Things to Know Before Filing for Missouri Bankruptcy
If you are considering filing for a Missouri bankruptcy, you should educate yourself on federal and Missouri bankruptcy laws. Individuals who are unable to repay their debts may file for one of several types of personal bankruptcy, also known as consumer bankruptcy. Missouri bankruptcy filings accomplish one of two things: You either are asking the court to discharge, or forgive, some of your debts, or you are seeking approval for a debt repayment plan.
Which type of bankruptcy is right for you will depend on your specific financial situation. Whether you live in St. Louis, Kansas City, Jefferson City or another part of the state, a local Missouri bankruptcy attorney can help advise you throughout the bankruptcy process.
This article will provide you with basic information about Missouri bankruptcy and the Missouri bankruptcy process.
The Missouri Bankruptcy Courts
For example, if you live in Kansas City, you would file your claim in the Western District Missouri bankruptcy court. If you live in St. Louis, you'd file your claim in the Eastern District Missouri bankruptcy court.
Types of Missouri Bankruptcy
There are two main types of consumer bankruptcy in Missouri.
The simplest and quickest form of bankruptcy is Chapter 7, also known as liquidation or straight bankruptcy. With Chapter 7, the court discharges your debt after a court-appointed trustee seizes some of your property and sells it to repay certain creditors.
The property the trustee sells is known as non-exempt property. Non-exempt property can include a second home, extra cars, stocks and investments. Property you get to keep is called exempt property. Although the list of exempt property in Missouri changes periodically, it generally includes such things as your house, a car, furniture and clothing.
Another form of bankruptcy is Chapter 13. With Chapter 13, the debtor seeks approval from the court for a debt repayment plan that lasts three to five years. You must have an income in order to file for Chapter 13 bankruptcy.
Those who do not qualify for Chapter 13 may file for Chapter 11 bankruptcy. Chapter 11 is typically reserved for corporate entities.
If you are a family farmer or fisherman, you can file for Chapter 12 bankruptcy, which is similar to Chapter 13.
Qualifying for Chapter 7 Bankruptcy
To be able to file for Chapter 7 bankruptcy, you must pass what is known as the means test. The means test was implemented to prevent high-income earners from abusing the bankruptcy system.
The means test in Missouri compares your recent income to the median income of similarly sized Missouri households. If your income exceeds this median, the means test then looks at your disposable income. This is income left over after necessary expenses, such as food and housing, are paid. If you have enough disposable income to pay off your debt, you may not qualify for Chapter 7.
As of Nov. 10, 2010, the median income for a single-person home in Missouri was $38,697. The median income for a four-person home in Missouri was $68,705.
Debts that Remain After Chapter 7
Before you file for Missouri Chapter 7 bankruptcy, you should consider the fact that certain debts will remain after your bankruptcy filing. Under the law, the court will not discharge the following types of debts:
- Child support
- Student loans
- Divorce property settlements
- Criminal fines
- Recently owed income taxes and property taxes
In addition, you will be expected to continue to make payments on your mortgage and car loans. Failure to do so may result in foreclosure or repossession.
Qualifying for Chapter 13 Bankruptcy
If you do not qualify for Chapter 7, you may qualify for a Chapter 13 Missouri bankruptcy. In Missouri, there are caps put on the amount of debt you are allowed to have if you want to file for Chapter 13. This debt limit is periodically adjusted.
Specifically, as of April 1, 2010, the limit on secured debt was $1,081,400, while the limit on unsecured debt was $360,475. Secured debt is a loan you pledged some asset for. Unsecured debt is a loan you did not pledge an asset for.
If you exceed one of these debt limits, you will be unable to file for Chapter 13. However, you should speak with a Missouri bankruptcy attorney about filing for Chapter 11.