You’re drowning in debt. Collection calls won’t stop. Your paychecks disappear before you can buy groceries. Chapter 7 bankruptcy might offer a fresh start, but one fear keeps you awake at night. Will they take everything? Your car, your home, your belongings?
Here’s the truth that surprises most people filing for Chapter 7 bankruptcy in Missouri. You’ll likely keep all of your property. The bankruptcy system isn’t designed to strip you bare. It gives you a genuine chance at rebuilding your life with the essentials you need to work and live.
Missouri law provides protections called “exemptions” that shield your essential belongings from being sold to pay creditors. These exemptions are specific and technical. If you don’t claim them correctly, you could lose property you’re legally entitled to keep.
How Property Protection Works in Bankruptcy
When you file for Chapter 7 bankruptcy in Missouri, a court-appointed trustee takes control of your bankruptcy estate. This estate includes everything you own when you file. The trustee’s job is simple. Sell any nonexempt property and distribute the proceeds to your creditors.
Exemptions create a protective shield around your most essential possessions. Missouri Revised Statutes Section 513.430 and related laws let you protect certain property from the trustee’s reach.
Here’s how it works. You list all your property on your bankruptcy schedules. Then you claim exemptions for items you want to protect. The trustee reviews your claimed exemptions and either accepts them or objects. If your property is fully covered by exemptions, the trustee has no interest in it. Your case proceeds smoothly, and you keep everything.
Missouri is an “opt-out” state. This means you must use Missouri’s state exemptions rather than federal bankruptcy exemptions. You can use certain federal nonbankruptcy exemptions for things like Social Security benefits and veterans’ benefits on top of Missouri’s state exemptions.
One important requirement exists. You must have lived in Missouri for at least 730 days (two years) before filing bankruptcy to use Missouri’s exemptions. If you’ve lived here for at least 180 days but less than 730 days, you’ll need to use the exemptions from the state where you lived before Missouri.
Can I Keep My House?
Your home is where your family lives and feels safe, and losing it can be devastating. Missouri’s homestead exemption protects up to $15,000 of equity in your primary residence, or $5,000 for mobile homes not attached to land you own (Missouri Revised Statutes Section 513.430(1)(6) and Section 513.475). Equity is your home’s current market value minus what you owe on mortgages and liens.
If your equity is $15,000 or less, your home is fully protected in Chapter 7 bankruptcy. For example, if your home is worth $175,000 and you owe $165,000, your $10,000 equity is completely covered by the exemption. If you have more equity, the trustee could theoretically sell your home, but after paying off your mortgage, your exemption, sale costs (8-10%), and their commission, little may remain for creditors, so trustees often abandon interest.
Married couples filing jointly cannot double the homestead exemption—it remains $15,000 total for both filers. You must stay current on mortgage payments, as Chapter 7 doesn’t help you catch up on back payments. Even during bankruptcy, lenders can foreclose if you’re behind on your mortgage.
Will I Lose My Car?
For most people in Missouri, a car isn’t a luxury. It’s how you get to work, take kids to school, and handle basic errands.
Missouri Revised Statutes Section 513.430(1)(5) allows you to protect up to $3,000 of equity in a motor vehicle. If you’re married and filing jointly, and you both own the vehicle together, you can double this exemption to $6,000.
Equity is your vehicle’s current wholesale value (what it would bring at auction) minus what you owe on any car loan.
Scenario 1: Your car is worth $8,000 and you owe $6,500 on your auto loan. Your equity is $1,500, which is well below the $3,000 exemption. You’re completely protected. Keep making your car payments, and you’ll keep your car.
Scenario 2: You own your car free and clear, and it’s worth $2,800. Since this falls under the $3,000 exemption, the trustee won’t touch it.
Scenario 3: You own a newer vehicle worth $15,000 with no loan. You have $15,000 in equity. The $3,000 exemption doesn’t fully protect it. The trustee would likely sell this vehicle. However, you could use your wildcard exemption to protect additional value.
Scenario 4: You owe more on your car than it’s worth. Maybe you owe $12,000 but the car is only worth $9,000. You have negative equity. The trustee has zero interest in a car that would cost money to sell.
If you have a car loan and want to keep your vehicle, stay current on payments. You may need to sign a reaffirmation agreement, which is a new contract with the lender stating you’ll continue paying the debt even though your other debts are being discharged.
What About My Personal Belongings?
Missouri Revised Statutes Section 513.430(1)(1) allows you to protect up to $3,000 in total value of household goods, furnishings, clothing, appliances, books, animals, crops, and musical instruments. “Aggregate” means the combined value of all these items cannot exceed $3,000 per person, or $6,000 for married couples filing jointly. The value used is garage sale value, not what you paid or replacement cost.
Most household goods have very little resale value when assessed realistically. A typical inventory might include a couch ($100), bed ($75), dining table ($50), TV ($150), clothes ($200), and kitchen items ($100). When valued at realistic used prices, most people’s household goods fall well below the $3,000 threshold.
