, with the proceeds paid to creditors.²

One threshold matters before you rely on any of this: you must have been domiciled in Louisiana for the full 730 days before your filing date to use Louisiana’s exemptions. If you moved here more recently, federal law sends you back to the exemptions of the state where you spent most of the 180 days before that two-year window.³

Home Equity: $35,000

Louisiana protects up to $35,000 of equity in your primary residence and the land it sits on.⁴ Equity is the market value of the home minus any mortgage or lien balance. The $35,000 is per homestead, not per person, so a married couple filing jointly claims one exemption between them, not two.⁵

The exemption covers contiguous land up to five acres inside a municipality, or up to 200 acres outside one. Surviving spouses and minor children of a deceased homeowner keep the same protection.⁴

If the debts you are discharging arose directly from a catastrophic or terminal illness or injury, the cap disappears and the full value of the home is protected. Louisiana defines this narrowly: the medical debt has to be uninsured, exceed $10,000, and represent more than 50% of your average annual adjusted gross income over the prior three years.⁴

Debts the Homestead Exemption Does Not Block

Some creditors reach your home no matter what. The homestead exemption does not protect against:

The purchase-money mortgage on the property itself
Debts for labor, money, or materials used to build, repair, or improve the home
Property taxes and government assessments
Liabilities of a public officer, fiduciary, or attorney for money collected or held on deposit⁴

Vehicle Equity: $7,500

You can protect up to $7,500 of equity in one motor vehicle per household.¹ Louisiana requires the equity calculation to use the NADA retail value for the vehicle’s year, make, and model, so your own estimate is not the number that controls.

If your loan balance exceeds the NADA value, there is no equity to protect and the exemption amount does not matter; the real question becomes whether you can keep making payments. A paid-off car worth $10,000, on the other hand, has $2,500 of non-exempt equity that a trustee can pursue.

Household Goods and Personal Items

Louisiana exempts a specific list of everyday household items with no overall dollar cap on the category. The statute covers your clothing, bedding, linens, chinaware, non-sterling silverware, glassware, living room and bedroom and dining room furniture, cooking stove, heating and cooling equipment, one noncommercial sewing machine, therapy equipment, kitchen utensils, pressing irons, washers, dryers, refrigerators, and deep freezers. Musical instruments played or practiced on by you or a family member are also protected.¹

A few personal items carry dollar limits:

Wedding and engagement rings are exempt up to $5,000 per ring.¹
Firearms and ammunition are exempt up to a combined $2,500.

The list is specific. Items outside it may not qualify at all. An expensive art collection or a high-end electronics setup would not fall within these protections.

Retirement Accounts

This is where Louisiana filers do especially well. All tax-deferred retirement arrangements are fully exempt from creditors under state law, with one exception: contributions made less than one calendar year before your filing date are not protected. A transfer from one retirement account to another does not count as a new contribution.¹

Covered accounts include 401(k) plans, 403(b) plans, traditional IRAs, Roth IRAs, SEP plans, SIMPLE plans, Keogh plans, defined benefit plans, defined contribution plans, money purchase pension plans, and any future account type that qualifies for tax deferral under the Internal Revenue Code. Rollovers from employer-sponsored plans into an IRA keep the same unlimited protection.¹

The federal system caps IRA protection at $1,711,975 for the period from April 2025 through March 2028. Louisiana’s own exemption has no dollar limit, so state filers get broader coverage than the federal cap. The only restrictions are the one-year lookback on recent contributions and a carve-out for alimony and child support.

Wages, Social Security, and Other Benefits

Seventy-five percent of your disposable earnings for any pay period are exempt from seizure. The protection never falls below the equivalent of 30 times the federal minimum hourly wage per week. At today’s $7.25 federal minimum, that floor is $217.50 per week of completely untouchable earnings.¹ In a Chapter 7 case, this same exemption protects earnings in your bank account at the time of filing, so long as you can trace them back to recent wages. Money that has been mixed with other funds for months may lose that identity and lose the protection.

Social Security benefits are fully protected under federal law, which shields them from bankruptcy and any other legal process. Because that protection comes from federal law outside § 522(d), Louisiana’s opt-out does not touch it.⁶

Other benefits get their own state protections:

Unemployment compensation is exempt as long as it stays separate from your other money, with an exception for debts incurred for necessities while you were unemployed.⁵
Workers’ compensation is exempt from all creditors except a judgment for alimony or support of a spouse, parent, or child.⁵
Veterans’ benefits are fully exempt under the Louisiana Constitution.
Public assistance is fully exempt.

