Missouri Laws on Bankruptcy and Wage Garnishment

Bankruptcy laws in Missouri play a crucial role in protecting individuals facing financial difficulties, especially when it comes to wage garnishment. Understanding the intersection of these two legal processes can provide relief and clarity for those who find themselves overwhelmed by debt.

Bankruptcy is a legal process that allows individuals or businesses to discharge or reorganize their debts under the protection of federal law. In Missouri, you can file for two main types of bankruptcy: Chapter 7 and Chapter 13. Chapter 7 bankruptcy is designed for individuals with limited income, allowing them to eliminate most unsecured debts, while Chapter 13 bankruptcy offers individuals with a regular income a way to create a repayment plan to manage their debts over three to five years.

One of the significant concerns for individuals considering bankruptcy is wage garnishment. Wage garnishment occurs when a court orders an employer to withhold a portion of an employee's earnings to pay off a debt. However, when you file for bankruptcy, an automatic stay is immediately put into effect. This stay halts all collection activities, including wage garnishment, providing the debtor with some breathing room.

In Missouri, there are specific laws governing wage garnishment. Generally, creditors can garnish up to 25% of a debtor's disposable earnings or the amount by which the debtor's weekly earnings exceed 30 times the federal minimum wage, whichever is less. However, certain types of income, like Social Security benefits and unemployment compensation, are exempt from garnishment.

If you file for Chapter 7 bankruptcy, the automatic stay will stop any current wage garnishment immediately. If your wages are being garnished, you will need to notify your employer and the court that you have filed for bankruptcy to ensure that the garnishment is stopped. Additionally, any wages garnished within the 90 days prior to filing could potentially be recovered through the bankruptcy process.

For those opting for Chapter 13 bankruptcy, the situation is slightly different. The automatic stay will also stop wage garnishments, but it is important to establish a repayment plan. This plan must be approved by the court, and once established, your income will be accounted for in determining monthly payment obligations. Creditors will not be able to garnish wages while you are adhering to the repayment plan.

It is important for individuals to understand their rights when faced with wage garnishment and bankruptcy. Consulting a qualified attorney specialized in bankruptcy law can provide valuable guidance tailored to your specific situation. With the right legal support, you can navigate these laws effectively and work towards regaining financial stability.

In summary, Missouri’s laws on bankruptcy provide essential protections against wage garnishment. By filing for bankruptcy, individuals can halt garnishments and either discharge or reorganize their debts, providing a path towards financial recovery.