Understanding Missouri’s Means Test for Bankruptcy

Understanding Missouri’s Means Test for bankruptcy is essential for anyone considering filing for Chapter 7 or Chapter 13 bankruptcy in the state. The means test determines whether individuals qualify for Chapter 7 bankruptcy, which can eliminate certain debts without a repayment plan.

The means test in Missouri is based on household income compared to the state's median income. This test ensures that individuals with higher incomes are not able to eliminate their debts via Chapter 7 bankruptcy. To pass the means test, your household income must fall below the median income for your family size in Missouri.

As of the latest data, the median income thresholds vary based on family size. For instance, individuals with one member must have a monthly income below approximately $3,257, while a family of four must stay under about $5,268. These figures are essential as they directly influence your eligibility for Chapter 7 bankruptcy.

If your income exceeds the median, you must complete additional calculations to determine your disposable income. This involves deducting allowable living expenses and secured debt payments from your monthly income. If your disposable income is significant, you may not qualify for Chapter 7 and may need to consider Chapter 13 bankruptcy instead, which involves a repayment plan over three to five years.

Moreover, the means test is not solely about income. It also takes into account certain expenses allowed by the IRS, including basic living costs such as food, clothing, healthcare, and housing. By accurately calculating these expenses, debtors may demonstrate that they have little to no disposable income left, thus improving their chances of qualifying for Chapter 7 bankruptcy.

It’s crucial to remember that not all debts can be discharged through bankruptcy, even if you qualify. Student loans and child support payments, for example, remain intact. Therefore, understanding the overall landscape of your financial situation in conjunction with the means test is vital.

If you're considering bankruptcy, consulting with a knowledgeable bankruptcy attorney in Missouri is advisable. They can provide guidance specific to your circumstances, ensuring you understand every aspect of the means test and the bankruptcy process.

In summary, understanding Missouri’s means test for bankruptcy is a key step in managing overwhelming debt. By assessing your income against the state median and calculating your expenses, you can determine the best path forward, whether that leads to Chapter 7 or Chapter 13 bankruptcy.