What Debts Can Be Discharged in Missouri Bankruptcy?
When individuals in Missouri find themselves overwhelmed by debt, bankruptcy can offer a fresh start. However, not all debts can be discharged in bankruptcy. Understanding what debts can be eliminated is crucial for anyone considering this legal option.
In Missouri, there are two main types of bankruptcy filings for individuals: Chapter 7 and Chapter 13. Each type has its own rules regarding dischargeable debts. Let's take a closer look at what debts can be discharged in each type of bankruptcy.
Debts Dischargeable in Chapter 7 Bankruptcy
Chapter 7 bankruptcy, often referred to as "liquidation bankruptcy," allows individuals to eliminate most unsecured debts. Key dischargeable debts under Chapter 7 include:
- Credit Card Debt: Unpaid credit card balances can be discharged, providing significant relief to individuals burdened by high-interest debt.
- Medical Bills: Unsecured medical debts, which can accumulate quickly due to unexpected health issues, are also dischargeable.
- Personal Loans: Unsecured personal loans from banks or private lenders can be wiped out in bankruptcy.
- Utility Bills: Outstanding utility bills typically qualify for discharge, helping individuals regain control of their financial situations.
- Debts from Collections: Debts sent to collection agencies can also be discharged, stopping further attempts to collect.
It is important to note that some debts are non-dischargeable in Chapter 7, including child support, alimony, certain tax debts, and student loans, among others.
Debts Dischargeable in Chapter 13 Bankruptcy
Chapter 13 bankruptcy, known as "reorganization bankruptcy," allows individuals to create a repayment plan for their debts over three to five years. While some debts can be discharged under Chapter 13, the process also aims to allow individuals to catch up on overdue payments while discharging certain obligations. Dischargeable debts in Chapter 13 include:
- Unsecured Debts: Much like Chapter 7, unsecured debts such as credit card debt and personal loans can be discharged.
- Past Due Balances: Debts that are past due as of the filing date may be discharged in some cases.
However, Chapter 13 is typically more complex, as it also requires individuals to pay secured creditors (like mortgage and car loan lenders) to retain their property. Notably, certain obligations such as child support, alimony, and many tax debts remain non-dischargeable in this type of bankruptcy as well.
Conclusion
Understanding which debts can be discharged in Missouri bankruptcy is essential for navigating the process effectively. While Chapter 7 provides the opportunity to eliminate unsecured debts quickly, Chapter 13 offers a pathway for repayment and eventual discharge of certain obligations. For tailored advice suited to individual circumstances, consulting with a bankruptcy attorney is highly recommended.