What are the Missouri Bankruptcy Exemptions?

What Are Missouri Bankruptcy Exemptions and Why Are They Important in Chapter 7 Bankruptcy?

Filing bankruptcy can be a tough decision. Many people assume that filing a Missouri bankruptcy means your property will be taken away by the bankruptcy court. Fortunately, Missouri bankruptcy exemptions allow you to file for bankruptcy and protect most of your property. The bankruptcy court allows filers to keep certain exempt property necessary to maintain a basic standard of living. Keep in mind, luxury items do not fall into this category. If other debt relief companies tell you that filing bankruptcy means you will lose everything, they’re not telling you the whole story. Congress implemented bankruptcy laws to help the “honest but unfortunate debtor” who fell into more debt than they can reasonably handle, often due to unforeseeable circumstances. Bankruptcy laws are in place to help you get out of debt while, at the same time not taking advantage of creditors. 

Does Missouri Allow The Use Of Federal Bankruptcy Exemptions?

The most important thing you will need to educate yourself before filing bankruptcy is what bankruptcy exemptions you will need to use. Bankruptcy exemptions allow you to keep your property. When filing bankruptcy there are two types of bankruptcy exemptions you will need to be aware of - federal exemptions and state exemptions. When Congress enacted bankruptcy laws, they implemented federal bankruptcy exemptions to allow filers to protect their property. At the same time, they allowed each State the opportunity to choose whether they want to use the federal exemptions or to opt-out if not. If you file bankruptcy in Missouri, you will learn that Missouri is an “opt-out” state. This means that Missouri opted out of allowing filers to use the federal bankruptcy exemptions. You can use the federal nonbankruptcy exemptions to protect certain qualifying retirement benefits, death benefits, and veterans’ benefits. 

To benefit from the Missouri bankruptcy exemptions, you must be a Missouri resident for at least 730 days (two years) when your bankruptcy case is filed. To ensure people wouldn’t move to a different state for more favorable exemptions, Congress adopted a rule which requires filers to reside in the state for a certain period of time before they can exempt property using state law. 

Missouri Bankruptcy Exemptions

Real Property Exemptions: Missouri Homestead Exemptions

The Missouri homestead exemption is available for people who own real property. The homestead exemptions allow you to protect the home you’re living in when you file for bankruptcy. The exemption limits filers to a certain amount of equity that can be exempt. Equity is the value of your property minus the amount you owe. So, if you have a home that is worth $20,000 and you owe $12,000 you have $8,000 of equity. If you have too much equity in your home, the bankruptcy trustee can sell your home, give you a check for the exempt amount and use the rest to pay off your credit card debts and other unsecured debts. Missouri’s homestead exemption cannot be doubled when both the person filing and their spouse are joint owners and have joint debts. If you own the property as tenants by the entirety the property can be exempt without any limit. 

• The Homestead exemption in Missouri is $15,000. Missouri bankruptcy law allows you to exempt up to $5,000 of equity using the homestead exemption in a mobile home as long as it is not attached to real property. 

Personal Property Exemptions

Consumers filing bankruptcy in Missouri are allowed to use the wildcard exemption under 513.430.1(3) & 513.440 to exempt any kind of property up to $600. If the filer is the head of a family, they are entitled to an exemption in the amount of $1,250. The filer can also get an extra $350 wildcard exemption for any dependent under age 21 and dependents with a disability. 

• Burial grounds: you can exempt up to $100 or one acre - 214.190 

• Clothing household goods, appliances, furnishings, books, animals, musical instruments and crops; health aids: you can exempt up to $3,000 

• Jewelry: you can exempt a wedding ring or engagement ring up to $1,500; and protect up to $500 for other jewelry. 

• Firearms and ammunition: you can exempt up to $1,500 value.

• Health savings accounts: you can exempt up to the full amount 513.430.1(10)(f) 

Motor Vehicle Exemption:

• If you have a car you can protect up to $3,000 of value. This means that if you finance or own your vehicle you may be able to keep it. 

Tools of the Trade: 44-13-100 

• Up to $3,000 for tools of trade and books for your profession.

Other Missouri Exemptions:

Wages- § 18-4-20

• You can keep up to 75% of weekly earned but unpaid wages. Keep in mind that if the 75 percent is less than 30 times the accepted minimum wage amount set by the US guidelines, that will supersede the 75 percent of earnings. 

Retirement Accounts 

Retirement Accounts can be exempt up to their full value. Below are the types of retirement accounts that fall under such:

• Tax-exempt retirement accounts:

• 401(k)s, 403(b)s, profit-sharing, and money purchase plans, SEP and SIMPLE IRAs, IRAS, Roth IRAs, ERISA-IRAs, stock, bonus, pension, annuity, and retirement payments needed for support - 11 U.S.C § 522 & 513.430.1(10)(e) & (f) 

• Retirement Accounts: Public Officers and Employees, city employees, police and highway employees, firefighters, state employees, teachers, and school employees, 

Wrongful Death Recoveries Reasonably Necessary For Your Support

• There is no limit you can exempt the full amount 

Money Benefits: 

Public Assistance:

The following can be exempt up to the full monetary value:

• Workers' compensation.

• Unemployment compensation, Veterans' benefits, social security benefits, crime victims' compensation, and local public assistance.

Insurance:

Disability, illness benefits needed for support; unmatured life insurance policy, life insurance interest, loan value or dividends:

• You can exempt up to $150,000 of cash value if purchased more than six month- 513.430.1(8) & (10)(e)

• Fraternal benefit society benefits up to $5,000 but must be bought over six months before filing. - 513.430(10)(c)

• You can exempt up to $15,000 of any matured life insurance proceeds for burial expenses for designated family members. 

Alimony and Child Support: 

• You can exempt up to $750 per month in alimony and child support payments - 513.430.1(10)(d)

Filing Chapter 7 Bankruptcy 

Knowing which bankruptcy exemptions to use when you file your Missouri bankruptcy case can be very confusing. Many Missouri bankruptcy attorneys that can give you legal advice as to which exemptions would be best. A bankruptcy lawyer will be able to review your case and discuss whether a Chapter 7 bankruptcy or a Chapter 13 bankruptcy would be better for you. A Chapter 7 bankruptcy, eliminates all of your debt and a Chapter 13 bankruptcy, will consolidate your debt into a single monthly payment plan. Most Missouri bankruptcy lawyers you meet with will give you free consultations which you can benefit from. If you don’t think that you will be able to hire an attorney to help you due to a lack of funds, there is no need to worry. Upsolve has free bankruptcy tools and guides to help you file for bankruptcy for free. You can use Upsolve’s tools to learn how to file for bankruptcy step-by-step. This can be a more affordable way to get the debt relief you need.