Bankruptcy Basics

Bankruptcy Basics

Find a Bankruptcy Lawyer in MO

Credit card companies want people to believe that bankruptcy is just for people who aren’t able to manage their finances and purposefully abuse their credit cards. They use these tactics to shame people to keep them from filing for bankruptcy protection. The reality is that most people who file bankruptcy do so because of job loss, unexpected medical bills, and other factors beyond their control.


At Doyer Law, we have filed bankruptcy cases for a wide variety of people. For people who file for bankruptcy from all walks of life, financial problems burden all demographic groups. It helps to be informed about the nuances of the bankruptcy process before you make a life-changing decision. A competent attorney armed with helpful bankruptcy information can spell the difference between a bankruptcy discharge or a dismissal.

Types of Bankruptcy in Missouri

Bankruptcy is federal law and is a mechanism that allows people to get a fresh financial start. Most debts are “discharged” in bankruptcy meaning that you no longer owe them. Some debts are not dischargeable, such as child support and student loans. Most people who file for bankruptcy typically use one of two types. Those are Chapter 7 and Chapter 13.

 

Missouri Chapter 7 Bankruptcy

In Chapter 7 most people do not end up paying anything to their unsecured creditors, such as credit cards, payday loans, and medical bills. Unfortunately, not everyone qualifies for a personal bankruptcy Chapter 7. Debtors must pass the “means test” which Congress implemented to make high-income people pay back a portion of what they owe to unsecured creditors.

 

Choosing Chapter 7 Bankruptcy

To apply for Chapter 7 bankruptcy, you must satisfy the means test. To prevent high-income individuals from misusing the bankruptcy system,

 

In Missouri, the means test compares your recent income to the median income of similar-sized Missouri families. It then looks at your discretionary income if you earn more than the median. After paying for necessities like food and shelter, this is the surplus. Have enough discretionary money to pay off your debts?

 

The median household income for Missouri was $57,409 in 2019. 2020 median household income data will be released in December 2021.

 

After-Chapter 7 Debts

Before applying for Missouri Chapter 7 bankruptcy, keep in mind that certain debts will remain after the bankruptcy. The federal court cannot dismiss the following debts:

  • Child Support
  • Alimony
  • Student Loans
  • Splitting marital assets
  • Penalties
  • Outstanding income and property taxes

You must also keep up with your home and auto payments. Inaction may lead to foreclosure or repossession.

Missouri Chapter 13 Bankruptcy

For those who cannot file Chapter 7 for some reason, Chapter 13 is an option. Chapter 13 allows people to make payments under a court-approved plan based on what they can afford, rather than what they owe.

 

Chapter 13 Bankruptcy Eligibility

If you don’t qualify for Chapter 7, you may be able to file for bankruptcy Chapter 13 in Missouri. If you want to file for Chapter 13 bankruptcy in Missouri, there are limits on how much debt you may have. This debt limit is modified regularly.

 

In particular, the 2020 Chapter 13 debt limits under Section 109(e) are effective as of April 1, 2019, and are valid for all of 2019, 2020, and 2021. Therefore, the current Chapter 13 debt limits effective for 2020 are $419,275 for unsecured debt and $1,257,850 for secured debt.

 

A secured debt loan is one for which you have made a security deposit. Unsecured debt is a loan for which you did not put up any collateral.

 

You won’t be allowed to petition for Chapter 13 if you surpass one of these debt restrictions. However, before filing bankruptcy Chapter 11, you should consult with a Missouri bankruptcy attorney.

MO Bankruptcy Exemptions

Whatever type of bankruptcy petition you choose, you’ll need to familiarize yourself with Missouri’s bankruptcy exemptions before filing for bankruptcy. An exemption allows you to protect a specific asset from creditors, such as your home or vehicle. Exempt property will not be liquidated to repay creditors in Chapter 7. You won’t have to factor exempt property into your debt repayment plan in Chapter 13.

The Show-Me Situation

The state has chosen not to participate in the federal bankruptcy exemptions list and has instead created its own. We’ll go through some of the most essential Missouri bankruptcy federal exemptions below:

  • Your Residence

Many people in Missouri who are considering bankruptcy are hesitant because they are concerned about losing their homes. However, there is some good news: the homestead exemption allows you to exempt up to $15,000 in home equity or $5,000 in mobile home equity.

  • Your Automobile

Similarly, under Missouri bankruptcy laws, you may be able to exempt some of the equity you have in your vehicle. In this case, you can deduct up to $3,000 from your taxes.

  • Your Wildcard

This exemption is known as a “wildcard” since it may be used for almost anything. You may deduct up to $600 in value from a collection of rare coins or a family heirloom. You may also deduct $350 for each kid you have, with an additional $1,250 if you are the head of your home.

Automatic Stay

The bankruptcy law is in place to protect both the creditor and the debtor. One of the most powerful parts of bankruptcy filing is known as the “automatic stay.” When someone files for bankruptcy, the “automatic stay” requires that everyone you owe money to just stop trying to collect from you. This means that all garnishments, tax levies, foreclosures, lawsuits, and harassment phone calls must stop.

The Bankruptcy Courts of Missouri

All bankruptcy matters are heard by the United States Bankruptcy Court. There are two districts in the city: the Western District and the Eastern District.

Those who live in Kansas City should register their claim in the Western District, while those who live in St. Louis should file in the Eastern District. This implies that if you wish to file for Missouri bankruptcy, you must go to the bankruptcy court where you live in Missouri. If you are still unsure about which court to go to, please contact Doyel law for a free consultation and note-worthy legal help.

Hire a Reliable Debt-Relief Law Firm to Assist You With Your Bankruptcy in Missouri.

Many people believe that filing a bankruptcy petition is the last resort, but it might just be the best solution to wipe out your unsecured debt. I have seen many people use their 401k retirement to pay creditors when bankruptcy could have eliminated the debt and allowed them to keep their retirement. Call us at Doyel Law, LLC to learn if bankruptcy filing is the best option for you. We have a team of experienced and talented bankruptcy attorneys who will fight tirelessly for your bankruptcy case so you can get a fresh start.

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