Asked in Bankruptcy for Louisiana

Q: Spouse is currently in Chapter 13. Owns home with JUST their name. We are separating and want to sell the home.

Can this be done without the total selling price being taken by court? We are in the state of Louisiana.

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1 Lawyer Answer
James L. Arrasmith
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  • Bankruptcy Lawyer
  • Sacramento, CA

A: In a Chapter 13 bankruptcy, the debtor's assets, including their home, are protected by the automatic stay, which prevents creditors from collecting debts or foreclosing on the property. However, selling a home while in Chapter 13 bankruptcy can be complex and requires court approval. Here are a few things to consider:

1. Consult with a bankruptcy attorney: It's essential to discuss your situation with a bankruptcy attorney who can guide you through the process and help you understand your options.

2. Seek court approval: To sell the home, you'll need to file a motion with the bankruptcy court and obtain permission from the trustee and the court.

3. Disclose the sale: You must disclose the sale terms, including the price, any exemptions you claim, and how you plan to distribute the proceeds.

4. Distribute the proceeds: If the court approves the sale, any non-exempt proceeds from the sale will be distributed to creditors according to the Chapter 13 repayment plan.

5. Louisiana's homestead exemption: Louisiana has a homestead exemption that protects a certain amount of equity in the primary residence. As of 2021, the exemption is $35,000 for a single person or $70,000 for a married couple. Any equity above this amount may be used to pay creditors.

While the court may take a portion of the sale proceeds to pay creditors, you might be able to keep some of the money if there is enough equity and the homestead exemption applies. It's crucial to work with a bankruptcy attorney familiar with Louisiana law to help you navigate this process and protect your interests.

Timothy Denison agrees with this answer

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