Debtor Exemptions In Missouri
Under Missouri Law, debtors have the right to claim that some of their property is "exempt" from levy or garnishment by a creditor or from their trustee in bankruptcy. When a debtor claims property is exempt, it is not available for liquidation by the bankruptcy trustee or available for a creditor to levy or garnish on to collect a judgment. The theory behind granting a debtor an "exemption" is that exempting some property allows the debtor a minimal quantity of assets for a "fresh start" after a bankruptcy or after a creditor has levied or garnished on a judgment.
The Missouri State Exemptions appear at RSMo. Chapter 513. Some of the most often used exemptions are as follows:
- Wages: If a wage earner is the "head of a household", only 10% of net income can be garnished. Otherwise, 25% of net income is subject to wage garnishment.
- "Wildcard": A debtor can claim up to $600.00 of "any other property of any kind." This is called the "wildcard" exemption because it can be used on any property owned by the debtor.
- Motor Vehicles: A debtor can claim an exemption of up to $3,000.00 in any one motor vehicle.
- Homestead: If the debtor owns real estate, the debtor can claim a homestead exemption, applicable to debtor's residence or dwelling house and land used in connection therewith of up to $15,000.00 in equity in the real estate. A husband and wife can only claim a total of $15,000.00.
- Household Items: Household furnishings, household goods, etc. held primarily for personal use, are exempt up to $3,000.00 in value.
There are several other exemptions allowed by Missouri statutes which should be reviewed when analyzing a credit application or other financial statement to determine how much of debtor's property would be subject to levy or garnishment in case a judgment is entered against the debtor or how much of debtor's property would be claimed as exempt in the bankruptcy estate if debtor files bankruptcy. Note that property jointly owned by a husband and wife is totally exempt if only one of them is a debtor.