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Bankruptcy Exemptions in Mississippi
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 an automobile ) is exempt, then you can file a bankruptcy case and keep the asset if you can pay the loan payments on the debt which is secured by the asset. If you have moved to Mississippi within the past two years, the exemptions from the state you moved from will apply in your case.
If a Debtor has lived in Mississippi for two consecutive years or more, then Mississippi Exemptions will govern your claimed exemptions. 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.
Common Mississippi Exemptions are as follows (be mindful that what we are exempting is your equity- not securitization):
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 $125,000.00 and your mortgage payoff (your securitization) is $100,000.00, then your equity is $25,000.00 and the homestead is exempt or protected. It is $50,000 less than what is allowed for the homestead exemption cap.
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). §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:
4. Retirement in multiple forms §85-3-1(b)(i) Miss. Code Ann., including:
5. Income from disability insurance. §85-3-1(b)(ii) Miss. Code Ann. (Note: This is used on all social security disability claims, even SSI claims.
6. Personal injury judgments up to $10,000.00. (Note: The key here is the word “judgments”; settlements don’t count. 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 stems from insurance or the sale of real property 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 imperative 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 or $100,000, which can be used on otherwise exempt property. §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)
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