Are You Eligible for Chapter 7 Bankruptcy? | St. Charles, Missouri



Are You Eligible for Chapter 7 Bankruptcy?

Find Out if Chapter 7 Bankruptcy Can Give You A Financial Fresh Start

If you are struggling with debt in Missouri and tried everything else, filing for bankruptcy might be your last resort. Among the types of bankruptcy, Chapter 7 bankruptcy in Missouri is considered the easiest and fastest. But before you go for it, you must ensure you are eligible.

Bankruptcy is a legal way to help you clear your debts, pay off what you owe, and get your money situation back on track. It is a common choice for people who need to start fresh financially. But bankruptcy rules can be different depending on where you live. You must meet requirements before filing for a specific type, like Chapter 7.

Quick Summary:

  • Chapter 7 bankruptcy is a potential solution for individuals in Missouri struggling with overwhelming debt.
  • Chapter 7, also known as “liquidation bankruptcy,” can help clear most debts, offering a fresh financial start.
  • Qualification for Chapter 7 involves passing a means test, attending financial counseling, and meeting specific criteria.
  • Not all assets are lost in Chapter 7. Exemptions protect essential items, but non-exempt property may be sold to pay off debts.
  • Consider factors such as income, assets, debt, and goals before determining if Chapter 7 is the right choice.
  • Alternatives to Chapter 7 include Chapter 13 bankruptcy, debt consolidation, debt settlement, and credit counseling.

Chapter 7 bankruptcy can give you a fresh start, but qualifying for it is not always easy. We break down the main things that decide if Chapter 7 bankruptcy is right for you. It helps you understand your options, so you can make smart choices about your money.

What is Chapter 7 Bankruptcy?

Chapter 7 bankruptcy, also known as “liquidation bankruptcy,” is the common bankruptcy type in the United States. It helps people clear most of their debts, like credit card bills, medical expenses, and loans not tied to property, such as a house or a car. 

If you are struggling to pay your bills and cover your basic living costs, Chapter 7 might be a good choice. 

But Chapter 7 usually means you have to sell some of your belongings to pay off your debts. While it can get rid of certain debts in a few months, a court-appointed trustee might sell your belongings not protected by the law to pay back your creditors. 

How Does Chapter 7 Bankruptcy Work?

Chapter 7 bankruptcy can help people struggling with many debts to get a fresh start. Here’s how it works: 

  1. Filing: Start by filling out paperwork with the court to begin the process.
  2. Trustee Evaluation: A court-appointed trustee examines your assets to see if they can be sold to pay off your debts.
  3. Asset Protection: Some possessions, like your car or clothes, might be protected so you can keep them.
  4. Creditor Meeting: Attend a meeting with your creditors where they can ask you questions about your finances.
  5. Debt Discharge: The court wipes out your eligible debts if everything goes well. That means you don’t have to pay them back anymore.
  6. Exceptions: Not all debts can be cleared, such as student loans or child support.
  7. Fresh Start: Chapter 7 bankruptcy offers relief from overwhelming debt, though it may require giving up some possessions to settle debts.

How Do I Qualify for Chapter 7 Bankruptcy?

Knowing if you meet the requirements for Chapter 7 bankruptcy in Missouri is crucial if you are dealing with a ton of debt. However, there are rules you have to follow. You must pass a test about your income and go through some financial counseling. Take a closer look at what it takes to qualify for Chapter 7 bankruptcy in Missouri.

Means Test

The means test compares your income to the median income in Missouri for a household of your size. If your income falls below this median, you typically qualify for Chapter 7 bankruptcy. If your income exceeds the median, you may still qualify based on your expenses and ability to repay debts.

Financial Counseling

Before filing for Chapter 7 bankruptcy, you must attend credit counseling from an agency approved by the United States Trustee Program. This counseling session aims to assess your financial situation, explore alternatives to bankruptcy, and create a budget plan.

