- There are two ways for you to declare bankruptcy. You can file for a so-called "Chapter 7 Bankruptcy" which tells the court that you have more unsecured debts than you can handle and that you would like to liquidate your assets, pay off your creditors with the proceeds, and start you financial life over. Any amount you owe to your unsecured creditors after your assets are liquidated will be forgiven by the bankruptcy court. Or you can file for a "Chapter 13 Bankruptcy", because you would like to pay off your creditors by making payments for up to five years.
- To file a Chapter 7 Bankruptcy, you must pass a "means test" in Missouri before you can be eligible. If your income exceeds the state's median income, your allowable expenses will be assessed. And if the court finds that you are able to pay at least $6,000 each year to your creditors after you cover your living expenses, then you're precluded from filing a Chapter 7 Bankruptcy. In 2009, the median annual income for a single person was about $39,500. If he was in a family of two, under $52,000; a family of three, $58,473; and about $70,000 for a family of four.
- Just like other states, Missouri will not include things like alimony, child support or back taxes owed by the petitioners. But it also excludes purchases of luxury goods of $550 or more if they are made within 90 days of filing. Missouri law also excludes any cash advances of $825, or more, if made by the petitioner within 70 days of filing for a Chapter 7 Bankruptcy.
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Missouri laws, not federal laws, govern what you may keep if your Chapter 7 Bankruptcy is accepted. What follows is a list of exempt property that you will find at research.lawyers.com (see Resources).
Your homestead, which is your house and the land connected with it, up to $15,000 in value
Your motor vehicle, up to $3,000 in value
Appliances, household goods, furnishings, clothing, books, crops, animals, and musical instruments up to $3,000 in value
Jewelry, up to $500 in value; wedding ring up to $1,500 in value
Wrongful death settlements for the person upon whom the debtor was dependent
Personal injuries and monetary damages
Social security benefit
Unemployment compensation
Local public assistance benefit
Veterans' benefits
Disability, illness, or unemployment benefit
Workers compensation
Implements, books and tools of your trade, up to $3,000 in value
Alimony or child support up to $750 per month
ERISA-qualified pension benefits
Firefighters' pensions
Highway and transportation employees' pensions
Police department employees' pensions
State employees' pensions
Teachers' pensions
Local governmental employees' pensions
Minimum of 75% of earned but unpaid wages; 90% for head of household
Unmatured life insurance contract if policy owned by the debtor in bankruptcy, other than a credit life insurance contract
Property that is held in tenancy by the entirety between a husband and a wife may be exempt against debts owed by only one spouse. This exemption is not available for tax liability.
Any asset you choose up to $600 in value
$1,250 for the head of household and $350 for each unmarried dependent under age 18 or disabled
Mobile home used as principal residence and not attached to real estate in which you have a fee interest, up to $5,000 in value
Professionally prescribed health aids
Burial grounds to one acre or $100 in value - If you file for bankruptcy, it will appear on your records at the three credit bureaus for up to ten years. Until it is expunged, your bankruptcy will affect your ability to seek new credit, or you will pay higher interest for the money that you borrow. Before you file for bankruptcy, look into alternatives that may be less punitive. For example, a credit counseling company may be successful in negotiating with your creditors to reduce what you owe. Or consider a home equity or a bill consolidation loan to reduce the interest you may be currently paying and possibly the size of your monthly payments.
