- February 25, 2026
- Kelvin Birk
- Bankruptcy
Missouri bankruptcy exemptions determine which assets you may keep when filing for bankruptcy. These legal protections exist to help individuals and families maintain basic necessities while addressing overwhelming debt.
Many people worry that bankruptcy means losing everything they own. In reality, exemption laws protect many common assets from creditors and the bankruptcy trustee. Missouri filers generally use Missouri exemption statutes, and Missouri does not allow the federal exemption list in 11 U.S.C. § 522(d). Some federal protections may still apply for certain benefits and retirement funds.
Key Takeaways for Missouri Bankruptcy Exemptions
- Missouri filers use state exemptions but retain some federal protections. Missouri opts out of the federal exemption list, though federal protections for Social Security and many retirement funds still apply. Learn more about how bankruptcy exemptions work in different contexts.
- The homestead exemption protects up to $15,000 of equity in your primary residence. Special rules apply when more than one owner claims this exemption. For related asset protection strategies, consider estate planning to safeguard your home.
- Many retirement funds receive strong protection in bankruptcy, but rules vary by account type. Traditional and Roth IRAs receive protection up to a federal limit that adjusts over time. Understanding these protections is part of comprehensive estate planning and administration.
How Missouri Bankruptcy Exemptions Work
Exemptions are legal provisions that remove certain property from the bankruptcy estate. The bankruptcy estate includes everything you own at the time of filing, but exemptions allow you to keep protected assets.
When you file bankruptcy, a trustee reviews your assets and compares them against applicable exemptions. Property that falls within exemption limits stays with you, while non-exempt property may be used to pay creditors in Chapter 7 or factored into your repayment plan in Chapter 13. For business owners, similar principles apply in business bankruptcy cases.
The Role of the Bankruptcy Trustee
The trustee’s job is to identify assets that may benefit creditors. In Chapter 7, the trustee may sell non-exempt property and distribute proceeds to creditors.
Many Chapter 7 cases are “no-asset” cases. This means the debtor’s property falls entirely within exemption limits, leaving nothing for the trustee to sell. If you’re considering bankruptcy chapter 7, it’s important to evaluate all exemptions carefully.
Why Missouri Uses State Exemptions
Federal bankruptcy law allows states to choose whether residents may use federal exemptions. Missouri opted out of the federal system under Missouri Revised Statutes Section 513.427, requiring filers to use Missouri’s exemption statutes for most property categories.
However, certain federal protections remain available. Benefits like Social Security and many retirement accounts receive protection under separate federal laws that Missouri’s opt-out does not affect.
Missouri Homestead Exemption in Bankruptcy
Your home often represents your largest asset, making the homestead exemption critically important. Missouri’s homestead exemption protects up to $15,000 of equity in a primary residence.
The exemption applies to equity, which is your home’s value minus any mortgage balance. Special rules apply when multiple owners share the exemption amount. If you’re facing foreclosure, you may want to explore facing foreclosure how chapter 7 bankruptcy can help.
How Equity Affects Homestead Protection
A home worth $250,000 with a $240,000 mortgage has $10,000 in equity. This amount falls within Missouri’s $15,000 homestead exemption limit, so the equity is fully protected.
Homes with equity exceeding $15,000 may still be protected in some cases. Chapter 13 bankruptcy offers alternatives for homeowners with significant equity who want to keep their property. Learn about bankruptcy chapter 13 as a potential solution.
Vehicle and Transportation Exemptions
Missouri exempts up to $3,000 of value in motor vehicles (total). This exemption helps filers maintain transportation for work, medical appointments, and daily life.
The vehicle exemption works similarly to the homestead exemption. Your equity in the vehicle, not its total value, determines whether the exemption fully protects it.
Missouri vehicle exemptions cover several types of property. The following items typically qualify for protection:
- Cars and trucks: Personal vehicles receive exemption protection up to the $3,000 aggregate limit. For detailed guidance, see can you keep your car in chapter 7 or chapter 13 bankruptcy.
- Motorcycles: These may qualify under the motor vehicle exemption depending on value and how the vehicle is titled.
- Vehicle equity: Only the equity amount matters, so financed vehicles with loans often fall within limits.
Vehicles with minimal equity due to loan balances are often fully protected. This allows many Cape Girardeau residents to keep reliable transportation through bankruptcy.
Personal Property and Household Goods
Missouri exemptions extend beyond real estate and vehicles to protect everyday belongings. These exemptions recognize that families need basic household items regardless of financial difficulties, though dollar limits apply to each category.
The state protects various categories of personal property up to statutory caps. The following items commonly receive exemption protection in Missouri:
- Clothing: Apparel for you and your dependents is protected up to set limits.
- Household furnishings: Furniture, appliances, and other household goods receive protection up to an aggregate limit.
- Books and family pictures: Personal items with sentimental value are typically exempt within statutory caps.
- Wedding rings and jewelry: Missouri law protects wedding bands up to a set dollar limit, with other jewelry subject to a separate lower limit.
These exemptions help families maintain dignity and basic living standards during financial hardship. Most household goods have limited resale value, making them unattractive to trustees anyway.
