Missouri Laws on Bankruptcy and Garnished Wages

In Missouri, bankruptcy laws provide individuals facing overwhelming debts a fresh start by eliminating or reorganizing their financial obligations. Understanding how bankruptcy interacts with wage garnishment is crucial for those considering this option. This article explores Missouri laws on bankruptcy and the implications for garnished wages.

Bankruptcy in Missouri is governed by both federal and state laws. The most common types of bankruptcy filings for individuals are Chapter 7 and Chapter 13. Chapter 7 allows for the discharge of most unsecured debts, while Chapter 13 enables individuals to create a repayment plan to pay off their debts over three to five years.

When a debtor files for bankruptcy, an automatic stay goes into effect immediately. This means that creditors must cease all collection activities, including wage garnishments. The automatic stay offers immediate relief for individuals struggling with wage garnishments, preventing further deductions from their paychecks while the bankruptcy case is underway.

Under Missouri law, wage garnishment limits are determined by both state and federal regulations. Generally, creditors can garnish up to 25% of an individual's disposable earnings or the amount by which disposable earnings exceed 30 times the federal minimum wage, whichever is less. However, if an individual is experiencing hardship, they may be able to request exemptions to reduce the amount being garnished.

Filing for bankruptcy can potentially discharge the debts that led to wage garnishment. For instance, if credit card debts or medical bills caused a creditor to pursue garnishment, filing for Chapter 7 bankruptcy may eliminate those debts entirely, thus stopping any garnishment. In Chapter 13, the repayment plan should account for income, and if successful, it can lead to the eventual discharge of those debts.

It is important for individuals facing wage garnishment to gather all necessary documentation and consult with a qualified bankruptcy attorney. An attorney can provide detailed guidance on how bankruptcy laws apply to their specific situation and help determine the best course of action to regain financial stability.

Additionally, after a bankruptcy discharge, the individual’s credit report will reflect the bankruptcy filing for up to 10 years, impacting future credit opportunities. However, the elimination of overwhelming debt often provides a path to renewed financial health.

If you are struggling with wage garnishment or considering bankruptcy as a means to manage your debts, it is essential to understand your rights and options under Missouri law. Seeking professional legal advice can ensure that you navigate the complexities of bankruptcy successfully and protect your financial future.