The Wildcard Exemption
The wildcard exemption protects property that doesn’t fit other exemption categories. Under Missouri Revised Statutes Section 513.430(1)(3) and Section 513.440, every person can exempt $600 of any property, plus an additional $1,250 if you’re head of household (providing more than half your family’s support), and $350 for each unmarried dependent child under 21. For example, a head of household with two children gets $2,550 in wildcard protection ($1,850 + $700).
You can use the wildcard exemption for anything, including bank account balances, vehicle value exceeding the motor vehicle exemption, tax refunds, cash on hand, valuable electronics or tools, or a second vehicle. The wildcard exemption often makes the difference between a smooth bankruptcy and a problematic one. Common strategic uses include covering gaps in other exemptions or protecting assets that would otherwise be at risk.
What Happens to My Retirement Accounts?
Retirement accounts receive strong protection under Missouri and federal bankruptcy law. Missouri Revised Statutes Section 513.430(1)(10)(f) and federal law exempt 401(k) plans, 403(b) plans, profit-sharing plans, pension plans, SEP IRAs, SIMPLE IRAs, traditional IRAs, Roth IRAs, and Health Savings Accounts. Traditional and Roth IRAs have a federal cap of $1,711,975 as of April 1, 2025, which applies to all your IRAs combined—most people have far less than this amount.
Never withdraw money from retirement accounts to pay debts before filing bankruptcy. Once you take money out, it loses its protected status and becomes vulnerable to trustees. For example, $10,000 withdrawn from your 401(k) and sitting in your checking account when you file is no longer protected as retirement funds.
This is one of the biggest mistakes people make before bankruptcy. They drain retirement accounts trying to stay afloat, then file bankruptcy anyway, losing both the money and their future security. Keep your retirement funds untouched—they’re protected inside the accounts but vulnerable once withdrawn.
Special Protections for Income and Benefits
Missouri law provides strong protections for various types of income and benefits under Missouri Revised Statutes Section 513.430(1)(10). Social Security benefits, unemployment compensation, veterans’ benefits, and disability and illness benefits are fully exempt. Workers’ compensation benefits are completely protected under Missouri Revised Statutes Section 287.260. You can exempt up to $750 per month in alimony, support, or separate maintenance payments.
These income sources often make up the bulk of some people’s monthly income. The law recognizes that you need this money to survive, so it’s protected from creditors.
Items That May Not Be Protected
While Missouri’s exemptions are generous, some property typically isn’t protected. Luxury items like boats, RVs, or vacation properties with significant equity generally aren’t exempt unless you can cover them with your wildcard exemption. Valuable collections, investment properties, and second vehicles beyond your exemption amounts may be at risk.
Tax refunds sitting in your bank account at the time of filing can be problematic. While you can use your wildcard to protect some of this, refunds above your available exemptions may be taken by the trustee.
The timing of your bankruptcy filing matters. If you know you’ll receive a large tax refund, it might make sense to file either before you receive it or after you’ve received and appropriately used it for necessary expenses.
How to Claim These Exemptions
When you file for Chapter 7 bankruptcy, you’ll complete forms called schedules. Schedule A/B lists all your property and its value. Schedule C is where you claim your exemptions.
On Schedule C, you list each piece of property you own, the exemption statute that protects it, and the value covered by that exemption. You need to cite the specific Missouri statute for each exemption you claim.
After you file, the bankruptcy trustee reviews your claimed exemptions. In most cases, if your exemptions are properly claimed and accurate, the trustee accepts them without objection. Your case proceeds smoothly, and you keep all your property.
If the trustee believes an exemption is improperly claimed, they can object. This triggers a hearing where the bankruptcy judge decides whether you’re entitled to the exemption.
When Property Isn’t Fully Exempt
Let’s say you own property worth $10,000, but you can only exempt $6,000 of it. What happens?
In theory, the trustee could sell the property, pay you your $6,000 exemption, and distribute the remaining proceeds to creditors. However, trustees also consider practical aspects. Selling property costs money. There are auction fees, trustee commissions, and administrative costs. If these costs would eat up most of the nonexempt value, the trustee often decides it’s not worth pursuing.
In cases where you have valuable nonexempt property, you have options. You can negotiate with the trustee to pay the nonexempt value in cash to keep the property. You might use additional exemptions like the wildcard. You could convert to Chapter 13 bankruptcy, where you can keep all your property but pay the value through a repayment plan over three to five years. Or you can let the property go if it’s not essential.
Married Couples and Property Ownership
If you’re married, you have options when filing for Chapter 7 bankruptcy in Missouri. You can file jointly or separately, and the best choice depends on your debts and how your property is owned.
Joint filing offers several advantages. It is more cost-effective because you pay one filing fee instead of two. It also simplifies the process by discharging joint debts in a single case and allows you to double most exemptions. For example, each spouse can claim a $3,000 vehicle exemption and a $600 wildcard exemption, for a total of $6,000 and $1,200 respectively. However, the homestead exemption cannot be doubled. It remains capped at $15,000 regardless of whether one or both spouses file.