Retirement Accounts and Benefits in Missouri Bankruptcy
Retirement savings receive strong protection in Missouri bankruptcy, though the rules vary by account type. Both state and federal laws shield many retirement accounts from creditors and the bankruptcy estate.
The Employee Retirement Income Security Act (ERISA) protects most employer-sponsored retirement plans. This federal protection applies to qualified plans regardless of Missouri’s opt-out from Section 522(d).
Types of Protected Retirement Accounts
Missouri and federal law protect various retirement account types. The following accounts typically receive exemption:
- 401(k) plans: Employer-sponsored retirement accounts are protected under ERISA.
- Traditional and Roth IRAs: These accounts receive protection up to a federal limit that adjusts periodically. Integrating retirement planning with steps estate planning ensures long-term security.
- Pension benefits: Employer pension plans are generally exempt under ERISA.
- Public employee retirement: Missouri protects state and local government employee retirement benefits.
Retirement account protection encourages long-term financial planning even during bankruptcy. Note that inherited IRAs may not receive the same level of protection as accounts you funded yourself.
Missouri Bankruptcy Exemptions in Chapter 7 vs. Chapter 13
Exemptions function differently depending on which bankruptcy chapter you file. Both chapters use the same exemption categories, but the practical effect varies.
Chapter 7 and Exemption Limits
In Chapter 7, exemptions determine what you keep versus what the trustee may sell. Non-exempt property may be liquidated to pay creditors, though many cases involve no non-exempt assets. For a comprehensive overview, read chapter 7 bankruptcy in missouri a fresh start guide.
The trustee evaluates whether selling non-exempt property would generate meaningful returns for creditors. Items with low resale value often remain with the debtor even if they are technically non-exempt.
Chapter 13 and Exemption Calculations
Chapter 13 does not involve the liquidation of assets. Instead, exemptions affect how much you must pay unsecured creditors through your repayment plan. Discover more in chapter 13 bankruptcy in missouri reorganize your debt rebuild your life.
Your plan must pay unsecured creditors at least as much as they would receive in a Chapter 7 liquidation. Non-exempt equity increases this minimum payment amount.
Common Mistakes With Missouri Bankruptcy Exemptions
People sometimes make assumptions about exemptions that create problems during bankruptcy. Avoiding these errors helps protect your assets effectively.
The trustee challenges and undoes certain transfers before filing, especially if they appear intended to keep assets away from creditors. In serious cases involving intent to hinder, delay, or defraud, the court denies a discharge. It’s also crucial to understand secured vs unsecured debt bankruptcy personal injury distinctions.
Failing to claim all available exemptions leaves property unprotected unnecessarily. Missouri law provides numerous exemptions, and overlooking any of them may cost you assets you might otherwise keep.
FAQ for Missouri Bankruptcy Exemptions
Are bank account balances protected in Missouri bankruptcy?
Some funds may stay protected even after deposit if they come from protected sources. Whether money in an account is protected depends on the source of funds and documentation that traces those funds. For more on protecting assets, see steps asset protection planning.
What happens to inherited property during bankruptcy?
Property you become entitled to receive within 180 days after filing may enter the bankruptcy estate under 11 U.S.C. § 541(a)(5). This includes inheritances, certain divorce or property settlement proceeds, and life insurance or death benefits.
Does Missouri protect tools and equipment for work?
Missouri law exempts tools of the trade up to certain limits. This protection helps self-employed individuals and tradespeople keep equipment necessary for earning a living. Business owners may also benefit from consulting a business lawyer regarding exempt tools.
What is the Missouri Wildcard Exemption?
Missouri offers a wildcard or general exemption that allows filers to protect any property up to a limited dollar amount. You may exempt up to $600 of equity in any property, plus $300 for each dependent residing in your household. This exemption can protect non-exempt cash, bank account funds, or jewelry.
Are my wages or earnings protected from creditors in Missouri bankruptcy?
Yes, Missouri law protects a significant portion of your earned but unpaid wages. Generally, the law exempts 90% of your earned but unpaid wages for the last thirty days from the bankruptcy estate. If wage garnishment is an issue, bankruptcy stop wage garnishment provides relief.
Does Missouri law protect personal injury or lawsuit proceeds in bankruptcy?
Missouri law protects certain recovery funds from legal claims. You may exempt up to $7,500 recovered from a personal injury claim. However, the law exempts proceeds from a wrongful death claim with no limit. These protections do not apply to punitive damages. For related matters, a personal injury attorney can offer guidance.
Protection Begins With Information
Every bankruptcy situation involves unique assets, debts, and exemption questions. The specific combination of property you own determines which exemptions apply and how effectively they protect your belongings.
At Birk Law Firm, we help Cape Girardeau residents evaluate their assets against Missouri exemption laws. Contact us to schedule a free consultation and learn which of your assets may be protected in bankruptcy. You can also read more testimonials from past clients.
Attorney Kelvin Birk
Kelvin Birk is a lawyer as well as a certified public accountant, with more than 30 years of experience in accounting and tax and business consulting, and more than 20 years of experience in numerous legal matters. This combined expertise allows our law firm to provide a level of service above that of other firms. Whatever your legal situation, your attorney at Birk Law Firm can counsel you as to the tax implications. We have experience in providing myriad legal representation services to residents of southeast Missouri and other areas.. [ Attorney Bio ]
