According to the law, to file for Chapter 7 your household income must be below the median income for a family of that size in Missouri.
Kansas City, MO – A man’s gotta do what a man’s gotta do. If you’re struggling with debt and there’s no silver lining anywhere on the horizon, it’s time to file for bankruptcy. It’s not pleasant and the process can be very confusing. No worries, that’s what lawyers are for. When considering bankruptcy, the most important decision is choosing the procedure that’s best suited to your financial situation and your needs.
How does bankruptcy work in Kansas City?
If you live in Kansas City, you’ll have to file for bankruptcy in the Western District Bankruptcy Court.
For regular folks, there are two main types of consumer bankruptcy – Chapter 7 and Chapter 13. Businesses can use Chapter 11 to reorganize their debts, while farmer and fishermen families can use Chapter 12 bankruptcy when they’re behind on payments.
Chapter 7 vs. Chapter 13
Chapter 7 is the first choice for most Missouri residents, primarily because it’s a quick scheme. You can be done with the whole bankruptcy procedure within 3-4 months.
Chapter 7 is commonly referred to as liquidation bankruptcy as it involves selling your non-exempt assets to pay your debts. This is done by a court-appointed trustee.
Chapter 13 is not about selling your assets. You get to keep everything provided you keep up with the debt repayment schedule set by the court. To be able to file under Chapter 13 you must have a reliable income that will allow you to repay your mortgage, loans, and credit card debt. It’s a long process that can take 3 to 5 years.
Your Kansas City bankruptcy lawyers will have a look at your financial situation to see if you qualify for Chapter 7. According to the law, to file for Chapter 7 your household income must be below the median income for a family of that size in Missouri. If your income is above average, you may have to use Chapter 13, but you will have to first take a means test to know for sure.
Pros of a Chapter 7 filing in Kansas City
Seeing your assets seized and sold may not sound too appealing, but you get to keep at least part of your valuables. Talk to experienced Missouri bankruptcy lawyers to see what exemptions you can use. In Missouri, you have to play by state rules and you cannot use federal bankruptcy exemptions. Here are the good things to keep in mind:
- Your unsecured debts (loans, credit cards, medical expenses, etc) will be discharged. They’re gone.
- Secured debts, such as your mortgage or your car loan, will remain. If you manage to keep your house and your car, you must sign a “Reaffirmation Agreement” and keep up with the monthly payments.
- Creditors cannot touch you. They cannot put garnishments on your wages and they won’t even be allowed to call you about your debt. All pending lawsuits filed by creditors are stopped.
- You get to keep all the wages you earn after filing for bankruptcy and any inheritance you receive.
Cons of a Chapter 7 filing in Kansas City
Before you file for Chapter 7 have a serious talk with reliable Kansas City bankruptcy lawyers to understand what property you can keep.
- All non-exempt property will be sold and the proceeds will be used by the trustee to pay your debts.
- You cannot choose which debts to include in your bankruptcy filing. You must list all your debts.
- If you use Chapter 7, you won’t be able to file for bankruptcy for the next 8 years. This is why your lawyers will advise caution. In some cases, they may tell you to wait for a few more months before you file for bankruptcy. Your debts will keep accumulating during that time, but they can all be discharged.
Tip: Since you’ll be dealing with lawyers and court clerks, now would be a good time to educate yourself a bit on legal matters.