If you file for bankruptcy in Louisiana, the Louisiana motor vehicle exemption allows you to protect $7,500 of car equity, and more if you are married and filing jointly or your car is equipped to accommodate a disability. Read on to learn more about the Louisiana motor vehicle exemption and how it can help you keep your car, van, truck, motorcycle, or other vehicle.
(For more information about exemptions, including how they work and which ones you can use, see our Bankruptcy Exemptions area. For information specific to the motor vehicle exemption, see our Motor Vehicle Exemption in Bankruptcy area.)
The Motor Vehicle Exemption and Your Car
Louisiana’s motor vehicle exemption plays a large role in determining whether or not the bankruptcy trustee can take your vehicle to repay your unsecured creditors. If the equity in your car is less than Louisiana’s car exemption, then the trustee cannot sell it. If the equity in your car is significantly more than the applicable exemption amount, the trustee is likely to sell your car to repay your unsecured creditors. For details, see The Motor Vehicle Exemption: Can You Keep Your Car in Chapter 7 Bankruptcy?
Keep in mind that even if your car is safe from the bankruptcy trustee, the lender may be able to repossess your car during or after bankruptcy. To learn more, see Your Car in Chapter 7 Bankruptcy and If You Are Behind on Your Car Payments, Can Chapter 7 Help?
The Amount of Louisiana’s Motor Vehicle Exemption
In Louisiana, you can exempt up to $7,500 in equity in your car or other vehicle. Louisiana law specifies that the value of your vehicle will be determined based on the National Automotive Dealers Association (NADA) vehicle price valuation, which you can find at the NADA website at www.nadaguides.com.
Example. Frank owns a 2008 Toyota Matrix valued at $10,000. She owes the dealer $4,000 on the loan, so there is $6,000 of equity in his car. Frank can protect all of the equity in his car using the Louisiana motor vehicle exemption.
The Federal Motor Vehicle Exemption
Some states allow bankruptcy filers to use the federal bankruptcy exemptions instead of state exemptions, but Louisiana is not one of these states.
Can Married Couples Double Louisiana’s Motor Vehicle Exemption?
Some states allow married couples filing a joint bankruptcy petition to double the listed exemption amounts. Louisiana allows married couples to double the motor vehicle exemption to protect up to $15,000 of motor vehicle equity.
(To learn about the advantages and disadvantages of joint bankruptcy filings, see Nolo's section on Bankruptcy Options for Married Couples).
What Vehicles and Insurance Are Covered by the Motor Vehicle Exemption?
The Louisiana motor vehicle exemption allows you to protect one motor vehicle, such as a car, truck, or van.
Additional Protection for Vehicles Modified to Assist with a Disability
Louisiana’s motor vehicle exemption allows you to protect up to $7,500 of additional equity in a motor vehicle if it had been modified or equipped to assist a person with a disability. You must use the vehicle to transport yourself or a dependent with a disability.
Checking Louisiana’s Exemption Laws
You can find Louisiana’s motor vehicle exemption at Fla. Stat. Ann. Section 222.25.
When the Louisiana Exemption Amounts Are Updated
Although the law itself does not provide for scheduled updates, the exemption laws in Louisiana change periodically. The Louisiana State Legislature website indicates whether the posted laws have been updated in accordance with the most recent legislative session. You can find the Louisiana State Legislature website at www.legis.state.la.us.