Filing Chapter 7 Bankruptcy in Missouri
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Chapter 7 Bankruptcy is a liquidation bankruptcy and will allow you to discharge all or most of your unsecure debt with in four to six months. Unsecured debt can include: hospital bills, credit card debt and unsecure personal loans.
A trustee is assigned to your bankruptcy case and will sell your non-exempt possessions and use the proceeds from the sale to pay your creditors. All creditors will be paid in the order they are assigned under federal bankruptcy law. If you do not have any assets your bankruptcy will be a “no asset” bankruptcy. Corporations, couples, partnerships and individuals all may be eligible to file Chapter 7 Bankruptcy.
The first step in Chapter 7 Bankruptcy is to contact your Missouri Bankruptcy Attorney who can help file all the correct bankruptcy forms including the schedules, petitions and Statement of Financial Affairs which will outline all of your debts, assets, income, expenses, property, and creditors.
Chapter 7 Bankruptcy is considered the most popular, least expensive and simplest type of bankruptcy. Unfortunately, in recent years bankruptcy laws have been updated to make it more difficult to qualify to file Chapter 7 Bankruptcy. With the Bankruptcy Abuse Prevention and Consumer Act (BAPCPA) of 2005, there have been some updates to bankruptcy law to encourage individuals to repay most or all of their debts by filing Chapter 13 Bankruptcy. The main changes enacted by the BAPCPA include:
- Requiring individuals to take a credit counseling course prior to filing bankruptcy
- Requiring individuals to take a financial management course prior to the discharge of your debt
- Requiring individuals to pass an income test to qualify for Chapter 7 Bankruptcy
Individuals who now want to file Chapter 7 Bankruptcy must pass an income test. If you live in Missouri, the income test will compare your median income to other Missouri residents. If your median income is lower than other Missouri families (of similar size), you may be able to file Chapter 7 Bankruptcy. If your income is higher than other Missouri residents, you will have to pass additional means testing.
The goal of means testing is to determine if you have enough income after deducting your expenses to pay your debts. The means test will subtract certain expenses (house payment, car payment, child support, taxes owed and school tuition- up to $1650) from your gross income. If the amount remaining allows you to pay $6,000 or $100 per month toward your debt over the next 60 months, you may not be able to file Chapter 7 Bankruptcy. If you can not do this, but you could pay up to 25% of your disposable income toward debts over the next 60 months, you may not be able to file Chapter 7 Bankruptcy.
Means testing can be complicated and the information offered above is very general in nature and should not be considered legal advice. It is important to talk to a Missouri Bankruptcy Attorney to determine if you can file Chapter 7 Bankruptcy or Chapter 13 Bankruptcy.
State median data is provided by the United States Trustee Program. For the State of Missouri, after March 15, 2009, the median income for a single wage earner is $39,563 and for a family of two it is $51,612. For a family of three it is $58,473 and for a family of four it is $70,363.
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