Missouri Laws on Bankruptcy and Credit Card Defaults

Understanding bankruptcy and credit card defaults in Missouri is crucial for residents dealing with financial hardship. The laws surrounding these issues can significantly impact one’s financial future, and being informed can help you navigate the situation more effectively.

Bankruptcy in Missouri
In Missouri, bankruptcy is a legal process that allows individuals or entities to eliminate or reorganize their debt. The two most common types of bankruptcy filings for individuals are Chapter 7 and Chapter 13.

Chapter 7 Bankruptcy
Also known as “liquidation bankruptcy,” Chapter 7 allows individuals to discharge most of their unsecured debt, including credit card debt. To qualify for Chapter 7, you must pass the means test, which assesses your income against the state’s median income for households of similar size. If your income is below the median, you may automatically qualify. However, if it is above, you will need to demonstrate a lack of disposable income.

Chapter 13 Bankruptcy
Chapter 13 is often referred to as “reorganization bankruptcy.” This option allows individuals to structure a repayment plan to pay back their debts over a three to five-year period. This type of bankruptcy is beneficial for those who want to keep their assets, such as a home or vehicle, while reorganizing their debt. To file for Chapter 13, you must have a regular income and your secured and unsecured debts must fall below certain thresholds.

Impact of Bankruptcy on Credit
Filing for bankruptcy in Missouri will have a significant impact on your credit score. A Chapter 7 bankruptcy remains on your credit report for up to ten years, while a Chapter 13 bankruptcy stays for seven years. However, although it will temporarily lower your credit score, many individuals find that post-bankruptcy, they can begin to rebuild their credit more quickly than expected by responsibly managing their finances.

Credit Card Defaults
Defaulting on a credit card occurs when you fail to make the necessary payments for an extended period. In Missouri, when you default on a credit card, the creditor may charge off the account after 180 days of non-payment, leading to severe consequences.

The creditor may attempt to recover the debt through collection agencies or, in some cases, may choose to file a lawsuit. If the creditor wins the lawsuit, they could potentially obtain a court judgment allowing them to garnish your wages or place a lien on your property.

Rights of Consumers
When facing credit card defaults and collections, Missouri consumers have rights under the Fair Debt Collection Practices Act (FDCPA). This federal law prohibits debt collectors from employing abusive, unfair, or deceptive practices. For example, they cannot contact you at inconvenient times or places, and they must provide verification of your debt upon request.

Seeking Legal Assistance
When dealing with bankruptcy and credit card defaults, it’s advisable to consult with a qualified attorney who specializes in bankruptcy law. They can guide you through the complexities of the process, help you understand your options, and advocate for your rights. Legal assistance can be particularly invaluable when negotiating with creditors or navigating court proceedings.

Conclusion
Missouri residents facing financial struggles from credit card defaults and considering bankruptcy have options available to them. By understanding the laws and seeking appropriate guidance, individuals can find a pathway to financial recovery.