Separate filing may be beneficial if one spouse has most of the debt, if you want to protect one spouse’s credit, or when one spouse does not qualify for Chapter 7. Missouri law also recognizes tenancy by the entirety, a special form of ownership between married couples. Property held this way, often a family home, is generally protected from creditors of only one spouse under Missouri Revised Statutes Sections 513.427 and 513.475. This means that if only you file bankruptcy and your debts are solely in your name, your jointly owned home may be off-limits to the bankruptcy trustee.
Common Mistakes to Avoid
Some mistakes get repeated over and over. Avoid these.
Don’t fail to list all properties. Some people think if they don’t list an asset, the trustee won’t know about it. This is bankruptcy fraud. You must list everything you own, even items with no value. Failing to do so can result in your case being dismissed or criminal charges.
Don’t misunderstand values. List your property at realistic, current resale values, not what you paid or what it would cost to replace.
Never transfer property before filing. Giving away property or selling it below market value shortly before filing bankruptcy can be considered fraud. The trustee can reverse these transfers and take the property anyway.
Don’t empty retirement accounts. Never withdraw retirement funds to pay debts before filing bankruptcy.
Watch timing. Filing right after receiving a large tax refund or bonus without proper planning can result in losing that money.
Don’t fail to claim an exemption. If you don’t claim an exemption for property, you can’t get it back later. The time to claim exemptions is when you file.
Don’t guess at exemption amounts. Use the current statutory amounts. These numbers can change, and using outdated exemption amounts causes problems.
How Often Do People Lose Property?
Here’s a statistic that surprises most people. In the vast majority of Chapter 7 bankruptcy cases, the debtor keeps all their property. These cases are called “no-asset” cases.
Why? Most people who need bankruptcy protection don’t own much of significant resale value. They might have equity in a modest home that’s fully covered by the homestead exemption. A car with a loan that leaves little equity. Household goods worth far less than the exemption amount. Retirement accounts that are fully protected.
Trustees aren’t interested in selling property when there’s nothing left for creditors after paying exemptions and costs. They only pursue assets when doing so will generate meaningful funds for the bankruptcy estate.
That said, if you own significant non-exempt property, Chapter 7 might not be your best option. Chapter 13 allows you to keep all your property while paying creditors through a repayment plan.
Key Takeaways
- Most people filing Chapter 7 bankruptcy in Missouri keep all their property through the exemption system
- You must use Missouri’s state exemptions and have lived in Missouri for at least 730 days before filing
- The homestead exemption protects up to $15,000 of home equity or $5,000 in a mobile home
- You can protect up to $3,000 of vehicle equity ($6,000 for married couples filing jointly who both own the vehicle)
- Retirement accounts including 401(k)s, IRAs, and pensions are fully protected (IRAs up to $1,711,975 as of April 2025)
- Never withdraw money from retirement accounts to pay debts before filing bankruptcy
Frequently Asked Questions
Will I lose my house if I file Chapter 7 bankruptcy?
Not if your equity is $15,000 or less (or $5,000 for a mobile home). Most people with a mortgage have little equity because they still owe a significant balance. However, you must stay current on your mortgage payments.
Can I keep my car in bankruptcy?
Yes, in most cases. If your equity (value minus loan balance) is $3,000 or less, your car is fully protected. If you have more equity, you might use your wildcard exemption to protect the excess. If you have a car loan, stay current on payments.
What if my property is worth more than the exemptions allow?
You have several options. You can pay the trustee the nonexempt value to keep the property, use other available exemptions like the wildcard, convert your case to Chapter 13 where you can keep all property, or allow the trustee to sell the property.
Can married couples double all exemptions?
Married couples filing jointly can double most exemptions, including the vehicle exemption, household goods exemption, and wildcard exemption. However, they cannot double the homestead exemption. It remains $15,000 total regardless of whether one or both spouses file.
How much cash can I have when filing bankruptcy?
Cash isn’t separately exempted in Missouri. You’ll need to use your wildcard exemption or other available exemptions to protect cash on hand or money in bank accounts. This is typically $600 per person, plus the head of household amount if applicable.
What happens to my tax refund in bankruptcy?
Tax refunds can be tricky. If you’ve already received your refund before filing, it’s cash that needs protection with available exemptions. If you haven’t received it yet but you’ve earned it, it’s property of the bankruptcy estate. The trustee may take all or part of it depending on your available exemptions.
Contact Us Today
At Roach Bankruptcy Center, LLC, we know how stressful financial difficulties can be. The fear of losing your home, car, or possessions feels overwhelming. But you have options, and you have rights.
Chapter 7 bankruptcy offers a path to a fresh start. In most cases, you’ll keep all your property through Missouri’s exemption laws. But getting the exemptions right requires knowledge and attention to detail. Our Kansas City bankruptcy attorneys have helped countless Missouri families protect their property while getting relief from crushing debt. We’ll review your specific situation, calculate your equity in various assets, identify all available exemptions, and create a strategy to protect everything that matters to you.
Take the first step toward your fresh start today. Contact Roach Bankruptcy Center, LLC for a free initial consultation. We’ll explain your options clearly, answer all your questions, and help you move forward with confidence.
