The Bankruptcy Process in Missouri Explained

Understanding the bankruptcy process in Missouri is essential for individuals and businesses facing financial challenges. This legal procedure helps individuals eliminate or repay their debts while providing protections against creditors. Here’s a detailed overview of how the bankruptcy process works in Missouri.

Types of Bankruptcy Available in Missouri

In Missouri, there are two primary types of bankruptcy for individuals: Chapter 7 and Chapter 13. Each serves different financial situations and has its unique criteria.

Chapter 7 Bankruptcy

Chapter 7, often referred to as "liquidation bankruptcy," allows individuals to eliminate most of their unsecured debts, such as credit card bills and medical expenses. In this process, non-exempt assets may be sold off to pay creditors.

Eligibility for Chapter 7 is determined by the means test, which compares your average income to the state median income for a household of your size. If your income falls below the median, you may qualify for this type of bankruptcy.

Chapter 13 Bankruptcy

Chapter 13, known as "reorganization bankruptcy," is designed for individuals with a regular income who wish to keep their assets. This option allows you to create a repayment plan to pay back a portion or all of your debts over a period of three to five years.

Eligibility requirements include having a certain level of secured and unsecured debts, which must fall below specific limits set by the federal government.

The Bankruptcy Process

The bankruptcy process in Missouri generally follows these steps:

1. Credit Counseling

Before filing for bankruptcy, individuals must complete a credit counseling session with an approved agency within six months. This session will help you explore alternatives to bankruptcy.

2. Filing the Petition

After the counseling session, you can file a bankruptcy petition in the U.S. Bankruptcy Court in Missouri. This petition must include comprehensive financial details, including your income, expenses, assets, and debts.

3. Automatic Stay

Upon filing, an automatic stay goes into effect, which stops most collection actions against you. This includes wage garnishments, foreclosure processes, and creditor harassment.

4. Meeting of Creditors

A few weeks after filing, you will attend a Meeting of Creditors (also known as a 341 hearing). Here, the bankruptcy trustee will ask you questions about your financial situation, and creditors may have the opportunity to ask questions as well.

5. Resolution of Debts

For Chapter 7 filers, the trustee will liquidate non-exempt assets to pay off creditors. In Chapter 13 cases, the court will approve a repayment plan. You must make regular payments according to this plan over the designated repayment period.

6. Discharge of Debts

If everything goes smoothly, you will receive a discharge order, wiping out eligible debts. For Chapter 7, this typically occurs within a few months after the filing. In Chapter 13, it happens once all payments under the repayment plan are completed.

Conclusion

The bankruptcy process in Missouri offers individuals and families a path toward financial recovery. Understanding your options and the steps involved is crucial for making informed decisions. If you're considering filing for bankruptcy, consulting with a qualified bankruptcy attorney can provide guidance and help you navigate this difficult terrain smoothly.

Remember that bankruptcy has long-term financial implications, so it's essential to weigh the pros and cons and explore all available alternatives before proceeding.