Common Bankruptcy Exemptions
Our Missouri Bankruptcy Attorney Explains Common Exemptions
There are a number of common misconceptions about bankruptcy. So, what is the most common misconception? Filing for Chapter 7 bankruptcy means you automatically lose all of your assets. However, in fact, many Chapter 7 filers can keep some or all of their most important assets, including a home, vehicle, firearms and jewelry. How is this possible? In Missouri and many other states, you can take advantage of bankruptcy exemptions. Missouri is an opt out state. But, you can only exempt assets using Missouri bankruptcy exemptions, not federal exemptions.
Below, our Kansas City bankruptcy lawyer discusses how Missouri bankruptcy exemptions work. You can contact us to schedule a free consultation if you have additional questions.
How Missouri Bankruptcy Exemptions Work
First, what happens when you file for Chapter 7 bankruptcy? The trustee assigned to your case takes your nonexempt assets and distributes the proceeds from those assets to pay your creditors. So, what are exempt assets? It depends. In Missouri, exempt assets may include:
- Equity in a home
- Retirement accounts
- Certain household goods
- A personal vehicle
Exempt assets are not included in the bankruptcy case. Furthermore, the trustee does not liquidate these assets during Chapter 7 bankruptcy, nor are they included in a Chapter 13 bankruptcy repayment plan.
Additionally, married couples may be able to take advantage of several benefits under Missouri bankruptcy exemptions. In Missouri, a married couple filing a joint bankruptcy case can double many types of exemptions.
Bankruptcy Exemptions for Motor Vehicles
In Missouri, you can exempt up to $3,000 in equity if you finance or own your vehicle. You and your spouse could double this amount if filing jointly.
The Missouri Homestead Exemption
You may be able to use the Missouri Homestead Exemption to protect your home during bankruptcy. For example, filers can exempt up to $15,000 in equity in their home. So, how do you calculate equity? Equity is the value of your home minus the remaining balance. But, if you have too much equity, the trustee may sell your home to satisfy your debts. You will then get a check for the exempt amount.
Unlike other types of bankruptcy exemptions, married couples cannot double the exemption for a home. If you live in a mobile home, you may exempt up to $5,000. In cases of tenancy by the entirety, the property may be protected against the debts of a spouse filing alone.
Bankruptcy Exemptions and Personal Property
There are bankruptcy exemptions for certain types of personal property. For example, you may be able to exempt:
- Firearms (up to $1,500)
- Books, musical instruments, furnishings and appliances up to $3,000
- Wedding or engagement rings up to $1,500, or other types of jewelry up to $500
- Tools of the trade, or assets needed to operate your business, up to $3,000
You can exempt certain types of retirement accounts from the bankruptcy estate. For example, exempt retirement accounts include:
- Most pensions
- 401(k) retirement accounts
- Traditional and Roth IRAs (with limitations)
- 403(b) retirement accounts
- Profit-sharing and money purchase plans
You can only exempt the funds in your retirement account or accounts. Bit, if you withdraw the funds, then you lose the exemption. It can be a major mistake to use your retirement account to pay off your debts if you are eligible to file bankruptcy.
We Can Answer Questions About Filing for Bankruptcy in Missouri
Want to learn more about whether you qualify for Missouri bankruptcy exemptions? We encourage you to contact us and schedule a free consultation. Our attorneys can answer any questions you have about filing for bankruptcy in Missouri.
You can schedule a consultation with Troppito Miller Griffin, LLC by dialing (816) 221-6006 or by using the contact form on our site.