Can Bankruptcy Help Me? Is Bankruptcy the Right Option for Me?
It can happen to anyone. Bills begin to pile up. You can’t make regular payments anymore, and you end up over your head in debt. If your situation is spiraling out of control, filing bankruptcy may be able to help you get back on your feet financially.
The Basics of Missouri Bankruptcy
There are two main categories of bankruptcy individuals can file: (1) Chapter 7; and (2) Chapter 13.
- Chapter 7
Under Chapter 7, which can take between four (4) and six (6) months, your assets are examined to determine which can be sold, or liquidated, in order to repay your creditors as much as possible. Some of your assets are exempt, and therefore cannot be sold. After your non-exempt assets are sold, any remaining debts you have are wiped out, or discharged (although, there are certain debts which cannot be discharged, including alimony/maintenance support, taxes, student loans, and others).
- Chapter 13
Chapter 13 bankruptcy is a reorganization of debts, creating a plan based on various factors in your life. This form of bankruptcy allows you to adjust your debt without liquidating your assets. As the debtor, you can submit a plan to pay off debt in three (3) to five (5) years that is based on your current and future income. If you are successful, your debt will be discharged. However, you may also be able to change from a Chapter 13 to a Chapter 7, if it is determined that your plan will not work.
Specific Missouri Rules for Filing Bankruptcy
While bankruptcy is a part of federal law, there are many state specific rules that you should be aware of prior to filing. First, Missouri has two districts for filing bankruptcy, including the Eastern District (St. Louis, Hannibal, and Cape Girardeau), and the Western District (Kansas City, Jefferson City, Joplin, Springfield, and St. Joseph). Where you file will depend on where you live.
Second, whether you can file for Chapter 7 bankruptcy depends on whether you have an average monthly income that is less than the median monthly income in Missouri. However, even if you make too much money, there is a possibility you can qualify for Chapter 7 if you are able to pass other stringent tests.
Third, as previously mentioned, under Chapter 7 some assets are exempt from liquidation in order to ensure that debtors do not go without their basic necessities. Both federal law and state law have specific lists of exempt property. While some states will allow you to choose between taking the federal list of exemption or the state list, in Missouri you are required you to follow the state exemptions. The Missouri list of exemptions includes:
- Real property (i.e., your home) valued up to $15,000 or a mobile home valued up to $5,000;
- A motor vehicle valued up to $3,000;
- A minimum of 75% of weekly earnings (90% if head of family) or 30 times the federal minimum hourly wage – whichever is more;
- Personal and household items, such as clothing, furniture, appliances, books, crops, animals, and musical instruments, totaling in value up to $3,000;
- Certain health aids;
- Wedding rings that are valued up to $1,500, as well as other jewelry valued up to $500; and
- Certain items you need for work, totaling up to $3,000.
Fourth, if Chapter 13 is the best option for you, your repayment plan, as indicated earlier, will vary depending again on your income. If you earn less than Missouri’s median income, your repayment plan will be less than three (3) years – unless good cause is shown to extend it, which if granted, is usually no more than five (5) years. If, on the other hand, your income is equal to or greater than the median income in Missouri, your repayment plan will likely be for five (5) years.
The Right Bankruptcy Attorney Can Help
With so many variables at play when dealing with bankruptcy, it is important to find the right attorney who will help you make the tough decisions that protect your interests. At Hollingshead, Paulus, and Eccher, you will find just that. We have the knowledge, experience, and skills needed to protect you and your financial interests. If you are considering bankruptcy, do not hesitate to call us today. We can help.