Financial stress often leaves individuals and businesses in Missouri searching for a way out. Many people struggling with debt choose to pursue bankruptcy. According to the Administrative Office of the U.S. Courts, there were 418,724 bankruptcies over a yearlong period ending in June 2023. 239,125 of them were Chapter 7 bankruptcies.
If you are considering Chapter 7 bankruptcy, you should review the eligibility requirements as well as the pros and cons of filing.
Chapter 7 bankruptcy
Choosing Chapter 7 bankruptcy can bring several advantages. It eliminates specific debts, relieving personal liability for them. Property acquired post-filing is generally exempt, which can safeguard future earnings. Unlike Chapter 13, there is no debt limit under Chapter 7, and filing does not require a court-approved repayment plan. Debt discharge can occur swiftly, often within a few months.
While Chapter 7 can provide a fresh start, you should weigh your options carefully. If you wish to retain secured property like a home with a mortgage, Chapter 7 might not be the best choice.
Eligibility for Chapter 7
To declare Chapter 7 bankruptcy in Missouri, you must pass a means test that assesses income. This test applies to those with higher incomes. If your income falls below the Missouri median for your household size, you can file Chapter 7 without taking the test. However, if your income exceeds the median, you must complete the means test.
To qualify for Chapter 7 bankruptcy, your current monthly household income must fall below the Missouri median income for your household size. This determines if you can repay some unsecured debts through Chapter 13 bankruptcy. There are notable exceptions. For example, you might be exempt from the means test if you are a disabled veteran who incurred debt during active duty.
Chapter 7 bankruptcy is a solution for individuals and businesses facing financial difficulties, providing relief and a path toward a brighter financial future.