The realization that you have more bills than money is hard to accept. For some people, filing for bankruptcy is the only way they can regain control their finances. Chapter 7, which is known as liquidation bankruptcy, is one option that is available for those who don’t earn much income.
Some people worry about losing the assets they’ve worked so hard for. In order to file for Chapter 7 bankruptcy, you have to pass a means test. Most people who are able to pass the means test won’t have many, if any, assets that are worth liquidating. This is because many assets are automatically exempted from the risk of liquidation by a Chapter 7 bankruptcy trustee.
Mississippi has opted out of a federal exemptions option, so anyone who files bankruptcy here will automatically qualify for the following state exemptions.
Homestead
The homestead exemption in Mississippi depends on the type of residence. It’s based on the equity available in the home, which is the difference between the home’s value and what’s currently owed on it. Mobile homes qualify for an exemption of $30,000, and other homes with properties less than 160 acres qualify for an exemption of up to $75,000. There are also special exemptions for people who are married, widowed and over 60 years old.
Retirement accounts
Retirement accounts, pension plans and college savings accounts are all exempted from the bankruptcy process in Mississippi. This includes IRAs, 401(k)s, 529 plans and other tax-deferred accounts.
Personal property
Mississippi has a $10,000 personal property exemption. This can be used for household goods, motor vehicles, electronics and anything else the person deems valuable to them. The exemption is based on an as-is cash value and the equity in the items. In the case of a motor vehicle, the exemption is based on how much equity is in the car.
Understanding these exemptions, and being able to maximize them, will help you to keep as much of your property as possible after filing for Chapter 7 bankruptcy. Seeking legal guidance is a great way to get started.