Business Debt Restructuring in Louisiana: 7 Laws That Change Your Leverage (2026)

Nothing You Read About Other States Applies Cleanly Here

Louisiana runs on a civil code, and that changes almost every answer on this page. There is no Uniform Fraudulent Transfer Act here, no Uniform Voidable Transactions Act, and no badge-of-fraud checklist; there is a revocatory action with an insolvency test and a one year clock. There is no tenancy by the entirety; there is a community property regime that works in the creditor's favor rather than yours. Advice written for a Georgia or a Missouri file will get a Louisiana owner into trouble, and the deadlines here are shorter than the ones you have probably been told about.

On top of that older architecture, the Legislature added something new in 2025. House Bill 470 enacted La. R.S. 9:3137.10, which requires written disclosure on revenue-based financing transactions. It is the broadest commercial financing statute in the country by scope, because unlike every other state's version it contains no dollar ceiling and no list of exempt providers. It is also the least useful to a merchant, because the same section declares that a revenue-based financing transaction is not a transaction for the use, forbearance or detention of money and that the amounts charged are not interest.

That combination is the thing to understand before you spend a dollar on strategy. Louisiana gave you a disclosure right and took away the recharacterization argument in the same breath. What is left is still substantial: a post-default rate ceiling most funders exceed without noticing, a garnishment procedure that works nothing like New York's, a deceptive practices statute that pays attorney fees, and a set of prescription periods far shorter than the ten years people assume. Those are the seven below.

1. The 2025 Act Reaches Everything and Excuses Nobody

2025 House Bill 470 enacted La. R.S. 9:3137.10, defining a revenue-based financing transaction as an agreement under which a person engaged in a commercial enterprise sells or agrees to forward a percentage of sales, revenue or income, with the payment obligation rising and falling according to the volume received. Subsection C requires a written disclosure of the terms at or before consummation, and specifies six items: total funds provided; total funds actually disbursed if reduced by fees withheld, payoff of a prior balance, or amounts paid to third parties; the total to be paid to the provider; the total dollar cost calculated as the difference; the manner, frequency and amount of each payment, with a description of the methodology and the circumstances under which payments may vary; and whether prepayment carries a cost or a discount, with a reference to the provision creating it.

Set that against every other state and the difference jumps out. Connecticut stops at $250,000, Virginia and Florida at $500,000, Texas and Utah at a million, New York at $2.5 million. Louisiana sets no ceiling at all, so an eight hundred thousand dollar advance to a Baton Rouge contractor carries the same disclosure duty as a forty thousand dollar advance to a food truck. There is likewise no exemption list, no bank carve-out written into the section, and no five-or-fewer small provider exclusion. The map of which states cover what sits on our fifty-state disclosure page.

The honest limit is what the act does not contain. The enrolled bill sets no penalty, creates no registration, names no regulator and states no private right of action. It is a duty without a stated remedy, which puts a Louisiana merchant in the position of arguing that a violation matters under general contract or deceptive practices principles rather than pointing at a penalty section. That is a weaker posture than Virginia's and a stronger one than nothing, and any firm telling you a missing Louisiana disclosure voids your agreement is describing a statute that does not exist.

2. Twelve Percent, With a Door Marked Business

Louisiana does have a rate cap. La. R.S. 9:3500(C)(1) provides that the amount of conventional interest cannot exceed twelve percent per year and must be fixed in writing, and R.S. 9:3501 supplies a remedy with real bite: any contract for the payment of interest in excess of that authorized by law results in forfeiture of the entire interest so contracted. Not the excess. All of it. Subsection C(2) separately lets a person who paid a higher rate sue to recover it within two years of the payment.

Subsection D closes the door for almost everyone reading this. The provisions do not apply to a loan made for commercial or business purposes, or to deferring payment of an obligation for commercial or business purposes. There is no dollar threshold on that carve-out, unlike Virginia's five thousand dollar line or Missouri's, so a twenty thousand dollar advance to an operating company is outside the cap on exactly the same footing as a two million dollar one.

