Louisiana Debt Relief
Pelican State Offers for Debt Relief

Louisiana debt relief laws and practices operate in tandem with federal laws covering this area. While some states have chosen to enhance debtor protections over and above federal safeguards, Louisiana is not one of those states.

Debt relief laws in Louisiana are principally codified by R.S. 9:3552, R.S. 9:3562, and R.S.9:3534 which comprise what is known as the Louisiana Fair Debt Collection Practices Act.

The act deals with unauthorized collection practices, effects of violations of the act on the rights of both parties, and limitations on agreements and practices. Other ancillary Louisiana statutes are incorporated in the scope of the act and are used to further define and amplify the scope of this act.

Contact of Debtor Rules of Engagement

Reaffirming what is already federal law, the Louisiana debt relief statutes prohibit a creditor or his agents from contacting the debtor's employer or friends regarding the debt. However, the creditor or debt collector may contact third parties to locate the debtor if he has changed jobs or residence.

Contact is also allowed if verbiage is present in the debt instrument allowing the creditor to contact third parties regarding the collection of the debt in case of default. If a debtor wishes the creditor or collection agency to cease contacting him, he may send a registered or certified letter to that effect to the creditor or his agent.

Penalty for Violating Rules of Contact

Other sections of the law relate to violations of the law by creditors and their assignees. An intentional breech of the provisions of this Louisiana debt relief law will entitle the debtor to a refund of all finance and loan service charges and the right to receive three times these charges as compensation for the offense. However, before these provisions become operative, the debtor must inform the debt collector or creditor in writing that the violations of law have occurred. The debt collector has 30 days to correct the violations before any penalties will be enforced. Unintentional violations are not sanctioned under this law.

Allowed Collection Fees

Under R.S.9:3534, in case of default on the obligation, the creditor may specify in the debt instrument a 25% payment of the balance of the debt for attorney and collection fees. Subsequent to the collection efforts, the creditor may not contract with the debtor to pay for the costs of the collection.

Louisiana Debt Relief—Fair Debt Collection Practices

Unfortunately for the residents of this southern state, federal debt collection practices go further to protect consumers than the Louisiana debt relief laws. Designed to protect debtors from abuse and harassment, this act specifically details unacceptable debt collection practices.

Here is a short list of the most powerful and important prohibitions:

• No collection calls may be placed outside of the hours of 8:00 a.m. and 9:00 p.m.
• Debt collectors may not use abusive or profane language and may not threaten arrest or prosecution for failure to pay the debt.
• At the inception of a collection call the debt collector must identify himself and disclose the purpose of the call.
• The debt collector may not intentionally harass the debtor or his family with continuous telephone calls.
• The collection agent may not discuss the debt or nature of the call with anyone other than the debtor.
• Collectors may not call a debtor at work if the debtor tells him not to call him at his job.
• Furthermore, the debt collector may not threaten to tell the debtor's employer about the debt.
• Nor may the collector place in the debtor's mind the idea that he represents a court of jurisdiction or other governmental agency.

Simply stated, federal laws prohibit a collection agency from using fraudulent, unscrupulous, or abusive methods to collect an outstanding debt. Under the federal statute, if a debtor wishes to be free from collection call and letters to his residence, he must send a certified letter stating this desire and the collection agent may send one more letter informing the debtor that legal action may follow. Under the Louisiana debt relief law, the collector may send four more letters but only at intervals of one month.

Louisiana Debt Relief—Bankruptcy Options

The United States constitution decrees that federal law is paramount over laws enacted by the states. However, in certain circumstances such as bankruptcy, federal courts take cognizance of state laws in the application of debtor relief. An individual may file a Chapter 13 or a Chapter 7 bankruptcy petition.

As a reorganizational filing, a Chapter 13 bankruptcy allows the petitioner to retain his personal possessions and protects him from legal action while he repays his creditors. A court appointed trustee devises a payment plan for the creditors and the debtor pays the court and the trustee pays the creditors. This type of plan lasts for three to five years, after which time the court discharges any remaining debt.

A straight liquidation of assets via a Chapter 7 filing involves the trustee selling the debtors assets to pay the creditors. Some assets are protected from seizure and sale. This is where Louisiana law comes into play. States set their own exemptions that are usually followed by the bankruptcy court in that jurisdiction.

Regarding bankruptcy exemptions, Louisiana debt relief laws provide for the following items to be excluded from the proceedings:

• Personal items such as clothes, bedding, furniture, and appliances
• Musical instruments played by the debtor or his family
• Cats, dogs, and other household pets
• Property the debtor uses to earn a living
• Books
• One firearm
• One utility trailer
• One motor vehicle worth up to $7,500
• Wedding rings worth up to $5,000

Other specific exemptions apply but none is more important than the homestead exemption. In Louisiana, the principle place of residence is exempt from seizure but this exemption is limited to $35,000. The exception to this is in the event of an obligation contracted due to a terminal or serious illness; in that case the total value of the homestead is exempt.

Louisiana Debt Relief—Statute of Limitations

This state's statute of limitations is less debtor friendly that other states. Open accounts become uncollectible in only three years but contractual debt is collectible for 10 years. Judgments are enforceable for 10 years and may be renewed indefinitely.

Louisiana debt relief laws give significantly more leniency in actions to collection agencies than are allowed in some other states. In this state federal code and practices are an important tool to shield Louisiana debtors from harassment.