Filing for Bankruptcy in Missouri: A Guide

Quick answer

• Bankruptcy can offer a fresh financial start but has long-term consequences.
• In Missouri, you can file for Chapter 7 (liquidation) or Chapter 13 (reorganization).
• You must meet specific eligibility requirements, including a means test for Chapter 7.
• Legal and credit counseling is mandatory before filing.
• A bankruptcy attorney can significantly help navigate the complex process.
• Consider alternatives like debt management or negotiation before filing.

Who this is for

• Individuals and families in Missouri struggling with overwhelming debt.
• Those who have explored other debt relief options without success.
• People seeking to understand the process and implications of filing for bankruptcy in Missouri.

What to check first (before you act)

Goal and timeline

What do you hope to achieve by filing for bankruptcy? Is it to discharge certain debts, stop foreclosure, or reorganize payments? Your goals will influence which chapter you might consider. Be realistic about the timeline; bankruptcy proceedings can take several months to over a year.

Current cash flow

Understand your monthly income and expenses in detail. This is crucial for determining your eligibility for Chapter 7 and for developing a repayment plan if you file for Chapter 13. Track every dollar to see where your money is going.

Emergency fund or safety buffer

While it might seem counterintuitive, having a small emergency fund can be vital. It helps cover unexpected expenses during the bankruptcy process and provides a buffer for when you emerge. However, bankruptcy laws limit what assets you can protect.

Debt and interest rates

List all your debts, including the creditor, balance, and interest rate. This helps you understand which debts might be dischargeable and which are not (like most student loans or recent taxes). High-interest debt can be a significant driver for considering bankruptcy.

Credit impact

Filing for bankruptcy will significantly impact your credit score for several years. While it can offer a fresh start, rebuilding credit afterward is essential. Understand that a bankruptcy filing will remain on your credit report for up to 10 years.

Step-by-step (simple workflow)

1. Assess your financial situation thoroughly.

• What to do: Gather all financial documents, including income statements, bank statements, tax returns, and a comprehensive list of debts and assets.
• What “good” looks like: You have a clear, itemized understanding of your income, expenses, assets, and liabilities.
• Common mistake: Overlooking or miscalculating debts or income.
• How to avoid it: Be meticulous, double-check calculations, and consider using budgeting software or a spreadsheet.

2. Determine your eligibility.

• What to do: Research the requirements for Chapter 7 (liquidation) and Chapter 13 (reorganization) bankruptcy in Missouri. This includes the “means test” for Chapter 7, which compares your income to the state median.
• What “good” looks like: You understand which chapter you might qualify for based on your income and debt levels.
• Common mistake: Assuming you automatically qualify for the chapter you prefer.
• How to avoid it: Carefully review the official U.S. Courts or Missouri bankruptcy court resources, or consult with an attorney.

3. Complete mandatory credit counseling.

• What to do: You must complete a credit counseling course from an approved agency within 180 days before filing.
• What “good” looks like: You have a certificate of completion from an approved agency.
• Common mistake: Taking the course too early or from an unapproved agency.
• How to avoid it: Verify the agency’s approval status and note the course’s expiration date.

4. Decide which chapter to file.

• What to do: Based on your financial assessment and eligibility, choose between Chapter 7 or Chapter 13. Chapter 7 typically liquidates non-exempt assets to pay creditors, while Chapter 13 allows you to repay some or all of your debts over 3-5 years.
• What “good” looks like: You’ve made an informed decision that aligns with your financial goals and legal eligibility.
• Common mistake: Choosing the wrong chapter for your situation.
• How to avoid it: Discuss your options thoroughly with a bankruptcy attorney.

5. Gather necessary documentation.

• What to do: Compile all required financial documents for the court, including pay stubs, tax returns, bank statements, property deeds, vehicle titles, and a list of all creditors.
• What “good” looks like: You have a complete and organized packet of all required financial disclosures.
• Common mistake: Missing or incomplete documentation.
• How to avoid it: Use the official bankruptcy forms as a checklist and organize documents by category.

6. File the bankruptcy petition.

• What to do: Complete and submit the official bankruptcy forms to the U.S. Bankruptcy Court for the Eastern or Western District of Missouri.
• What “good” looks like: Your petition is accurately filled out and filed on time.
• Common mistake: Errors or omissions in the petition.
• How to avoid it: Carefully review all forms before submission, or have an attorney file on your behalf.

7. Attend the Meeting of Creditors (341 Meeting).

• What to do: You must attend a meeting where a bankruptcy trustee and any creditors can ask you questions under oath about your financial situation.
• What “good” looks like: You attend the meeting prepared and answer all questions truthfully.
• Common mistake: Missing the meeting or not being truthful.
• How to avoid it: Prepare by reviewing your petition and understanding your finances; always be honest.

8. Complete debtor education.

• What to do: After filing, you must complete a debtor education course from an approved agency to discharge your debts.
• What “good” looks like: You have a certificate of completion for the debtor education course.
• Common mistake: Forgetting to take this course, which prevents discharge.
• How to avoid it: Mark the deadline on your calendar and schedule the course promptly.

