Eligibility Requirements for Bankruptcy in Missouri

Bankruptcy can be a complex process, especially when it comes to understanding the eligibility requirements. In Missouri, individuals filing for bankruptcy must meet certain criteria under federal and state laws. There are primarily two types of bankruptcy filings for individuals: Chapter 7 and Chapter 13. Each has its own eligibility requirements, which we will explore below.

Chapter 7 Bankruptcy Eligibility

Chapter 7 bankruptcy is often referred to as “liquidation bankruptcy.” To qualify for this type of bankruptcy in Missouri, an individual must pass the means test. The means test determines whether your income is below the median income for a household of your size in Missouri. If your income exceeds this threshold, you may need to consider Chapter 13 bankruptcy instead.

As of 2023, the median income for a two-person household in Missouri is around $80,000. However, this figure is subject to change, so it is essential to verify the current median income statistics. The calculation considers not just your gross income but also deductions for allowable expenses, which can help decrease your income level for the means test.

Aside from the means test, individuals must meet other requirements, including:

• No Previous Bankruptcy Discharges: You cannot have received a discharge in a Chapter 7 case within the last eight years.
• Credit Counseling: You must complete a credit counseling course from an approved agency within 180 days before filing.

Chapter 13 Bankruptcy Eligibility

Chapter 13 bankruptcy, known as “reorganization bankruptcy,” allows individuals to create a repayment plan to pay off their debts over a period of three to five years. The primary eligibility requirement for Chapter 13 is that individuals must have a regular source of income. This income can come from employment, self-employment, or other means.

Another critical eligibility factor is the amount of debt you owe. As of 2023, your unsecured debts must be less than $465,275, and secured debts must be less than $1,395,875. These figures are also subject to change, so it's crucial to check for the most current limits.

Additionally, like Chapter 7, those looking to file for Chapter 13 must also complete a credit counseling course before filing. Furthermore, you cannot have had a prior bankruptcy that was dismissed due to failure to comply with the court’s order within the last 180 days.

Conclusion

The eligibility requirements for bankruptcy in Missouri can seem daunting, but understanding them is crucial for successfully navigating the process. It is advisable for individuals to consult with a qualified bankruptcy attorney to assess their situation accurately and ensure compliance with all legal requirements. Seeking professional guidance can provide clarity and help individuals make informed decisions about their financial futures.