When you file for St. Louis bankruptcy, you are quickly introduced to a new set of processes and court procedures. Your bankruptcy lawyer helps you understand the initial steps of a St. Louis bankruptcy and anticipate the upcoming requirements and eventual outcome. In tandem with the procedure of bankruptcy, you will also encounter certain legal terminology and definitions.
The vocabulary can be as confusing as the court process, but it is a necessary element of any St. Louis bankruptcy case. One term you are certain to encounter in any Chapter 7 bankruptcy is “exempt property.” Our team at Ledbetter Law Firm gives you an overview of the meaning and how this one definition might significantly impact your St. Louis bankruptcy case.
How Does Chapter 7 Bankruptcy Work?
To fully understand the definition of exempt property, you need to understand the process of Chapter 7 bankruptcy. Bankruptcy is a federal legal process under the Bankruptcy Act. An individual or entity can file for different types of bankruptcy in St. Louis, and each type has a different set of procedures and rules. The procedure and requirements of Chapter 7 bankruptcy are very different from Chapter 13 bankruptcy.
Chapter 7 bankruptcy is called liquidation bankruptcy because one of the requirements is that the debtor, who is the individual filing for St. Louis bankruptcy, must use proceeds from his or her property to repay debts. Upon filing for bankruptcy, the debtor’s property is placed in a bankruptcy estate.
A bankruptcy trustee manages the bankruptcy estate on behalf of the court. The bankruptcy trustee is responsible for assessing the property, selling the property in the bankruptcy estate, and repaying creditors in a specific order. Your St. Louis bankruptcy lawyer will ensure this entire process is carried out in accordance with your rights under bankruptcy law. One of the issues that is often handled by an experienced lawyer is determining if property is exempt or non-exempt.
Exempt Property Is Withheld from the Bankruptcy Estate
Whether property is exempt or non-exempt is extremely important to Chapter 7 bankruptcy. All non-exempt property is placed into the bankruptcy estate and sold in the manner described above. The debtor will no longer be the owner of this property, as the bankruptcy trustee liquidates it. In stark contrast, the debtor keeps exempt property during a Chapter 7 bankruptcy.
Exempt property is protected from liquidation and sale and the only property the debtor retains during and after bankruptcy. Therefore, the more property that falls under the definition of exempt property, the better for the debtor. The next question for anyone filing St. Louis bankruptcy is who determines the definition of exempt property and what is the current definition?
Exempt Property Is Determined by Missouri Law
It is crucial to know that each state is responsible for defining exempt property for its jurisdiction. If you file for Chapter 7 bankruptcy in New York, the definition of exempt property might be different from Missouri. This confuses many people because federal law sets the majority of laws and regulations applicable to bankruptcy. Bankruptcy is even a legal process held in federal court.
Missouri law determines what is exempt property for a St. Louis bankruptcy. The exact property and values can be changed by the Missouri legislature and are actually changed from time-to-time to account for inflation and other financial fluctuation, such as median income or wages in the state.
Certain exempt property is applicable in all states, with simply the values fluctuating. For example, residential property or the debtor’s primary residence is protected in all 50 states. In Missouri, residential property is exempt up to $15,000 and mobile homes exempt up to $5,000 in value. State exemption laws also regularly protect wages. In Missouri, the exemption for wages is set at 30 times the federal minimum wage, which is $7.25, as of the end of 2018.
Certain personal property is also exempt property in a St. Louis bankruptcy. In almost all instances, there is a maximum value on the value of these exemptions. A personal motor vehicle, clothing, appliances, household goods, books, animals, and even musical instruments are named as exempt property. As well, jewelry valued to up $500 is considered exempt property, with the only exception being for an engagement or wedding ring, in which case the maximum exemption is $1,500.
Finally, Missouri exemption law also protects other assets. Of importance to many debtors are the protections for tax-exempt retirement accounts, including IRAs and 401-K’s, up to a certain value, worker’s compensation benefits, and unemployment checks.
Determine Your Exempt Property in a St. Louis Bankruptcy
You will want to make an independent determination of your exempt property in a St. Louis bankruptcy. While it is a rare instance that a bankruptcy trustee or the court doesn’t act in your best interest, it is possible that items will be overlooked or missed when compiling the bankruptcy estate. Instead, a bankruptcy lawyer in Missouri can help you assess your exemptions prior to filing for bankruptcy and assess the liquidation of your estate throughout the bankruptcy process.
Ready to work with a skilled bankruptcy lawyer in St. Louis? Contact Ledbetter Law Firm by calling 314-602-1431