What is an Exemption?
An exemption is a rule that helps you keep certain property such as a wedding ring or a car. Depending on the particular exemption rule, you may be able to save an entire item. Your attorney will review your list of property to see how much of it can be saved in the Bankruptcy process.
How to Calculate an Exemption Value
According to 11 U.S. 11 U.S.C. §§ 506 and 527(b), debtors and attorneys need to value an item based upon what a retailer’s price for the same item would be. Some good sources for comparing items of the same age and condition are the Kelly Blue Book, eBay, and Amazon. You need to determine an accurate replacement value for any item you hope to keep.
Married Couples May Double Certain Exemptions
Missouri allows married couples to double certain exemptions such as the one for cars. Missouri allows a $3,000 exemption for cars, but married couples can take a $6,000 exemption. Unfortunately, Missouri does not allow married couples to double the Homestead exemption which protects the equity in your home.
Trustee Can Abandon Some Non-Exempt Property
If the Trustee feels that a certain non-exempt item will not fetch enough at auction, you may be able to keep it. This decision is made by the Trustee, and is made on a case by case basis.
Exemptions in Chapter 7 Bankruptcy – Liquidation
In a Chapter 7 Bankruptcy, the Bankruptcy Trustee sells any property you own and in exchange you can get a fresh start. The Bankruptcy Trustee will sell anything you own outright to your creditors or others. However, exemptions may help protect your property.
For example: Sheila is unmarried, and filing for Chapter 7 Bankruptcy in Missouri. Sheila owns her own car free and clear of any loans. Sheila owns a 1997 Acura CL 2.2 Coupe 2D with 95,000 miles that has a Blue Book value of $1,684. Missouri has a $3,000 exemption for cars, and Sheila’s car is worth less than $3,000 so the car is SAFE due to Missouri Bankruptcy exemption laws.
Exemptions in Chapter 13 Bankruptcy – Reorganization
In a Chapter 13 Bankruptcy, the Bankruptcy Trustee works with you to reduce your debts so you can pay your creditors in either a 3-year or 5-year period. Also, in a Chapter 13 you get to keep your property, but you must use all of your disposable income to pay your creditors. The law requires that your creditors get just as much money as if you had filed a Chapter 7 Bankruptcy.
Your Bankruptcy Trustee will calculate the value of your non-exempt property.
Commonly Used Missouri Exemptions include but are not necessarily limited to:
- Household Furnishing, Household Goods, such as wearing apparel, appliances, books, animals, crops or musical instruments that are held primarily for personal, family or household use of such person or dependent of such person: $3,000.00.
- Wedding Ring: $1,500.00.
- Other Jewelry held primarily for the personal, family or household use of such person or a dependent of such person: $500.00.
- Any Motor Vehicles (Cars): $3,000.00.
- Homestead (if you own your house): $15,000.00.
- Wild Card: You can save any property up to $600.00 limit per person.
Each personal bankruptcy situation is unique. Bankruptcy can give a debtor a fresh start while saving some personal items.
If you reside in the St. Louis, Missouri or Jefferson County, Missouri area and are considering bankruptcy and believe you may qualify, please contact The Schwent Law Firm at (636) 937-4994 to set up an appointment to met with our Bankruptcy Attorney at our Festus, Missouri law office. We will be happy to assist you.
