Missouri Bankruptcy Laws for Unsecured Debt
Understanding Missouri bankruptcy laws is crucial for individuals facing the burden of unsecured debt. Unsecured debts generally include credit card balances, medical bills, and personal loans that are not backed by collateral. Missouri offers several options for debtors considering bankruptcy, with Chapter 7 and Chapter 13 being the most common forms.
Chapter 7 Bankruptcy in Missouri
Chapter 7 bankruptcy allows individuals to eliminate most unsecured debts. This process involves liquidating nonexempt assets to pay creditors, although many debtors find that they can keep essential property such as their homes and cars. Missouri follows specific exemptions that can help protect assets. For instance, Missouri law allows individuals to exempt a portion of their equity in their home, making it possible to retain their living situation while navigating bankruptcy.
To qualify for Chapter 7 bankruptcy, you must pass the means test, which compares your income to the median income of a household of your size in Missouri. If your income is below the median, you may file under Chapter 7. If it's above, you may need to explore Chapter 13 as an alternative.
Chapter 13 Bankruptcy in Missouri
Chapter 13 bankruptcy is a reorganization plan that enables individuals to keep their property while repaying a portion of their debts over a three to five-year period. This type of bankruptcy is beneficial for individuals with a steady income who want to save their assets from liquidation and repay their creditors gradually.
In Missouri, you can discharge certain unsecured debts through Chapter 13 while making monthly payments to a trustee, who will distribute the funds to creditors. This approach often helps individuals regain control over their finances and avoid the long-term credit damage associated with Chapter 7.
Debts Dischargeable Under Missouri Bankruptcy
Both Chapter 7 and Chapter 13 bankruptcies allow for the discharge of various types of unsecured debts. Common dischargeable debts include:
- Credit card debt
- Medical bills
- Personal loans
- Utility bills
- Some types of tax debt (under specific circumstances)
However, not all debts are dischargeable. For example, student loans, child support, and most tax debts are typically non-dischargeable under both chapters.
Impact on Credit
It is essential to understand that declaring bankruptcy will negatively impact your credit score. A Chapter 7 bankruptcy can remain on your credit report for up to ten years, while Chapter 13 can stay for seven years. However, many individuals find that they can start rebuilding their credit score soon after filing, especially if they manage their finances responsibly moving forward.
Seeking Legal Assistance
Navigating bankruptcy laws can be complex, and the implications can significantly affect your financial future. It is advisable to seek the assistance of a qualified bankruptcy attorney in Missouri who can guide you through the process, ensure you make informed decisions, and help you understand your rights.
Understanding Missouri bankruptcy laws for unsecured debt can empower you to take control of your financial situation. Whether opting for Chapter 7 or Chapter 13, knowing your options and rights will pave the way for a more secure financial future.