Then R.S. 9:3509(A) removes the argument as a matter of pleading. A domestic or foreign corporation, an LLC, a partnership in commendam, a registered limited liability partnership, or any other person or individual borrowing for commercial, business or agricultural purposes may agree to pay interest above the maximum, whether the debt is secured or unsecured, and is prohibited from asserting a claim or defense of usury. The section then adds a sentence that catches people who thought they were outside it: any person signing as co-maker, guarantor or endorser is prohibited from asserting the claim or defense too. If you personally guaranteed the advance, that sentence is about you.

3. The One Rate Ceiling Louisiana Actually Kept

Here is the provision almost nobody in this industry cites, and it is the most valuable thing on this page for a Louisiana file that has already defaulted. La. R.S. 9:3509(B)(1) says that notwithstanding the usury exemption in subsection A, and unless otherwise agreed in writing after the default, a lender may not prospectively increase the simple interest rate on a commercial, business or agricultural purpose loan following declaration of the obligor's default except within stated limits.

The limits are specific. On an obligation with an original principal balance of two hundred fifty thousand dollars or less, the rate may not be prospectively increased above eighteen percent per year or three percentage points over the original fixed contract rate, whichever is greater. Above that original balance, the ceiling is twenty-one percent per year or three points over the original rate, whichever is greater. Subsection B(2) limits the rule to fixed-rate, simple-interest obligations entered into on or after September 7, 1990 that provide for a prospective post-default increase, and excludes consumer credit transactions and obligations contractually governed by another state's law.

Two cautions keep this honest, and they matter. Subsection B(3) makes the exclusive remedy the return of any excessive post-default interest assessed and collected, and says specifically that the obligor has no rights under R.S. 9:3501, so the entire-interest forfeiture is off the table for a subsection B violation. And the section speaks of loans and interest, which means an agreement papered as a revenue-based financing transaction faces the characterization wall that R.S. 9:3137.10 built. Where the paper is a straightforward business loan with a default rate written into it, this is a live and underused argument.

4. There Is No Fraudulent Transfer Act Here

Every conversation about restructuring eventually reaches the question of moving something. In forty-nine states the answer runs through a uniform act. In Louisiana it runs through the revocatory action at Civil Code arts. 2036 through 2043, and the differences are not cosmetic. Article 2036 gives an obligee the right to annul an act of the obligor, or the result of a failure to act, made after the obligee's right arose, that causes or increases the obligor's insolvency. Article 2037 defines insolvency on a balance sheet: an obligor is insolvent when the total of his liabilities exceeds the total of his fairly appraised assets.

Article 2038 governs contracts for value and turns on knowledge rather than intent. An onerous contract may be annulled where the other party knew or should have known it would cause or increase insolvency, and in that case the counterparty recovers what it gave only to the extent the creditors benefited. Where the counterparty did not know, it recovers as much as it gave, and lack of knowledge is presumed when it gave at least four-fifths of the value of what it received. That eighty percent figure is Louisiana's answer to reasonably equivalent value, and it is a number you can actually work with. Article 2039 lets an obligee attack a gratuitous contract whether or not the other party knew anything, and article 2040 protects a contract made in the regular course of business.

The clock is the part that surprises out-of-state counsel. Article 2041 requires the action within one year from the time the obligee learned or should have learned of the act, but never after three years from the date of the act. Compare four years plus a discovery year almost everywhere else. Article 2042 requires the obligee to join both the obligor and the third person, who may plead discussion of the obligor's assets, and article 2043 annuls the act only to the extent it affects the obligee's right. None of this is a method for putting property beyond a creditor and we are not writing one; it is the frame counsel uses to price something already done.

5. A Louisiana Garnishment Is a Snapshot, Not a Standing Order

Under C.C.P. art. 2411(A) a judgment creditor may, by petition and after issuance of a writ of fieri facias, have a third person cited as garnishee to declare under oath what property of yours it holds and what it owes you, even if the debt is not yet due. Subsection B(1) provides that the seizure takes effect upon service of the petition, citation, interrogatories and notice of seizure. Article 2412(A)(2) requires the creditor to send you written notice of the garnishment petition, and then says outright that the notice to the judgment debtor has no effect on the validity of the seizure.

