Bankruptcy is not just for big corporations and is not a way to get free money. Personal bankruptcy provides a way for individuals and their families to get out from under crushing debt and give them a fresh start. Bankruptcy is often a necessary option when people are hit with sudden expenses they cannot cover, including after a natural disaster, loss of a job, or medical emergency.
Bankruptcy can put an immediate halt to harassing creditors and may also allow you to keep certain important assets. If you have any questions about filing for personal bankruptcy in Missouri, talk to your experienced bankruptcy attorney to understand your options and protect your family's future. Contact the Joshua Wilson Law Firm today at 816-331-9968.
Filing for Personal Bankruptcy Protection in Missouri
There are a number of types of bankruptcies, referred to by their chapter in the U.S. Bankruptcy Code. The two primary personal bankruptcy options include:
- Chapter 7 Bankruptcy
- Chapter 13 Bankruptcy
How to choose which type of bankruptcy is right for you will depend on your individual debt situation. Generally, Chapter 7 bankruptcy sells off most assets and wipes out dischargeable debt. Chapter 13 bankruptcy allows the individual to reorganize their debt and pay off outstanding debts over time, allowing them to keep much of their property.
Chapter 7 Bankruptcy
Chapter 7 bankruptcy is the most common type of bankruptcy filed in the U.S. Chapter 7 bankruptcy, or “liquidation bankruptcy,” involves a trustee taking the debtor's assets, selling liquid assets, and distributing the money to creditors. Some secured creditors may have the right to retain secured property or assets, like a vehicle with car payments.
One of the most immediate benefits of filing under Chapter 7 is that it puts a stop to creditors trying to collect money. The “automatic stay” goes into effect when bankruptcy is filed and prohibits bill collectors from calling, sending collection letters, foreclosing on your property, or trying to repossess your car.
Chapter 7 Exemptions
There is a limited amount of exempt property that the debtor may be able to keep that the trustee cannot take or sell. Exempt assets are governed by Missouri state laws. Some examples of exempt property that is not included in you liquid assets to be sold off include:
- $15,000 in equity in a primary residence as a “homestead” exemption;
- $5,000 for mobile home equity;
- $3,000 for a vehicle;
- $3,000 in household furnishings and goods;
- $3,000 in professional implements and tools of the trade;
- $1,500 in firearms and ammunition;
- $1,500 for wedding rings;
- $500 for jewelry;
- 75% of wages (or 30 times the federal minimum wage);
- Certain employee and retirement benefits; and
- A $600 wildcard exemption.
Qualifying for Chapter 7 and the Means Test
The process for Chapter 7 bankruptcy from filing to discharge of debt generally takes 3 to 5 months. To qualify for Chapter 7 bankruptcy, the debtor may have to meet the “means test.” If the debtor's current monthly income is more than the state median, the means test is used to determine whether the filing is presumptively abusive. If the debtor cannot rebut the presumption of abuse, the debtor may not be able to file a Chapter 7 bankruptcy or may file Chapter 13 bankruptcy instead.
Chapter 13 Bankruptcy
Chapter 13 bankruptcy is another personal bankruptcy option and is also known as wage earner's bankruptcy. Chapter 13 bankruptcy may be the best option for individuals with too much debt but who still bring in a regular income. Chapter 13 bankruptcy can reorganize debt and provide for a court-supervised repayment plan.
Under Chapter 13 filing, the debtor files a plan for repayment with the bankruptcy petition. Payments are made to a trustee within 30 days of filing. The trustee then begins paying the creditors after the repayment plan has been approved by the court. Payments are made over the course of 3 to 5 years and after making the required payments, the remaining debt may be discharged.
Chapter 13 bankruptcy generally allows the debtor to keep certain property, like a car with a car loan, while continuing to make payments. To qualify for Chapter 13 bankruptcy, the individual can only have a limited amount of secured or unsecured debt. Chapter 13 bankruptcy is also an option for individuals with too high of an income to qualify under Chapter 7.
Not all debts are dischargeable after bankruptcy. Nondischargeable debts or debt that may more difficult to discharge includes:
- Child support obligations,
- Alimony or spousal support,
- Student loans,
- Debts for willful and malicious injuries to person or property,
- Debts to the government for fines and penalties,
- Debts for personal injury caused by DWI, and
- Debts for certain condominium fees.
Should I File for Bankruptcy?
Whether or not you should file for bankruptcy can be a difficult decision. There are a number of benefits to seeking bankruptcy protection and it can be the best option for you and your family in the long run. However, there are some important things to consider about how a bankruptcy can impact your life now and years down the road. Talking to an experienced bankruptcy attorney in your area can help you determine the best path forward.
Filing for Bankruptcy in Western Missouri
Bankruptcy filings are handled in the federal courts. Most bankruptcies filed in western Missouri are handled by the U.S. Bankruptcy Court, Western District of Missouri, in Kansas City. According to the Bankruptcy Court, bankruptcy laws in the U.S. are complicated and, if possible, you should seek the advice of an attorney before filing.
Missouri Bankruptcy Lawyer
Bankruptcy can put an end to bill collectors, repossessors, and banks harassing you and your family. Getting started on filing bankruptcy today can help you make a fresh start after financial hard times. If you have questions about filing for bankruptcy in Missouri, contact the Joshua Wilson Law Firm in Raymore today. Contact us online or by calling (816) 331-9968. We maintain a virtual capable law office to keep you safe and connected.