Commingling is the practical trap here. Depositing Social Security, unemployment, or workers’ comp into a checking account that also receives other income can make the protected funds hard to trace, and they can lose their exempt status as a result. A separate account for benefit deposits makes the exemption much easier to defend.

Life Insurance and Annuities

Louisiana broadly protects life insurance from creditors. The proceeds and avails of a life insurance or endowment policy, including cash surrender value, are exempt from the debts of both the insured and the beneficiary.⁷ When the beneficiary is the debtor’s spouse or children, the exemption covers the full amount.⁵

For policies issued within nine months of a bankruptcy filing or seizure, the exemption for cash surrender value and loan value is capped at $35,000. That timing rule keeps someone from pouring money into a new policy right before filing.⁷ Policies held longer than nine months face no such cap.

Tools of the Trade

Louisiana exempts property necessary for you to practice your trade, profession, or calling, without any dollar cap. The trade-off is that the category covers only four specific things: tools, instruments, books, and one utility trailer.¹

Narrow but uncapped can be powerful. A carpenter’s full workshop or a mechanic’s complete tool set qualifies, as long as the items are genuinely necessary for the trade. A work vehicle does not fit here; that falls under the separate $7,500 motor vehicle exemption.

Removing Liens That Eat Your Exemptions

An exemption can be undercut by a lien on the same property. Federal bankruptcy law lets you fight back through lien avoidance under 11 U.S.C. § 522(f), but only for two lien types:

Judicial liens, meaning liens that arise from a court judgment, such as a money judgment recorded against your home. These can be avoided on any exempt property.
Nonpossessory, nonpurchase-money security interests, meaning liens where you pledged property you already owned as collateral for a loan. These can be avoided on household goods, jewelry, tools of the trade, health aids, and similar personal or family items.³

A lien impairs an exemption when the total of all liens plus the exemption amount exceeds the property’s value, so the math tends to work in your favor when the property is already heavily encumbered. Because Louisiana’s tools-of-trade exemption has no dollar cap, a special federal rule limits avoidance of nonpossessory, nonpurchase-money liens on tools of the trade to $8,575 in value. Judicial liens on the same tools face no such cap.³

No Wildcard, So Anything Outside the List Is Exposed

Louisiana does not offer a wildcard or general-purpose exemption. Many states do, letting filers protect a set dollar amount of any asset that no specific exemption covers. Without it, property that falls outside Louisiana’s defined categories has no exemption protection at all. Common examples: cash in a bank account that cannot be traced to recent wages or benefits, investment accounts held outside a retirement plan, valuable collections, and a second vehicle.

If you own assets like these, they are exposed to liquidation in a Chapter 7 case. Trustees do not always pursue non-exempt property, though. When the costs of selling something (transportation, storage, appraisal, and the trustee’s commission) would eat up most of the proceeds, the trustee typically abandons the property and releases it back to you. That is common for items with modest non-exempt equity or a thin resale market.

When abandonment is not likely, two options exist for keeping the asset. You can sometimes negotiate with the trustee to pay the non-exempt amount in cash. Or you can file Chapter 13 instead, which lets you keep everything in exchange for a repayment plan that pays unsecured creditors at least as much as they would have received in a Chapter 7 liquidation. Both paths depend on an accurate valuation of the non-exempt equity, and disagreements over that number are common.

1
Louisiana State Legislature. Louisiana Revised Statutes 13:3881 – General Exemptions From Seizure
2
United States Bankruptcy Court Eastern District of Louisiana. Exemption Information
3
Office of the Law Revision Counsel. 11 USC 522 – Exemptions
4
Justia Law. Louisiana Revised Statutes 20:1 – Declaration of Homestead Exemption From Seizure and Sale
5
United States Bankruptcy Court Eastern District of Louisiana. Louisiana Exemptions
6
Office of the Law Revision Counsel. 42 USC 407 – Assignment of Benefits
7
Justia Law. Louisiana Code 22:912 – Exemption of Proceeds; Life, Endowment, Annuity