Missouri Bankruptcy Laws and Credit Card Debt

Understanding the implications of bankruptcy laws in Missouri is essential for individuals struggling with credit card debt. Filing for bankruptcy can provide relief, but it’s important to know how Missouri's laws specifically affect your financial situation.

In Missouri, individuals facing overwhelming credit card debt generally have two main options for bankruptcy: Chapter 7 and Chapter 13. Each of these chapters has distinct eligibility requirements, processes, and effects on your finances.

Chapter 7 Bankruptcy

Chapter 7 bankruptcy, often referred to as liquidation bankruptcy, allows individuals to eliminate unsecured debts, such as credit card debt, relatively quickly. To qualify for Chapter 7 in Missouri, you must pass the means test, which evaluates your income against the state’s median income for your household size. If your income is below this threshold, you might qualify for Chapter 7 protection.

Once you file for Chapter 7, an automatic stay goes into effect, halting all collections efforts, including creditor calls and lawsuits. Your assets will be assessed, and any non-exempt property could be liquidated to repay creditors. However, Missouri offers certain exemptions that allow you to retain essential assets, such as your primary residence, a vehicle, and personal belongings up to a certain value.

Chapter 13 Bankruptcy

Chapter 13 bankruptcy is designed for individuals with a regular income who want to keep their property while repaying debts over time. This type of bankruptcy allows individuals to create a repayment plan that spans three to five years, during which they make monthly payments to a bankruptcy trustee, who then distributes the funds to creditors. This is an effective way for individuals to manage and eventually eliminate credit card debt while preserving their assets.

To qualify for Chapter 13, your secured and unsecured debts must fall below certain limits, which are adjusted periodically. Unlike Chapter 7, the means test does not apply here, making it a feasible option for many individuals regardless of their income level.

Credit Counseling Requirement

Before filing for bankruptcy in Missouri, individuals must complete a credit counseling course from an approved agency. This requirement aims to ensure that individuals explore all their options before pursuing bankruptcy as a solution for their financial difficulties. Following the course, you’ll receive a certificate that you must include with your bankruptcy filing.

The Impact on Credit

It’s important to note that filing for bankruptcy will have a significant impact on your credit score. A Chapter 7 bankruptcy remains on your credit report for ten years, while a Chapter 13 stays for seven years. However, many individuals find that their credit score improves in the long term as they rebuild their credit post-bankruptcy.

Consulting a Bankruptcy Attorney

Navigating the complexities of Missouri’s bankruptcy laws and how they pertain to credit card debt can be challenging. It’s highly advisable to consult with a qualified bankruptcy attorney who can guide you through the process and provide personalized advice based on your financial situation. An attorney can help you understand your options, the potential ramifications of filing, and the best way to protect your assets.

In summary, Missouri bankruptcy laws offer valuable options for those overwhelmed by credit card debt. By understanding both Chapter 7 and Chapter 13 bankruptcy, individuals can make informed decisions and take steps towards financial recovery.