Missouri Improves Bankruptcy Exemptions

25 Jul Missouri Improves Bankruptcy Exemptions

Exemptions are the laws that tell us how much property you can protect in the bankruptcy process. Recently those laws have been improved for Missouri and former Missouri filers.

The new law will go into effect on August 28, 2012. Sponsored by hard-working State Rep. Kevin Elmer, despite a highly partisan and rancorous legislative session, this bill was passed unanimously.

Among the important changes is an adjustment to the head of family “wildcard.” Under the statute, a head of a family can protect small amounts (currently $350) of additional property of any kind for each dependent. This provision is being changed to recognize that most kids remain dependent on their families until at least 21, not 18. This doesn’t seem like a huge change but these extra amounts can make the difference for folks struggling to get by.

A more significant change, during tax time, is likely to be the exemption for earned income tax credits. The EITC is often the largest part of a working family’s tax refund and Missouri wildcards are not large enough to preserve them in most cases. So every year folks must either wait to receive their refunds, spend them, then file a Chapter 7, or risk losing the money to the trustee and creditors. Missouri, following the lead of its neighbors Iowa and Illinois, struck the word “local” from the exemption for public assistance benefits. If two separate Missouri bankruptcy judges (Karen See and Arthur Federman) are correct, working families will no longer have to risk the EITC portion of their pending tax refunds. This can mean thousands more available to help keep these families afloat during hard times.

The legislature also corrected an unintended flaw in a prior amendment which inadvertently put mobile homes at risk. Current law puts those homes at risk if someone owns a mobile home and also the land it is on — if they have not attached it to the land. This is being fixed to protect those mobile homes (the land could be at risk since it is not your actual home). So attaching your mobile home to your land permanently is a good idea — because it then becomes your homestead and has even greater protection than a stand-alone mobile home.

And some changes are actually cosmetic but intended to make the law clearer for everyone. The protection for motor vehicles has been re-written at least twice in the last 30 years. In the last round, the legislature tried to make it clear that multiple vehicles could be preserved, within a $3,000 total value. Yet in the final rush to finalize that bill, the language was garbled, leaving Missouri bankruptcy courts to sort it out. But since this law can end up being applied by judges outside Missouri, the legislature sought to “clean up” the language so even former Missourians could benefit.

Photo credit: Flickr/David_Shane


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I have been a bankruptcy attorney since 1989. Our firm represents consumers filing bankruptcy almost exclusively, although I have represented bankruptcy trustees as well as creditors. For 2017-2018 I am also serving on the American Bankruptcy Institute's Commission on Consumer Bankruptcy. If you live in Eastern Missouri, visit our website, send an e-mail or give us a call (314) 781-3400. Our website: STLBankruptcy.com
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