A person who files for bankruptcy protection may be worried that they will lose all the assets that they have, but this isn’t the case. There are specific laws that cover what assets are protected from the bankruptcy process.
Mississippi has opted out of the federal bankruptcy exemption list. Instead, the state has its own list of things that can’t be taken in the bankruptcy process. Some of these are commonly used. They include:
You may be able to keep your home when you’re filing for bankruptcy. As a general guide, up to $75,000 of home equity is protected as long as your homestead is located on less than 160 acres. There are some other exclusions and terms that might apply. For example, the equity limit for a mobile home is $30,000.
Unemployment, disability from the Veteran’s Administration, Social Security benefits and similar government benefits are all exempt under state law. You should avoid comingling these funds with others so there’s no misrepresentation about where they came from.
With the exception of funds added to the accounts within the one year prior to the bankruptcy, funds in tax-deferred retirement accounts, including IRAs and 401(k) accounts, are exempt. Other long-term accounts, such as 529 plans, college plans, and pensions are also exempt.
Up to $10,000 worth of personal property is protected from bankruptcy. This includes the equity amount and as-is cash value of assets. Motor vehicles, household items, and electronics are examples of what’s included under the personal property exemption.
Filing for bankruptcy is a major life decision. Make sure you understand exactly how it will impact you so you can make an informed decision. Try to get the process started as quickly as possible so you can have the relief you need.