Overwhelmed by Debt? Filing Chapter 13 Bankruptcy Can Help
Chapter 13 bankruptcy in Missouri can be a way out of overwhelming debt, offering a chance to create a manageable repayment plan and a fresh financial start, especially for residents of St. Charles.
This guide will break down the process of filing for Chapter 13 bankruptcy in St. Charles, Missouri, including who qualifies, how to build a repayment plan, and what to expect along the way. By understanding the specifics of the process in your area, you can approach Chapter 13 bankruptcy with more confidence.
Short Summary:
- Chapter 13 bankruptcy in Missouri allows individuals with regular income struggling with debt to create a court-supervised repayment plan (three to five years) to get back on track financially.
- To qualify for Chapter 13 bankruptcy, you must be tax-compliant, manage your debt within certain limits, prove stable income, and be an individual (or sole proprietor with business debt).
- Missouri law protects certain assets, including up to $15,000 of home equity, up to $3,000 of car equity, a wildcard exemption for some non-exempt property (amount varies depending on household size), retirement savings (protected by federal and state laws), and various personal items, burial plots, medical equipment, etc.
- The filing process for Chapter 13 bankruptcy involves preparation (debt analysis, income assessment, etc.), followed by paperwork filing, meetings and hearings, plan payments, and completion of financial management courses.
What is Bankruptcy?
Bankruptcy is a legal process that helps people in overwhelming debt get a fresh start. It allows them to create a plan to repay some or all their debts over time, depending on the specific chapter of bankruptcy they file under. In the case of this guide, we’ll be focusing on Chapter 13 bankruptcy in Missouri.
What is Chapter 13 Bankruptcy?
Chapter 13 bankruptcy is a legal option for individuals with regular incomes struggling with overwhelming debt. It allows them to create a manageable repayment plan, typically lasting three to five years, under the supervision of the court.
The purpose of Chapter 13 bankruptcy is to help people catch up on missed payments, restructure their debts, and eventually become debt-free while keeping valuable assets like their car or house.
Am I Eligible For Chapter 13 Bankruptcy?
Before you file for Chapter 13, there are a few things you need to take care of:
- Be Tax-Ready: Get your federal and state income tax filings up to date for the past four years.
- Manage Your Debt: There are limits on how much debt you can have to qualify for Chapter 13. You must have enough income to repay some of your debts, and your debts cannot be too high. In addition, you must be current on your tax filings.
- Show Stable Income: You’ll need a steady income to make the required monthly payments in your repayment plan. Your income after subtracting certain allowed expenses and required payments on secured debts must be enough to meet your repayment obligations.
- Individuals Only (Mostly): Chapter 13 is typically for individuals, not businesses. However, sole proprietors can include their business debts in the filing.
What are the Exemptions in Chapter 13 Bankruptcy?
While filing for bankruptcy allows for debt relief, it doesn’t mean you lose everything. Missouri offers exemption laws that protect certain assets you own. Here’s a quick rundown of what you can shield in bankruptcy:
- Home Equity: The homestead exemption safeguards up to $15,000 of value in your residence. Married couples filing jointly can’t simply double this amount.
- Vehicle Equity: Missouri allows you to exempt up to $3,000 of equity in your car.
- Wildcard Exemption: Choose up to $600 worth of any non-exempt property you want to keep. Heads of households get an increased exemption amount.
- Retirement Savings: Most retirement accounts like individual retirement accounts (IRAs) and 401(k)s are generally protected by federal law. Missouri also offers protection for specific state pensions.
Here’s a more detailed list of exempt assets in Missouri:
- Personal Property: Up to $3,000 of furniture, clothes, appliances, and other household items
- Burial Plots: Up to one acre of land or $100
- Medical Equipment: Assistive devices necessary for your health
- Jewelry: Up to $1,500 for a wedding ring and $500 for other jewelry
- Wrongful Death Awards: Funds received due to wrongful death lawsuits, if needed for support.
- Firearms: Up to $1,500 worth of firearms and related accessories
- Health Savings Accounts (HSAs): Funds saved in a health savings account
- Tools of the Trade: Up to $3,000 worth of tools or equipment you use for your work
- Alimony or Child Support: Up to $750 per month received in support payments
How Can I File for Chapter 13 Bankruptcy?
Below is a breakdown of the key steps involved in filing for Chapter 13:
Preparation:
- Analyze Your Debt: There are limits on the total debt you can have, and some debts must be repaid in full under Chapter 13. Also, Chapter 13 has exceptions for some debts, such as secured debts where the creditor can repossess your property if you don’t repay the loan.
- Value Your Assets: Knowing the value of your property and what protections you have is crucial.
- Assess Your Income: You’ll need enough income to cover living expenses, debt payments, and the value of any non-exempt property you keep.
Filing and Initial Procedures:
- Complete the Paperwork: This involves gathering financial information and drafting your repayment plan.
- Take a Pre-filing Course: Credit counseling is mandatory before filing.
- File Your Petition and Pay Fees: Submit your paperwork and the filing fee to start the process.
- Provide Financial Documents: The trustee will verify your income and assets after filing.
- Attend Creditor Meetings and Hearings: You’ll meet with a trustee and potentially creditors to discuss your plan and get court approval.
- Automatic Stay: After filing for Chapter 13 bankruptcy in Missouri, the automatic stay starts. Your creditors are legally prevented from contacting you or taking further collection actions once your petition is filed.
Plan Execution and Completion:
- Make Your Repayments: Start making payments according to your confirmed plan within 30 days.
- Complete the Financial Management Course: Take the second required course before your debt discharge.
- Receive Your Discharge: Once you complete your plan, you’ll be relieved of most outstanding debt.
Call Our St. Charles Bankruptcy Attorney Now!
Chapter 13 bankruptcy offers a path to financial recovery in St. Charles, Missouri. By creating a manageable repayment plan, you can catch up on missed payments, avoid foreclosure, and ultimately discharge some eligible debts. While the process may seem complex, the knowledgeable team at Westbrook Law Group, LLC can guide you every step of the way.
Our bankruptcy law firm offers free consultations to discuss your situation and explore your options. Don’t hesitate to call our knowledgeable St. Charles attorneys to help determine if Chapter 13 bankruptcy in Missouri is the right solution for you and ensure a smooth filing process. Take charge of your financial future today!
