People who are struggling financially in Missouri know that filing for Chapter 7 bankruptcy is a potential option for relief. However, many St. Louis residents hesitate to pursue bankruptcy because they do not know what to expect from the bankruptcy process. The truth is that there is no reason to fear the bankruptcy process and that experienced bankruptcy attorney Kenneth Carp can help you through every step of the process. What follows here is a brief overview of the steps in a bankruptcy in Missouri.
Prior to Bankruptcy
In accordance with federal law, you must attend a credit counseling course in order to qualify for bankruptcy, with limited exceptions. You must attend a course approved by the United States Bankruptcy Trustee in Missouri, who provides a list online.
Completing and filing forms
Bankruptcy requires several complicated and lengthy forms that you must file. Examples of forms include a petition, the means test, forms detailing all of your financial information, and more. Filling out these forms completely and accurately is vital to qualifying for Chapter 7 bankruptcy, so you should not attempt to complete them on your own. An experienced St. Louis bankruptcy lawyer can help make sure all forms are completed correctly.
Additionally, these forms must be filed with the appropriate court in accordance with that courts rules. If your forms are filed incorrectly, your bankruptcy may be significantly delayed or even completely thrown out. It is highly important to have an attorney who is familiar with St. Louis court procedures and rules.
Determining Household Median Income
If your household income is below the Missouri median income for your household size, you are exempt from taking the Missouri Chapter 7 means test. Consequently, you may file a Chapter 7 bankruptcy.
Average monthly household income is determined by averaging your monthly income over the past six calendar months. That number is then multiplied by 12 to determine your annual household income. The annual median household income thresholds in Missouri range from $40,994.00 for one-member households to $120,830.00 for ten-member households.
If your household income exceeds the median income threshold for a household of your size, you must complete the Chapter 7 means test.
Taking the Chapter 7 Means Test
The Chapter 7 means test involves calculating all of your household income and expenses for a given year. For purposes of the means test, ‘income’ includes business income, rental income, interest and dividend income, pensions, retirement plans (i.e., 401(k) and 403(b) retirement plans), money paid by others toward household expenses, and unemployment income.
Once you have determined the amount of your household income for the year, you must subtract out your total expenses. This final number determines the amount of income you have available under the bankruptcy laws to pay your unsecured creditors.
The final determination is as follows:
- If your total monthly income for the next 60 months is lower than $7,475.00, then you may file a Chapter 7 bankruptcy.
- If your total monthly income for the next 60 months is over $12,475.00, then you may not file a Chapter 7 bankruptcy.
- If your income is between those amounts, then you need to do further calculations to determine whether or not you are eligible to file for a Chapter 7 bankruptcy.
Federal and state laws provide exemptions that allow you to keep certain property or assets in your Chapter 7 bankruptcy, and you always want to apply exemptions in the most beneficial way possible in order to keep the most property possible. Exemptions may include equity in homes or cars, personal possessions, insurance policies, and more. A bankruptcy lawyer can help make sure you use exemptions to your maximum advantage.
These are only a few of the required steps in a Chapter 7 bankruptcy. If you have an experienced attorney handling your case, you have no reason to be wary of the process. At the Law Offices of Kenneth P. Carp, we are committed to helping St. Louis residents with their financial problems, so call us today at 636-947-3600 for help.