Part of our practice involves representing clients in connection with Chapter 7 bankruptcy. A Chapter 7 bankruptcy is a proceeding that is filed in the U.S. Bankruptcy Court that when successfully completed results in the client being discharged of most debts. A discharged debt is a debt that a creditor may not seek to collect upon the completion of bankruptcy.
One of the first issues that I discuss with our clients about relates to “exempt property”. The issue of what property is exempt is decided by the law of each state. Missouri law determines what property a Missouri resident debtors may keep thru bankruptcy. Property that is not exempt property can be taken by the bankruptcy trustee and then sold and divided among the creditors of the individuals filing bankruptcy.
There are two important issues in determine whether property is exempt. First of all is the type of property, which often refers to it use. Also, the “fair market” value of the property is often controlling of whether the property is exempt or not. Please note that secured property such as real estate secured by a Deed of Trust or personal property under a security agreement such an automobile can be recovered by the secured creditor if the payments are not made under the terms of the agreement.
Missouri exemptions are must less generous that some other states. For example, the exemption on the primary residence in Missouri is Fifteen Thousand Dollars ($15.000) when the exemption of “homestead” in other state is unlimited or more generous. A married couple who file a joint petition in bankruptcy can only claim one homestead exemption. Each debtor in a bankruptcy can claim an exemption for a motor vehicle with equity of up to Three Thousand Dollars ($3,000). One Missouri exemption that is not dependent on the value is “tools of the trade”. Under this exemption a carpenter or a auto mechanic can keep their tools if they are used in their trade.
Other commonly used exemption include Three Thousand Dollars ($3000) for household goods and other delineated property, wedding ring of Fifteen Hundred Dollars ($1500), and other jewelry worth up to Five Hundred Dollars ($500). It is worth mentioning that the bankruptcy trustee has some discretion in abandoning and not taking from the bankruptcy petitioner some non-exempt property. If you decide to talk to an attorney about filing for bankruptcy it is important to carefully consider all property owned by you, its value and whether or not it is exempt..
I am willing to talk to you about the issues relating to filing for bankruptcy including exempt property and help you decide whether it makes sense for you.