Previous Bankruptcy

Suppose you had a bankruptcy case dismissed within the last 180 days for reasons such as failure to appear in court, failure to comply with court orders, or voluntary dismissal after creditors sought relief from the bankruptcy stay. In that case, you might not qualify for Chapter 7 bankruptcy immediately.

Income Source

Your income source must be considered regular and reliable, such as wages from employment, self-employment income, or government benefits like Social Security or unemployment compensation. Income from illegal sources or sporadic windfalls may not count towards qualification.

No Fraudulent Activity

You must not have engaged in fraudulent activity related to your debts or bankruptcy filing. This includes intentionally concealing assets, providing false information on bankruptcy forms, or transferring assets to defraud creditors.

Credit Counseling

After filing for Chapter 7 bankruptcy, you must complete a debtor education course from an approved agency. This course covers topics on budgeting, managing money, and using credit wisely to help you make informed financial decisions in the future.

Eligibility Review

Reviewing your specific financial situation with a qualified bankruptcy attorney is crucial. They can assess your eligibility for Chapter 7 bankruptcy based on your income, expenses, assets, and debts. Additionally, they can guide you through the bankruptcy process, ensuring that you meet all legal requirements and understand the implications of filing for bankruptcy.

Will I Lose All My Properties If I Filed For Chapter 7?

Filing for Chapter 7 bankruptcy does not necessarily mean you will lose all your property. Some possessions, like your home, car, and other necessities such as clothing and household items, may be protected under what’s called “exemptions.” These exemptions allow you to keep essential items. 

However, non-exempt property, things that are not protected, may be sold by a trustee appointed by the court to help pay off your debts. These may include expensive jewelry or valuable collections, secondary cars or recreational vehicles, expensive electronics or appliances, and other properties not considered essential for daily living. While you might have to give up some belongings, you will not necessarily lose everything. 

Is Filing for Chapter 7 the Best Choice For Me?

Whether Chapter 7 bankruptcy suits you depends on your specific financial situation. It is a big decision that depends on many things. Here are some critical factors:

Chapter 7 bankruptcy might be right for you if:

  • You have significant debts that you cannot repay.
  • You do not have many assets or valuable property.
  • You are struggling to make minimum payments on your debts.
  • You have little to no disposable income.
  • You want a fresh start financially.

What factors do you need to consider: 

  • Your money situation right now: How much money you make, how much you spend, how much you owe, and what you own.
  • What you want to achieve with your money: Do you need help for a short time, or are you looking for a long-term fix?
  • If you are allowed to file for Chapter 7 bankruptcy: Do you meet the income and other requirements for Chapter 7 in Missouri?
  • How much risk you are okay with: Are you comfortable with the potential consequences of filing for bankruptcy, like the impact on your credit score and the need to sell some assets?

What are your alternatives to Chapter 7:

  • Chapter 13 bankruptcy: Repayment plan instead of liquidation, but longer and more complex process.
  • Debt consolidation: Combines multiple debts into one monthly payment but does not necessarily reduce overall debt.
  • Debt settlement: Negotiates lower settlements with creditors but can damage credit score.
  • Credit counseling: This can help develop a budget and explore repayment options.

Remember, filing for bankruptcy is a significant decision with potential consequences. Carefully consider all your options and seek professional guidance before making a choice.

Unsure if Chapter 7 Bankruptcy in Missouri is Right for You? Give Us A Call Now!

Now that you have learned more about Chapter 7 bankruptcy eligibility, knowing you are not alone is crucial. Getting through bankruptcy can be tricky. So, reaching out for help is a good idea. You can talk to our bankruptcy attorney at Westbrook Law Group, LLC. Our bankruptcy attorneys can help you assess your financial situation, determine your eligibility, and explore your options.

Whether you are dealing with wage garnishment, facing credit card debts, or want to know how to build your credit score, Westbrook Law Group, LLC is always ready to assist. 

Asking for help does not mean you are weak. It means you are strong enough to face your financial problems head-on. Take that first step toward a brighter financial future by contacting us today for a free consultation. Remember, you have the power to make things better for yourself.

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