Missouri Bankruptcy Laws: What are the Laws Regarding Bankruptcies in the State of Missouri
People who work in different professions seek relief from their creditors by filing bankruptcy, and this includes even business owners, doctors, lawyers, and CEOs of Fortune 500 companies. People of different ages, ethnicities, religions, and backgrounds find a lot of financial relief by filing for bankruptcy.
In the United States, filing for personal bankruptcy is an American’s economic right. Creditors are aware that you have the legal right to file bankruptcy and consider this risk when you determine what interest rates they will charge you. If the interest rates on your debts are very high, it is possible that you might have already paid the creditor more than you initially cost or borrowed.
Bankruptcy in Missouri
If you are considering the option of filing for bankruptcy, in the state of Missouri, you should research and educate yourself about the federal and Missouri bankruptcy laws. People who are unable to repay their debts can file for one of several types of personal bankruptcy, also known as consumer bankruptcy. The bankruptcy filings in Missouri accomplish one of two things, a debtor either asks the court to discharge, or forgive, some of his/her debts, or you are seeking approval for a debt repayment plan.
Types of Bankruptcy
The type of bankruptcy that is apt for you will depend on your specific financial situation. Even if you live in St. Louis, Kansas City, Jefferson City or any another part of the state, a local bankruptcy attorney in Missouri can help and advise you throughout your bankruptcy process.
There are two types of consumer bankruptcy in Missouri.
The simplest and straightforward form of bankruptcy is Chapter 7, also known as liquidation or straight bankruptcy. With Chapter 7, the court will discharge you of your debt after some of your property is seized and sold to repay certain creditors.
The property that the trustee sells is known as non-exempt property. Non-exempt property can include a second home, extra cars, stocks, and investments. The property you get to keep is called exempt property. Although the list of exempt property in Missouri changes periodically, it generally includes such things as your house, a car, furniture, and clothing.
Another form of bankruptcy is Chapter 13. With Chapter 13, the debtor seeks approval from the court for a debt repayment plan that lasts three to five years. You must have an income to file for Chapter 13 bankruptcy.
Missouri Homestead Laws
Missouri homestead law allows residents a $15,000 exemption, which applies to homes, like buildings, and the land on which the building are. Some states extend these protections to other types of property that go beyond real estate.
The statute according to the US Code makes it clear that the total exemption amount of $15,000 should not be exceeded under any circumstances. For example, if there are two co-owners of a property, they are eligible to claim homestead protection of up to $15,000 together. Additionally, if one co-owner claims homestead protection, the other co-owner may not sell the property.
Federal Homestead Protections
Missouri real estate owners are free to elect and choose the federal homestead exemption instead of and not in addition to state homestead protections. The federal exemption amount is $22,975, and it may apply to burial plots and mobile homes as well as houses and condos. Furthermore, married couples can increase this and double this exemption to $45,950.
It is essential to keep in mind that the federal law requires a 40-month residency in the property before declaring homestead protection. Any former property owned in the state if sale proceeds were used to purchase the current ownership, count toward this requirement.