Common Objections to Bankruptcy, Part 1: Won't I lose all my things if I go bankrupt?
Most People Lose NOTHING in Bankruptcy.
If you're like an overwhelming majority of my clients, you won't lose anything in a normal Chapter 7 consumer bankruptcy. Why? Because under the bankruptcy code and the relevant state laws, the Bankruptcy Trustee can only make a claim on something that isn't exempt under the Missouri exemption rules, found in the Revised Statutes of Missouri, mostly in sections 513.430 and 513.475.
These exemptions for married joint filers include things like $15,000 of home equity, $6,000 of car equity for up to two cars. (Equity here being the actual fair market value of these items, minus any liens like mortgages or purchase money security interests). Other common exemptions-- your ERISA-backed 401K or Roth IRA or other retirement plans are 100% exempt. The same married couple would get another $6,000 to exempt the fair market value of their household goods-- furniture, clothing, sporting goods, etc. Additionally, these prospective filers would have $1,200 more to put toward anything they wanted that wasn't already exempted-- like bank account balances. This couple also has $3,000 to exempt wedding rings, and another $1,000 to apply to any other jewelry. As if that weren't enough, most can also apply a "head of family" exemption which gives another $1,250 plus an additional $350 exemption per child under 21, to apply to anything not already covered. There are other, less commonly used exemptions like $3,000 to apply to your "tools of trade" (this doubles to $6,000 if both spouses use them).
The result is that most Chapter 7 bankruptcies are "no asset" cases-- the Trustee has nothing to administer, and you get your discharge three months from filing.
