Bankruptcy Lawyer in Union, MO
Collection calls that won't stop, a garnishment on your paycheck, a car payment you're behind on, or credit card and medical bills that keep growing no matter what you pay. Schmanke Law Firm helps people in Union and the surrounding area figure out whether bankruptcy makes sense, which debts it would and wouldn't address, and what could happen to their house and car.
The two kinds of bankruptcy most people file
Individuals usually file under either Chapter 7 or Chapter 13 of the Bankruptcy Code.
In a Chapter 7 case, a court-appointed trustee reviews what you own. Property protected by exemptions stays with you. Property that isn't protected can be sold, with the money going to creditors. Most Chapter 7 cases turn out to be "no asset" cases, meaning there's nothing unprotected worth selling. At the end, most individual filers receive a discharge of the debts the law allows to be discharged. Chapter 7 cases are usually finished within a few months.
A Chapter 13 case works differently. You generally keep your property and make monthly payments to a trustee under a repayment plan that lasts three to five years. The plan is based on your income and expenses, and the court has to approve it. Some debts are paid in full through the plan, others only in part. The discharge comes at the end, after the payments are completed. Which chapter a person can use isn't a matter of preference. Chapter 7 has an eligibility test based on income, and each chapter has its own requirements and tradeoffs.
Who qualifies for Chapter 7
Chapter 7 eligibility for most individuals with consumer debt runs through what's called the means test. The first step compares your household income over the past six months with the median income for a Missouri household of the same size. Those median figures are published by the government and change periodically.
If your income is below the median, you generally pass. If it's above, there's a second calculation that looks at certain expenses and how much you could realistically pay toward debts. Being over the median doesn't automatically rule out Chapter 7.
What happens once a case is filed
Before filing, individuals are required to complete a credit counseling course from an approved provider. The case itself starts when a petition is filed with the U.S. Bankruptcy Court for the Eastern District of Missouri, along with detailed schedules listing your income, expenses, debts, and property. Everything has to be disclosed.
Filing triggers what's called the automatic stay. It stops most collection activity, including most lawsuits, wage garnishments, and collection calls, while the case is open. It isn't absolute. Some actions, such as collecting child support, aren't stopped, and a creditor with a loan secured by property can ask the court to lift the stay. A recent prior bankruptcy filing can also limit or shorten it.
A trustee is assigned to the case. About a month or so after filing, you attend a meeting of creditors, where the trustee asks questions under oath about the information you filed. Creditors can attend, though they often don't. For most filers, this is the only proceeding they attend in person. Before a discharge is entered, you also have to complete a financial management course.
What bankruptcy does with different kinds of debt
A discharge releases you from personal liability for the debts it covers. Creditors can't try to collect those debts from you afterward.
Unsecured debts, like most credit card balances and medical bills, are often dischargeable. That's generally true in both chapters, though exceptions exist, such as charges run up through fraud.
Some debts usually aren't discharged. These include most recent income taxes, child support and alimony, and criminal fines and restitution. Student loans are harder to discharge than other debts. They can be discharged only if repaying them would cause undue hardship, which requires a separate proceeding within the bankruptcy case.
Secured debts, like a mortgage or car loan, work differently. A discharge can end your personal liability on the loan, but the lien on the property stays. If you want to keep the house or car, the loan generally still has to be paid.
What happens to your house and car
There's no single answer. It depends on which chapter you file, how much equity you have, whether you're current on the loan, and what Missouri's exemptions protect.
Exemptions matter a great deal. Missouri has opted out of the federal bankruptcy exemptions, so Missouri residents generally use Missouri's exemptions instead. These protect some equity in a home and a vehicle, along with certain other kinds of property, up to set limits.
Filing can pause a pending foreclosure or repossession because of the automatic stay, but that pause isn't necessarily permanent. In a Chapter 13 case, a plan may give a homeowner a way to catch up on missed mortgage payments over time. In a Chapter 7 case, keeping a house or car generally means staying current on the loan and having the equity protected. Bankruptcy doesn't guarantee either result.
What your lawyer looks at before filing
Most of the work happens before anything is filed. Michael will want to see your debts, income, recent pay stubs, tax returns, bank statements, loans, and property. From there, he looks at which chapter you're eligible for and which, if either, makes sense.
He also looks for problems before they become problems. Examples include recent payments to family members, recent transfers of property, debts that won't be discharged, and property that may not be fully protected by exemptions. Those issues are much easier to deal with before filing than after.
If filing makes sense, he prepares the petition and schedules and attends the meeting of creditors with you. He also deals with the trustee and handles objections or motions from creditors. You'll know ahead of time what the bankruptcy will do and what it won't. Sometimes the answer is that bankruptcy isn't the right fit, or that it isn't needed yet.
Frequently Asked Questions
How much does a bankruptcy lawyer cost?
Attorney fees depend on the chapter and the complexity of the case. A Chapter 13 case lasts years and usually costs more than a Chapter 7 case. The firm's fee for your situation can be discussed at the free consultation.
How much does it cost to file bankruptcy?
The court filing fee is currently $338 for Chapter 7 and $313 for Chapter 13. These fees are set nationally and change from time to time. The fee can be paid in installments in some cases. For Chapter 7, it can be waived for people whose household income is below 150 percent of the federal poverty guidelines. The required credit counseling and financial management courses carry their own small fees.
Do I need a lawyer to file bankruptcy?
The law doesn't require one, and people do file on their own. Bankruptcy does require complete and accurate disclosure, and mistakes can cost a filer property or the discharge itself. Chapter 13 plans and cases involving a house, a business, or nondischargeable debt tend to be the most difficult to handle alone.
Can bankruptcy stop wage garnishment?
The automatic stay generally stops most wage garnishments for ordinary debts once a case is filed. Garnishments for child support and some other obligations can continue.
How do I know if bankruptcy is right for me?
There isn't a debt amount that decides it. It depends on what kinds of debt you have, your income, what you own, whether creditors are already collecting, and whether there are realistic alternatives. Looking at those details is the point of the consultation.
Talk With a Bankruptcy Lawyer in Union
If you're considering bankruptcy and want to know whether it fits your situation, schedule a free consultation at our Union office at 301 East Main Street. Appointments are also available at our Owensville office. Bring recent bills, collection notices, pay stubs, and your most recent tax return if you have them.