What Are Exemptions?

When you file a Chapter 7 Bankruptcy or Chapter 13 Bankruptcy, everything you own on the date of filing becomes property of the bankruptcy estate (see 11 U.S.C § 541).

This includes your home and car, but also includes things like your household goods and furnishings, clothes, retirement accounts, etc. Basically, every single item you own belongs to the Bankruptcy Estate.

Does that mean you are going to lose all of your property? The answer is a simple no. In fact, most Chapter 7 Bankruptcies are “no asset” cases, meaning the Trustee is not going to take any property or money from you. You won’t lose any property if you can claim an exemption. An exemption is simply a mechanism that protects your property from your creditors and the Bankruptcy Estate.

11 U.S.C. § 522(d)  lists the federal exemptions. However, this section also allows states to opt out of the Federal Exemptions. Missouri has opted out and has their own bankruptcy exemption scheme and residents of Missouri cannot claim the federal exemptions from 11 U.S.C. § 522(d). Rather they must use the Missouri Exemptions and the majority of these exemptions can be found in RsMO § 513.430. RsMO § 513.475 allows residents to claim an exemption in their homestead of up to $15,000.00. Residents of Missouri may also claim federal exemptions not listed in 11 U.S.C. § 522(d).

To ensure your property is properly protected it is imperative that you meet with an experienced bankruptcy attorney. An experienced bankruptcy attorney will be able to maximize your use of exemptions and minimize the likelihood that you will lose any property or money in your Bankruptcy. Most times, an experienced bankruptcy attorney will be able to protect all of your property.