9. Await court approval and discharge.

• What to do: The court will review your case. If all requirements are met, your eligible debts will be discharged.
• What “good” looks like: You receive a discharge order from the court.
• Common mistake: Not understanding what debts are discharged or the timeline.
• How to avoid it: Review the discharge order carefully and consult your attorney about any remaining obligations.

Common mistakes (and what happens if you ignore them)

Mistake	What it causes	Fix
Not consulting a bankruptcy attorney	Incorrect filing, missed deadlines, loss of assets, case dismissal.	Seek legal counsel early in the process.
Failing to disclose all assets or debts	Dismissal of your case, potential charges of fraud, inability to discharge debts.	Be completely honest and thorough in your disclosures.
Misunderstanding the “means test”	Filing for Chapter 7 when you’re not eligible, leading to dismissal or forced conversion to Chapter 13.	Carefully calculate your income against Missouri’s median income.
Missing the Meeting of Creditors	Automatic dismissal of your bankruptcy case.	Prioritize attending this meeting and be prepared.
Not completing the debtor education course	Inability to have your debts discharged, even if other requirements are met.	Schedule and complete this course before the court deadline.
Trying to hide assets	Criminal charges, dismissal of bankruptcy, and inability to get a fresh start.	Full and honest disclosure of all property.
Not understanding exemptions	Losing more property than you are legally allowed to.	Research Missouri’s exemption laws or consult an attorney.
Making new debt after filing	This debt may not be dischargeable and can complicate your case.	Avoid taking on new debt while in bankruptcy.
Not understanding secured debts (mortgages, car loans)	Potential loss of collateral if payments are not maintained or a reaffirmation agreement is not reached.	Understand your options for secured debts and make timely payments.

Decision rules (simple if/then)

• If your primary goal is to eliminate most unsecured debts quickly and you have limited assets, then Chapter 7 might be suitable because it aims for a fresh start by liquidating non-exempt assets.
• If you have regular income and want to keep secured assets like your home or car, then Chapter 13 may be better because it allows you to repay debts over time through a structured plan.
• If your income is above the state median for your household size, then you will likely need to pass the “means test” for Chapter 7, or consider Chapter 13.
• If you have significant non-dischargeable debts (like recent taxes or most student loans), then bankruptcy might not eliminate all your financial problems because these debts typically survive bankruptcy.
• If you have a history of filing for bankruptcy, then you may be restricted from filing again for a certain period, so check the rules.
• If you are facing foreclosure or repossession, then Chapter 13 can provide a way to catch up on payments and keep your property.
• If you have recently transferred assets or incurred significant debt, then this could impact your bankruptcy case, so disclose these actions.
• If you are considering bankruptcy, then consulting with a Missouri bankruptcy attorney is highly recommended because they can explain complex laws and guide you through the process.
• If you have substantial equity in assets that exceed Missouri’s exemption limits, then Chapter 7 could result in those assets being sold.
• If you are unsure about your eligibility for Chapter 7, then consider pursuing Chapter 13 to protect your assets while reorganizing your debts.

FAQ

What is the difference between Chapter 7 and Chapter 13 bankruptcy?

Chapter 7 bankruptcy involves liquidating non-exempt assets to pay creditors, aiming for a quick discharge of eligible debts. Chapter 13 is a reorganization plan where you repay a portion of your debts over 3-5 years.

Will bankruptcy solve all my debt problems?

No, bankruptcy does not discharge all debts. Common non-dischargeable debts include most student loans, recent tax debts, child support, and alimony.

How long does bankruptcy stay on my credit report?

A Chapter 7 bankruptcy remains on your credit report for up to 10 years from the filing date, while a Chapter 13 bankruptcy stays for up to 7 years from the completion date of the repayment plan.

Can I keep my house if I file for bankruptcy in Missouri?

It depends on the type of bankruptcy and your equity. Chapter 7 allows you to keep your home if you can exempt it and continue making mortgage payments. Chapter 13 allows you to catch up on missed payments over the plan’s duration.

What is the “means test”?

The means test is a requirement for Chapter 7 bankruptcy. It compares your income to the median income in Missouri for a household of your size to determine if you have enough disposable income to repay creditors through Chapter 13.

Do I need a lawyer to file for bankruptcy?

While not legally required, it is highly recommended. Bankruptcy law is complex, and an attorney can help you navigate the process, ensure you meet all requirements, protect your assets, and achieve the best possible outcome.

How much does it cost to file for bankruptcy in Missouri?

There are court filing fees, and costs for credit counseling and debtor education courses. Attorney fees vary widely depending on the complexity of your case and the attorney’s experience.

What happens to my credit cards if I file bankruptcy?

Most unsecured credit card debt is dischargeable in Chapter 7. In Chapter 13, you may pay a portion of it through your repayment plan. After bankruptcy, rebuilding credit is crucial.

What this page does NOT cover (and where to go next)

• Specific legal advice for your individual situation. Consult a qualified bankruptcy attorney in Missouri.
• Detailed explanation of Missouri’s specific asset exemption laws. Research Missouri Revised Statutes or consult an attorney.
• Strategies for debt negotiation or management outside of bankruptcy. Explore consumer credit counseling agencies or debt relief services.
• The process of business bankruptcy filings. Seek specialized legal counsel for business matters.
• Tax implications of debt discharge. Consult a tax professional.