According to the 2005 Bankruptcy Act, all District Courts must adhere to federal standards for bankruptcy. Missouri has an Eastern and Western District with 8 court locations between the 2 districts. The most commonly filed types of bankruptcies in Missouri are Chapter 7, Chapter 11, Chapter 12, and Chapter 13.
Chapter 7 is an elimination bankruptcy, ridding the debtor of many unsecured debt once the bankruptcy is finalized. This is an attractive option for those with a high debt ratio and few assets that would be liquidated to repay debt. Non-dischargeable debt, like child support and taxes remain the responsibility of the debtor.
Chapter 13 works a bit differently. Instead of eliminating debt, it is reorganized so that the petitioner has a longer time frame to pay it off without accruing so many fees and so much interest. The repayment period is typically between 3 and 5 years. As long as payments are being made, the petitioner's home and car can stay in their possession.
A similar type of bankruptcy for businesses is called Chapter 11. Chapter 11 offers debt relief and a 3 to 5 year repayment period to businesses which may allow them to stay in operation. A similar but specific to family farmers and fishermen type of bankruptcy is called Chapter 12.
Credit counseling is required within 6 months prior for all who petition bankruptcy. Some people are able to navigate their way out of debt without having to file, while others choose to take the path of bankruptcy. For those who wish to petition, there are several other steps to complete.
The first step is to determine for which type of bankruptcy a petitioner is eligible. This is done by way of a Means Test. The Means Test compares the petitioner's last 6 months of income with the median income of the state of Missouri. If the debtor's income is lower than the median, he or she is eligible for Chapter 7 or Chapter 13. Those with higher income have the option of Chapter 13 only.
It is then necessary to gather paperwork to submit to the court. This includes, but it not limited to: records of recent major financial transactions, tax returns from the last 2 years, deeds to property, vehicle titles, loan information, a list of all debts, an inventory of all possessions, and monthly expenses. For those filing Chapter 13, a written summary of debt repayment is also due.
The paperwork is then added to the forms required for each bankruptcy and is referred to by the court as "the schedule." Some people find it helpful to hire legal counsel to file bankruptcy, while others choose to file on their own. The cost for Chapter 7 is $306 and can be waived in some cases. Chapter 13's fees are $281 and cannot be waived. Of course, the attorney fees are the responsibility of the petitioner.
When the court receives the documents, they issue an automatic stay for the debtor. This prevents creditors from contacting the petitioner directly and halts foreclosure proceedings. The case is then reviewed by a court appointed trustee who uses the non-exempt items to liquidate for repayment of outstanding balances. The trustee is also responsible for holding a 341 meeting between the creditors and debtor to negotiate terms. If no agreement can be made, a judge will intervene.
Lastly, all petitioners are required to complete a financial management course to finalize their bankruptcy. Chapter 13 filers must continue to make payments as arranged by the court to avoid penalties.
Missouri is a state divided into two districts for bankruptcy proceedings, an Eastern and Western District. The Eastern Bankruptcy Courts are found in the following cities: Cape Girardeau, Hannibal, and St. Louis. Situated in the Western Bankruptcy District are the locations Jefferson City, Joplin, Kansas City, Springfield, and St. Joseph.