There are many things to consider when you are deciding whether to file bankruptcy. One of the most important is what will become of your house and car when you file.
In a Chapter 7 bankruptcy, the debtor asks the court to discharge debts because he or she does not have the income to pay these debts. If the debtor has a significant number of assets, the court does have the authority to liquidate the assets in order to satisfy (or partially satisfy) the identified debts. However: the law recognizes that certain assets must be protected. Retirement accounts, for example, are widely protected from being liquidated by a bankruptcy court. Equity in homes and cars are also protected, to an extent. There are bankruptcy exemptions that can be used to protect the exempted amount from liquidation. In Missouri:
- The Homestead Exemption allows a debtor to protect up to $15,000 in equity in their home or land. (This is limited to $5,000 for mobile homes.)
- The motor vehicle exemption protects up to $3,000 in equity for vehicle equity. (This is an aggregate for all vehicles owned by the debtor.)
- There is also a “wild card” exemption of $1,250 for a head of family (or $600 for a debtor who is not head of family). This can be applied to household goods, but it can also be applied to home or vehicle equity that exceeds the Homestead and Motor Vehicle Exemptions.
There are other specific exemptions, and all clearly state the exact amount which can be exempted. In this manner, you can prepare all your assets for bankruptcy by either finding an applicable exemption, or choosing which assets to submit to the court for liquidation. It is rare for a debtor to be unprepared for the bankruptcy court to seize or liquidate an asset. An experienced bankruptcy attorney will carefully review your assets prior to filing bankruptcy, and ensure that an applicable exemption will protect them.
Call a St. Louis Bankruptcy Attorney Today
If you are experiencing financial difficulties, experienced Missouri attorney Kenneth P. Carp can help determine whether filing bankruptcy is right for you. Call (636) 947-3600 to schedule your consultation or contact us online.