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Is a Debtor Required to Forfeit Property in a Bankruptcy?

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Is a Debtor Required to Forfeit Property in a Bankruptcy?
When someone is considering filing bankruptcy, there are a lot of questions and concerns they may have.  They may be worried about having to forfeit property and may think they will have to surrender their property, such as vehicles, houses, pension, household goods, etc.
There are certain occasions where debtors may have to turn over to the Trustee some of their property.  However, this does not often happen and only happens if the property cannot be exempted and/or if there is a large amount of equity. 
Property exemptions will vary state to state.  In Missouri, there is a $15,000 homestead exemption to protect equity a debtor has in their real property.  Equity is the difference between what a piece of property is worth and how much is owed against the property.  Therefore, if a person owns a house worth $150,000.00 and $135,000.00 is owed against the property, they have $15,000.00 equity in the property.  Since there is a $15,000.00 homestead exemption, that equity would be protected, and the Trustee would not be able to sell the property.  As long as the debtor is current on the house and continues making their payments, they will be able to keep the real property.  The exemption for a mobile home is $5,000.00.
There are other exemptions to protect personal property in Missouri.  There is a $3,000.00 exemption for household goods, furnishings, and clothing.  It is $6,000.00 for a joint filing.  Those values can be determined by estimating garage sale prices for the personal property.  There is also a $1,500.00 wedding ring exemption per person filing and a $500.00 exemption for other jewelry per person filing.  There is a $3,000.00 tools of the trade exemption that covers work-related tools and supplies.  There is also an exemption for qualified retirement plans.
The Missouri vehicle exemption is $3,000.00.  If a debtor has $3,000.00 or less equity in a vehicle, they will be able to keep their vehicle as long as they continue making their payments on the vehicle and are current on the vehicle.  Debtors can only exempt one vehicle per person filing. 
There is a wildcard exemption of $600.00 per person, which can exempt anything not covered by any other specific exemption.  The wildcard can be used to cover any money a debtor has in the bank at the time of filing, cash on hand, additional equity in houses or cars, collectibles, etc.  There is also a head of household exemption which can be used in certain circumstances and would also cover any property not covered by other specific exemptions.  If you have any questions regarding this issue, please contact a St. Louis or St. Charles bankruptcy attorney.

Category: Bankruptcy

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