What exemptions are there?
As stated in the explanation in Chapter 7, exempt assets are protected assets and a chapter 7 trustee cannot take assets that are properly claimed as exempt. In other words, if an asset (such as a car) is exempt, then a person can file a bankruptcy case and keep it if their is no lien on the car and the value of the car and the other items that he/she is claiming as exempt are within the the dollar limits set by the statute that allows the vehicle to be claimed as exempt.
If there is a lien on the car, then the debtor can still keep the car provided 1) he/she reaffirms the secured debt and pay the installment loan payments on the debt which is secured by the asset as set forth in the reaffirmation agreement, and 2) he/she properly claims the the equity (value that exceeds the lien) as exempt and claim of the equity is within the dollar limits of the statute under which the claim of exemption is made.
If a Debtor has lived in Mississippi for two consecutive years or more, then Mississippi Exemptions shall control what can be claimed as exempt. If you have moved to Mississippi in the last two years and need to file a bankruptcy petition, then we will have to look at where you lived during the six months that precedes two years before you intend to file. Although there are a few others, the most commonly claimed exempt assets Mississippi are set forth below:
1. Homestead up to $75,000.00 in equity in real property up to 160 acres. §85-3-17 Miss. Code Ann. Example: If your home has a value of $150,000.00 and your mortgage payoff is $100,000.00, then your equity is $50,000.00 and the homestead is exempt or protected.
2. One (1) mobile home, trailer, manufactured housing, or similar type dwelling owned and occupied as the primary residence by the debtor, not exceeding a value of Thirty Thousand Dollars ($30,000.00); in determining this equity after deducting liens. §85-3-1(d) Miss. Code Ann.
3. Personal property including the following items up to $10,000.00 in value for an individual and up to $10,000.00 each in value for a husband and wife filling jointly, per §85-3-1(a) Miss. Code Ann. , which include the following:
- i) Household goods, wearing apparel, books, animals, crops, one television, wedding rings and engagement rings (this does not include most electronic equipment and jewelry other than wedding rings unless each item is worth less than $200.00; thus, almost all of our client’s electronic equipment and jewelry can be retained),
- ii) Motor vehicles (which in Mississippi is any vehicle or trailer that requires a tag under Mississippi law, but does not include such items as a dirt bike or 4 wheeler that do not require tags),
- iii) Implements, professional books or tools of the debtor’s trade,
- iv) Cash on hand (note: this does not include money in bank accounts),
- v) Professionally prescribed health aids, and
- vi) Any item worth less than $200.00 (thus, items such as the second and third tvs, vcrs, computers, stereos and jewelry, etc. worth less than $200.00 not exempt as a household good would still be exempt).
4. Retirement in multiple forms §85-3-1(b)(i) Miss. Code Ann., including:
- 1) An annuity, pension, or profit-sharing or stock bonus or similar plan established to provide retirement benefits for an officer or employee of a public or private employer or for a self-employed individual;
- ii) An annuity, pension, or military retirement pay plan or other retirement plan administered by the United States; and
- iii) An individual retirement account.
5. Income from disability insurance. §85-3-1(b)(ii) Miss. Code Ann.
6. Personal injury judgments up to $10,000.00. (Note: The problem here is that the courts have ruled that a personal injury claim that has not been reduced to a judgment is not exempt.) §85-3-17 Miss. Code Ann. Thus, this exemption normally cannot be used because when individuals file their bankruptcy petition, they normally have a pending claim, not a judgment.
7. Worker’s Compensation benefits. §71-3-43 Miss. Code Ann. 100% of worker’s comp benefits are exempt and protected.
8. Whole life and universal life insurance cash value. (Note: it appears that the amount is unlimited except that the any amount of cash value placed into the policy within the last 12 months that brings the total cash value to greater than $50,000.00 is not exempt.) §85-3-11 Miss. Code Ann.
9. Seventy-five (75%) of all wages and 100% of wages due within the next 30 days after service of a writ. §85-3-2 Miss. Code Ann. This exemption is important when a person normally receives a large bonus each year.
10. A state tax refund up to $5,000.00; a federal tax refund of up to $5,000.00 and earned income credit of up to $5,000.00. A husband and wife filing a joint case can exempt up to $5,000.00 each in each category. §85-3-1(i), (j) & (k) Miss. Code Ann. Most people think of the entire amount they receive as their tax refund. However, most of the time, part of the refund is actually earned income credit and part of it is a refund of taxes withheld the prior year.
11. Proceeds of insurance and or from the sale of exempt property. This from insurance or the sale of real such as one’s homestead or personal property such as autos or household goods. §85-3-1(b)(i) Miss. Code Ann. This can include payments on a deed of trust on the sale of the debtor’s homestead provided he/she/they were still living there at the time of the sale and they have not purchased a new homestead. The homestead would have to have been a Mississippi homestead originally exempt under §85-3-21. Miss. Code Ann. If the proceeds have been received it is critical that these funds have never been co-mingled with other funds.
12. $50,000.00 of anything not identified above for debtors at the age of 70 or above. This exemption has no limitation on type of property. Thus, if you are 70 or older, you have a $50,000.00 wild card exemption and if a husband and wife are both 70 or older, then both of them have a $50,000.00 wild card exemption. §85-3-1(h) Miss. Code Ann.
13. Funds in a health savings account, provided the account was established pursuant to a health savings account program provided in the Health Savings Account Act under Mississippi law. §85-3-1(g)
Although there are a few other items which may be exempted under the Mississippi Code, most people filing bankruptcy do not own or hold any exempt assets other than those listed above. The most common non-exempt assets that the bankruptcy trustee liquidates in chapter 7 proceedings are real property other than one’s homestead, debts owed to the debtors other than those types of debts listed above, personal injury claims or other potential claims or lawsuits in which the debtor holds an interest, and interest in estates.