Missouri Bankruptcy Laws and Wage Garnishment Rules
Bankruptcy can be a vital financial relief option for individuals struggling with overwhelming debt. In Missouri, understanding the specific bankruptcy laws and wage garnishment rules is essential for anyone considering this route. This article will explore these regulations to help you navigate the complexities of financial distress in the state.
Understanding Bankruptcy in Missouri
Missouri offers individuals the opportunity to file for two main types of bankruptcy: Chapter 7 and Chapter 13. Chapter 7 liquidates non-exempt assets to pay off creditors, while Chapter 13 establishes a repayment plan that allows individuals to keep their property and pay back their debts over time.
Chapter 7 Bankruptcy
In Missouri, Chapter 7 bankruptcy permits qualified individuals to discharge most unsecured debt, including credit card debt and medical bills. To qualify, debtors must pass a means test, demonstrating that their income is below the state's median. Exemptions available under Missouri laws can protect certain assets during the bankruptcy process, such as a portion of home equity and personal property.
Chapter 13 Bankruptcy
Chapter 13 bankruptcy is ideal for those who have a steady income but are struggling to keep up with their debt payments. This option allows debtors to create a repayment plan, spanning three to five years, to pay off their debts in manageable installments. This plan can also help individuals avoid foreclosure on their homes and stop wage garnishments.
Wage Garnishment in Missouri
Wage garnishment is a legal process that allows creditors to collect debts directly from a debtor's paycheck. In Missouri, there are specific rules governing how much of your wages can be garnished and the process that creditors must follow.
Limits on Wage Garnishment
Missouri law limits the amount that can be garnished from wages to 25% of disposable earnings or the amount by which your weekly disposable earnings exceed 30 times the federal minimum wage, whichever is lower. Disposable earnings refer to an employee's income after legally required deductions.
Stopping Wage Garnishment
If you are facing wage garnishment, filing for bankruptcy can halt the process. As soon as you file for either Chapter 7 or Chapter 13 bankruptcy, an automatic stay goes into effect, preventing creditors from garnishing your wages or pursuing collection actions during the bankruptcy proceedings.
Protection from Wage Garnishment
Aside from bankruptcy, Missouri law offers certain protections against wage garnishment. If the debts qualify for specific exemptions, such as student loans, taxes, or some child support obligations, these can affect the amount that can be garnished. Additionally, individuals may contest the garnishment if they can demonstrate financial hardship or incorrect debt amounts.
Conclusion
Understanding Missouri bankruptcy laws and wage garnishment rules is crucial for anyone facing financial hardship. By knowing your options, you can make informed decisions about your financial future. Whether you choose to pursue Chapter 7 or Chapter 13 bankruptcy, or explore other avenues to stop wage garnishment, consulting with a legal professional familiar with Missouri laws can provide you with the guidance necessary to regain control of your finances.