Subsection C is the one worth memorizing. Other than for wage garnishments under R.S. 13:3921 and following, a garnishment is not continuing in nature, and the garnishee need only respond as to property it holds at the time the interrogatories are served. A Louisiana bank garnishment reaches the balance at that instant and nothing that arrives afterward. Subsection D adds that a bank, savings and loan or credit union may keep paying checks and drafts presented in the ordinary course on the day the interrogatories are served or the next business day without liability. A creditor who wants the next deposit has to serve again.

The pressure in this procedure falls on the garnishee, not on you. Article 2412(D) gives the garnishee thirty days from service to file sworn answers. Article 2413 then provides that failure to answer before the creditor files a contradictory motion is prima facie proof that the garnishee holds property or owes you to the extent of the judgment, interest and costs, and judgment goes against the garnishee unless it proves otherwise. Regardless of how the motion comes out, the court must award the creditor costs and a reasonable attorney fee. That is why your bank answers quickly and why the account is often the least defended thing you own. Our page on the signals that precede a freeze covers what usually happens first.

6. LUTPA Reaches Your Company, Unless the Funder Is Licensed

La. R.S. 51:1405(A) declares unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce unlawful, and R.S. 51:1409(A) gives the private action to any person who suffers any ascertainable loss of money or movable property, corporeal or incorporeal, as a result of such a practice. Since the 2018 amendment the statute says any person, which settles the old fight about whether a business had standing. Damages are actual damages, the action must be brought individually and not in a representative capacity, and where damages are awarded the court shall award reasonable attorney fees and costs to the plaintiff.

Two limits get misstated constantly and you should hear them correctly. Treble damages are not available merely because the conduct was knowing. Section 1409(A) requires that the practice was knowingly used after being put on notice by the attorney general, which is a predicate almost no private case satisfies. And subsection E imposes a liberative prescription of one year running from the time of the transaction or act that gave rise to the right of action. One year, from the act, not from discovery and not from default. On a serial-renewal file, most of the rounds are already gone.

The exemption in R.S. 51:1406(1) is the one that decides whether you have a defendant at all. The chapter does not apply to any federally insured financial institution, its subsidiaries and affiliates, or any licensee of the Office of Financial Institutions and its subsidiaries and affiliates, or to transactions subject to the jurisdiction of the insurance commissioner, the commissioner of financial institutions, other states' financial regulators, or federal banking regulators. A specialty advance company is usually none of those. A bank partnership program frequently is, and that is the first thing to establish before a LUTPA demand goes out.

7. Community Property Puts Half of Everything on the Table

A guarantor in Virginia or Maryland may hold the family home as tenants by the entirety and keep it beyond the reach of a creditor who has a judgment against one spouse. Louisiana has no such device. What it has is Civil Code art. 2345: a separate or community obligation may be satisfied during the community property regime from community property and from the separate property of the spouse who incurred the obligation. Read that carefully. It does not matter whether the debt was classified as separate or community. Community property answers for it either way.

Article 2360 defines a community obligation as one incurred by a spouse during the regime for the common interest of the spouses or for the interest of the other spouse, and a business advance funded into the family's source of income frequently fits. Article 2357 then governs after the regime terminates: an obligation incurred before or during the regime may be satisfied from the property of the former community and from the separate property of the spouse who incurred it. The same article makes a spouse who disposes of former community property for a purpose other than satisfying community obligations personally liable for the other spouse's obligations up to the value of that property, which is a trap that catches people mid-divorce.

There is one written escape and it is prospective only. The third paragraph of art. 2357 lets a spouse assume responsibility by written act for one-half of each community obligation incurred by the other, after which that spouse may dispose of community property without further responsibility. Anyone considering that should be doing it with Louisiana counsel and well before a default, not in the week a garnishment lands. What a creditor reaches on the personal side beyond that is limited by R.S. 13:3881, which exempts seventy-five percent of disposable earnings with a floor of thirty times the federal minimum hourly wage, and by R.S. 20:1, which exempts thirty-five thousand dollars in value of a bona fide homestead on up to five acres inside a municipality or two hundred acres outside one.

Who Should You Call? Our Top-Rated Business Debt Firms

One firm on this list works the entire lifecycle of a business debt file, from stopping the daily debits through attorney-led negotiation, UCC lien removal, and a signed release. The other two cover broader debt categories that often sit alongside the advances. Choose accordingly.