Bankruptcy exemptions protect the equity in your property from creditors and the bankruptcy court—preventing the equity from being used to pay your creditors. Equity is the value of property after you subtract the amount of any liens against the property from its fair market value.

The equity in your home is one such asset in bankruptcy. And bankruptcy exemptions—including the homestead exemption—allow you to protect the property you will need to maintain a home and employment after bankruptcy.

Bankruptcy exemption amounts vary by state, so the amount you will be able to protect will depend on where you live and the type of bankruptcy you file (Chapter 7 or Chapter 13).

In Missouri, bankruptcy exemptions allow individuals to protect certain property from creditors when they file for bankruptcy. The homestead exemption is particularly relevant for protecting equity in one's home. As of the current regulations, Missouri's homestead exemption allows an individual to exempt up to $15,000 of equity in their residence. This exemption applies to a house, mobile home, or condominium. Additionally, Missouri allows for a 'wildcard' exemption that can be applied to any property, including the equity in a home, for up to $600 for an individual or $1,250 for a married couple filing jointly. The specific amounts and types of exemptions can vary depending on whether the bankruptcy is filed under Chapter 7 or Chapter 13. In a Chapter 7 bankruptcy, assets can be liquidated to pay off creditors, so exemptions play a critical role in determining what property an individual can retain. In a Chapter 13 bankruptcy, debtors propose a repayment plan, and exemptions may affect the amount they are required to repay. It's important for individuals considering bankruptcy in Missouri to consult with an attorney to understand how state statutes and federal law apply to their situation and to maximize the use of exemptions.