When filing for bankruptcy, it is important to consider first and foremost if you will file for a Chapter 13 or a Chapter 7 bankruptcy. A Chapter 13 bankruptcy is a popular choice if you have fallen behind on vehicle, mortgage or business-related payments and you wish to keep your property among many other reasons. However, for the vast majority of Missouri residents who wish to simply eliminate their burdensome unsecured debt without losing their property, Chapter 7 may be the best choice due to Missouri’s state bankruptcy exemptions.
What are Bankruptcy Exemptions?
In all bankruptcy proceedings, certain assets are exempt or protected from being taken by the bankruptcy trustee. This ensures that debtors who file for bankruptcy are able to survive after the fact and eventually get back on track financially. While there are 17 states where debtors are able to choose between federal and state exemptions, the assets that are protected by exemptions are generally defined by each state. In Missouri, federal exemptions are not available, which leaves Missouri residents within the majority of states that call for debtors to use state exemptions only.
Missouri Bankruptcy Exemptions
As previously stated, federal exemptions are not available in Missouri. The state exemptions that are available for debtors are automatic and do not require any other qualification other than to assign the exemption to the property you wish to protect in your bankruptcy schedules. For several of the exemptions listed below, the amounts can be doubled if filing for bankruptcy with a spouse. However, there are some exceptions to doubling and it is best to seek legal advice from a bankruptcy attorney to answer any questions about your individual case. Below is a list of the most common bankruptcy exemptions used in Missouri, but is not a complete list.
The Homestead Exemption
This exemption protects up to $15,000 of real property or $5,000 of a mobile home. This figure applies to the amount of equity available, not the total value of the property. In some cases, if a husband and wife own property in tenancy by the entireties, the total value of a home could be exempt if only one spouse files for bankruptcy. The total value may only be exempt in Missouri if the spouses own the property together and came into ownership of the property at the same time on the same deed. The spouses also must not have any other joint debt in order to exempt the entire value of the home. If spouses share other debt together, the original $15,000 exemption is still applicable.
Motor Vehicle Exemptions
Motor vehicle exemptions depend on if you are filing for bankruptcy with a spouse or as an individual. For joint filers in Missouri, a motor vehicle may be exempt up to $6,000. For individual filers, a motor vehicle may be exempt up to $3,000. For joint filers, each spouse is able to apply $3,000 to one vehicle (totaling $6,000) if the spouses jointly own only one shared vehicle. If an individual filer owns multiple vehicles, he/she may not split the $3,000 exemption among vehicles.
Household Goods Exemptions
Certain household goods may be exempt up to $3,000 or $6,000 for married filers in Missouri. Household goods can include several things such as appliances, books, instruments, crops, furnishings or clothing.
A wedding ring is protected up to a total value of $1,500, and all other jewelry for an additional $500 or less is exempt.
Retirement Account Exemptions
Those who file for bankruptcy in Missouri may exempt certain accounts including IRA’s, 401(k)s, pension, and retirement based money purchase plans or profit sharing accounts. It is necessary to note that certain requirements must be met to exempt certain portions of cash value in life insurance policies and annuities.
Firearms and Ammunition
A recently enacted exemption protects up to $1,500 of firearms, accessories and ammunition owned by a debtor, or $3,000 if owned jointly with a filing spouse.
There are certain items that may not fall under any of the above categories but can still be exempt. For the items that are not covered in the categories above, Missouri allows you to exempt up to $600 in equity in anything you choose. Joint filers may qualify for $1,200 in wildcard exemptions.
Head of Household Exemption
If an individual filer provides a bulk of the income for a household, he/she may exempt any asset up to $1,250 in addition to the wildcard exemption. A head of the household exemption also allows an individual in Missouri to exempt an additional $350 for each child of the filer that resides in the household and is under the age of 21.
Important Disclaimer: The information discussed above and throughout this website should not be relied upon to make any decisions without first speaking to a bankruptcy attorney. There are many intricate rules of law governing bankruptcy with many exceptions to the general rules that could change the advice given by an attorney based on the differing facts in each person’s special set of circumstances. THEREFORE, it is important to discuss any information contained in this website with one of our attorneys before taking any action or refraining from taking any action.