Missouri’s new law impacts the state’s rules around bankruptcy and debt collection. Individuals who are struggling now will have the chance in bankruptcy to have greater protections and higher exemption limits that will ultimately help their situations and their bankruptcy process.
 
Increase for the Homestead Exemption
 
Before the bill was passed this past May, Missouri’s homestead exemption sat at $15,000. If you had more than $15,000 of equity in your home, this could force you to sell your home to pay off creditors. Now, the exemption has increased to $40,000, which makes it significantly easier for Missouri residents to file for bankruptcy and still keep their homes, while also resulting in lower monthly payments on what they may owe further.
 
Motor Vehicles, Personal Property and Household Good Protections Expand
 
Under the new bill, the protections related to cars and personal property have significantly expanded as well, allowing for more protections for essentials often required for individuals to run their households:

– Household furnishings, apparel, appliances and other personal, family or household property is now protected up to $17,000, up from $3,000.

– The motor vehicle exemption has been increased from $3,000 to $10,000 and may increase to the unused amount allowed for household furnishings and appliances up to an additional $10,000.

– Professional tools, equipment or books required for the debtor’s occupation have increased protections from $3,000 to $6,000.

– Mobile homes used as a residence now have increased protections from $5,000 to $12,000.

Protections Adjusted for Inflation
 
As a means to prevent these updated limits from becoming obsolete as the cost of living continues to rise, the new bill requires that the Revisor of Statutes automatically adjust these exemption dollar amounts for inflation every three years beginning April 1, 2029. These adjustments will further protect debtors in their bankruptcy process by ensuring that the rise in living costs will be taken into account.
 
Impact on Chapter 7 and Chapter 13 Filers
 
The new law will ultimately prove to be a very important shield for Chapter 7 filers due to the higher exemption limits, which will result in fewer asset forfeits. For example, if a person has $35,000 of equity in their home and a paid-off car worth $4,000, under the previous bill the debtor would more than likely lose both assets. Under HB 1870, the higher homestead and motor vehicle exemptions forbid creditors from taking either asset.
 
For Chapter 13 filers, the new exemptions allow for significantly lower monthly payments in repayment plans by erasing more nonexempt equity. This also results in many people being more qualified to file for Chapter 13 due to the lower required baseline payments.
 
The Bottom Line
 
If you are considering filing for bankruptcy in Missouri, HB 1870 means you can likely wipe out your dischargeable medical bills, credit cards and personal loans without being forced to forfeit your car, your home or your essential household belongings. It shifts the state from having some of the most restrictive asset protections in the country to a much more practical framework for achieving a fresh start.
 
While the new law will go into effect January 1, 2027, it is important to begin thinking about your options now. These significant changes can be very complex and require guidance from a professional to understand the right way to go about a case. The team at Sader Law Firm is here to help you navigate the changes imposed by this act. Contact us at (816) 561-1818 for a free phone consultation and to learn more.