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.
Does Missouri Allow You To Use The Federal Bankruptcy Exemptions?
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.
Tools Of The Trade Exemption
The court won’t try to rob you of your livelihood. You can exempt up to $3,000 in books and tools related to your profession.
Missouri bankruptcy laws allow you to exempt up to 75% of your weekly earned unpaid wages. There is an exception that may allow you to exempt more. If 75% of your weekly wages amount to less than 30 times the accepted minimum wage set by US guidelines, you will be able to exempt up to 30 times the accepted minimum wage.
Wrongful Death Recovery Exemption
If you’ve recovered money from a wrongful death settlement, you will be able to exempt the full amount of that settlement.
Workers’ Compensation & Unemployment Exemptions
The State of Missouri allows you to exempt the full amount of any workers’ compensation benefits or unemployment benefits you’re receiving.
Veterans’ Benefits & Social Security Benefits
Like workers’ compensation and unemployment benefits, you will be able to exempt the full amount of your veteran’s benefits or social security benefits.
Alimony & Child Support Exemptions
If you’re receiving alimony or child support, you can exempt up to $750 per month in alimony and child support payments.
When it comes to insurance, you’re able to exempt up to $150,000 in life insurance dividends, loan or cash surrender value, and interest if the policy was purchased more than six months before filing for bankruptcy. You can also exempt up to $15,000 of any matured life insurance proceeds to be used for burial expenses for designated family members.
There could be other exemptions you may qualify for. A bankruptcy attorney can sit down with you and examine your property to help you figure out what is and is not exempt in the State of Missouri.
Chapter 7 Vs. Chapter 13 Bankruptcy Exemptions
You may be wondering if exemptions change depending on whether you decide to file for a Chapter 7 or a Chapter 13 bankruptcy. The good news is that bankruptcy exemptions remain the same regardless of which chapter you file for. The difference is how each chapter treats nonexempt property.
In a Chapter 7 Bankruptcy, nonexempt property is sold and the proceeds are distributed to creditors by the bankruptcy trustee to pay off debts. With a Chapter 13 bankruptcy, you get to keep your nonexempt property. The caveat is that you’ll have to pay the value of your nonexempt property or your disposable income (whichever is greater). These two approaches ensure that creditors receive the same amount of money regardless of the bankruptcy chapter that is filed.
Eligibility For Missouri Bankruptcy Exemptions
Living in Missouri does not automatically qualify you to use the Missouri bankruptcy exemptions. The amount of time you’ve lived in the state before filing for bankruptcy matters. You must have lived in Missouri for more than 180 days to file for bankruptcy in the state. To use Missouri’s bankruptcy exemptions, you need to have lived in Missouri for at least 730 days before filing for bankruptcy. If you file for bankruptcy before meeting the 730 day requirement, you’ll need to use the bankruptcy exemptions from the state you previously lived in.
Objections To Exemptions
Listing an exemption in your bankruptcy forms does not automatically allow you to keep the property you list. You will list your exemptions on your Schedule C bankruptcy form. The bankruptcy trustee appointed to your case will review your exemptions on this form. If the trustee does not agree with an exemption you’ve listed, they can file for an objection.
If an objection is filed, the decision on whether or not you get to keep your property is left to the judge. Objections are usually only filed if the trustee believes you are purposely trying to cheat the system and exempt property that shouldn’t be exempt. If you’ve made a small mistake while listing exemptions, the trustee will likely call you to fix the issue informally.
It’s very important that the Schedule C form is filled out with care. Inaccurately listing exempt property on purpose is considered fraud and bankruptcy fraud has serious consequences. Bankruptcy fraud is a crime that could result in 20 years in prison, a $250,000 fine, or both. It’s important to work with a bankruptcy lawyer who will make sure that all of your forms are filled out correctly.
Consult With A Missouri Bankruptcy Lawyer
Have questions about filing for bankruptcy in Missouri? Not sure which exemptions you may actually qualify for? The bankruptcy lawyers at A Bankruptcy Law Firm, LLC are here to help. We offer free initial consultations. Our consultations give you an opportunity to review your finances with an attorney, understand more about how the bankruptcy process works, and figure out the best way to resolve your debt. You can request a free consultation by calling (800) 7-BENSON or filling out a contact form.
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.