January 23, 2017
Many people who file for bankruptcy can keep most, if not all, of their assets. You can find out whether you’ll be able to protect your property by reviewing the Mississippi’s exemption statutes.
Keeping Property in Bankruptcy
Unlike a handful of other states, Mississippi does not give it’s residents the option of choosing between its exemption scheme and the federal exemption list. Mississippi residents must use the state exemptions when filing for bankruptcy. If needed, you can, however, protect valuable assets, such as a qualified retirement plan, wages, and public benefits, using the federal “nonbankruptcy” exemptions.
Protecting Your Property: The Process
Exemptions are not automatic—you must take steps to claim exempt property. Specifically, you’ll exempt your property by listing it on official bankruptcy form Schedule C: The Property You Claim as Exempt.
Any property that you can’t protect is “nonexempt.” In a Chapter 7 bankruptcy, nonexempt property gets sold, and the proceeds are used to pay creditors.
The rules are different in a Chapter 13 case. You’ll be able to keep your property; however, you’ll have to pay for it as part of a three- to five-year repayment plan. (Find out more about both chapters in Choosing the Type of Bankruptcy: Chapter 7 or 13.)
Mississippi Property Exemptions
You’ll find commonly-used Mississippi exemptions listed below (as of January 2017). A couple who files jointly (together) can double most exemption amounts. You can locate the text of each exemption (with conditions) in the Mississippi Code Annotated (Miss. Code Ann.) on the website of the Mississippi Legislature.
- Manufactured housing—$30,000; you cannot use personal property exemption on manufactured housing; spouses cannot double this amount. (§ 85-3-1(d))
- Homestead—$75,000 equity in primary residence; limited to 160 acres; spouses cannot double this amount. (§ 85-3-21)
Wages and Support
- Wages—75% of disposable earnings or 30 times the federal minimum wage per week, whichever is greater. (§ 85-3-4)
Household Furnishings, Jewelry, Clothing, Motor Vehicle, and Tools of the Trade
- Tangible personal property—$10,000; includes household goods, cash on hand, tools of the trade (items needed in your trade or profession), motor vehicles, wedding rings, crops, and personal items under $200 of value. (§ 85-3-1(a))
Retirement Accounts, Pensions, and Other Benefits
- Municipal employee benefits (§§ 21-29-51, 21-29-257, 21-29-307)
- State retirement benefits (§ 25-11-129)
- Teacher retirement benefits (§ 25-11-201)
- Supplemental legislative retirement plan (§ 25-11-319)
- Optional university employee retirement benefits (§ 25-11-419)
- Public officer and employee retirement benefits and deferred compensation (§§ 25-13-31, 25-14-5)
- Public aid to the blind, elderly, or individuals with a disability (§§ 43-3-71, 43-9-19, 43-29-15)
- Employee private trust plan benefits (§ 71-1-43)
- Workers’ compensation (§ 71-3-43)
- Unemployment compensation—cannot commingle with other funds (for instance, in the same account). (§ 71-5-539)
- Qualified retirement plan (§ 85-3-1(e))
- Qualified higher education tuition plan (§ 85-3-1(f))
- Health savings account (§ 85-3-1(g))
- Insurance or annuity proceeds held by insurer (§ 87-7-5)
- Fraternal society benefits (§ 83-29-39)
- Disability insurance income (§ 85-3-1(b)(ii))
- Life insurance proceeds—unlimited; $50,000 if policy procured less than one year before filing. (§ 85-3-11)
- Life insurance proceeds payable to executor or administrator—$50,000. (§ 85-3-13)
- Insurance proceeds from the destruction of homestead property—$75,000; plus $250 in personal property. (§ 85-3-23)
- Exempt property sales proceeds—any funds received from the sale of exempt property. (§ 85-3-1(b)(i))
- Property subject to the tax lien of another state (§ 85-3-1(c))
- Earned income credit, federal or state tax refund—$5,000. (§§ 85-3-1(i), (j), (k))
- Personal injury judgment—$10,000. (§ 85-3-17)
- Crime victim’s compensation (§ 99-41-23(7))
- Wildcard for individuals 70 years of age and older—$50,000; can be used for any property of the filer’s choosing. (§ 85-3-1(h))
This list does not include all Mississippi exemptions. Additionally, the amounts are subject to change and conditions. It’s prudent to consult with a local bankruptcy attorney to ensure the proper application of the exemptions.
Questions for Your Attorney
- Will some of my property get sold if I file for Chapter 7 bankruptcy?
- How much, if anything, will I have to pay for my nonexempt property in a Chapter 13 case?
- Overall, does it make sense for me to file for bankruptcy?