Understanding Bankruptcy in Missouri: An Overview of the Process

Bankruptcy Is the Process

Of Using the Law

To Modify the Rights of Your Creditors.

Bankruptcy is a federal court process that can eliminate or reorganize debts you can’t pay. Most individuals file Chapter 7 or Chapter 13. Filing generally stops collection efforts right away, and a Chapter 7 case typically takes about three to six months. Here’s how the process works, step by step.

What is bankruptcy?

Bankruptcy is the process of using the law to modify the rights of your creditors. In plain English, it’s a federal court process that gives people who can’t pay their debts a way to get relief, either by eliminating many of those debts or by repaying them under a court-approved plan.

The rules come from the federal Bankruptcy Code. In 2005, Congress amended it with the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA). It’s quite debatable whether the law needed to change back then, but be that as it may, Congress made the changes, and we all live by them now.

Understanding bankruptcy isn’t easy. There are different types, known as “chapters,” and most individuals file Chapter 7 or Chapter 13. A person who files is called the “debtor.” This page is designed to help you decide whether bankruptcy makes sense for you.

The Bankruptcy Process, Step by Step

Step 1: Gather your information

Perhaps one of the most tedious tasks in bankruptcy is gathering the required information. It takes real effort on your part, and I’ll give you the guidance and forms to help. You must also complete a credit counseling course with an approved provider before filing.

Step 2: I prepare your petition

Once you give me what I need, I will prepare your bankruptcy petition. That usually takes a few weeks, and it can be done faster if necessary. During this time, we may need to meet so I can prepare properly and protect what can be protected.

Step 3: I file your petition

I will file your petition electronically from my office in St. Peters. You then receive your case number, a copy of the filed petition, notice of your 341 creditors meeting, and instructions for additional documents the trustee needs. These are commonly called “4002 documents”, and I need them well in advance of the 341 meeting.

Once you file, the automatic stay generally stops most collection efforts, including calls, lawsuits, and wage garnishments. For example, if you are being harassed by a debt collector for a credit card debt, that should stop.

Step 4: The 341 meeting

About [a month, verify] after you file, you attend the meeting of creditors, called the “341 meeting” after the section of the Bankruptcy Code that requires it. The trustee asks you questions under oath about your paperwork. It’s usually brief. See 341 Creditors Meeting Information and Questions Asked at the Meeting of Creditors.

Step 5: Finishing your case

From here, the type of bankruptcy determines what comes next. In Chapter 7, once you’ve completed the required financial management course [verify], the court issues your discharge, usually about three to six months after filing [verify]. In Chapter 13, the court holds a confirmation hearing on your plan, and you make payments for the length of the plan. See Chapter 13 plan confirmation.

Types of bankruptcy in Missouri

There are [six, verify] chapters in the Bankruptcy Code:

1. Chapter 7: “Liquidation”
2. Chapter 9: “Municipal Bankruptcy”
3. Chapter 11: “Reorganization”
4. Chapter 12: “Family Farmer and Fisherman Bankruptcy”
5. Chapter 13: “Adjustment of Debts of Individuals with Regular Income”
6. Chapter 15: “Cross-Border Cases”

Most of my clients file Chapter 7 or Chapter 13, so I won’t discuss the others here.

Chapter 7: The “Fresh Start”

In a Chapter 7 case, the trustee sells non-exempt assets and distributes the proceeds to creditors. In most consumer cases, a debtor has no non-exempt assets that are sold.  You generally can’t receive a Chapter 7 discharge if you received one in a Chapter 7 case filed within the last 8 years, and other timing rules apply after an earlier Chapter 13 case.

H3: Passing the Means Test

An individual or couple enters their income and allowable expenses in a formula that shows whether they could repay a significant portion of their debt. If they could, they may not qualify for Chapter 7 under what is called The Means Test. I’ll have you provide your pay stubs for the six months before you file, and I’ll tell you where you stand.

Looking for abuse

Even if you pass the means test, the court can dismiss a Chapter 7 case, or convert it to Chapter 13, if it finds that granting you relief would be an abuse of the bankruptcy laws.

The Bankruptcy Process Ending: Discharge

When your case is complete, the court issues a “Discharge Order.” You do not have to pay debts that are discharged in your bankruptcy.

Secured debts: keeping your car or house

If a creditor has a lien (a security interest) on your property, such as a car loan or mortgage, you generally have these options. You tell the court which one you choose on a statement of intention, and you carry it out within 30 days of the 341 meeting.

Reaffirmation agreements: “To Reaffirm or Not to Reaffirm, That Is the Question”

A reaffirmation agreement is a legally enforceable agreement to repay all or part of a debt. The creditor must sign it, and so must either your attorney or the judge. If I’m the one approving it, I must sign a declaration that I believe it doesn’t impose an undue hardship on you or your dependents. I won’t sign if your budget doesn’t support the payments, the interest rate is unreasonable, or the property is worth significantly less than you owe. Once everyone signs, the agreement must be filed with the court before the court’s deadline.

I discourage reaffirming on home loans. A creditor can’t foreclose just because you didn’t reaffirm, though it may stop sending statements and stop reporting your payments. Still, some clients reaffirm because it can make it easier to rebuild credit, pursue a loan modification, or simply communicate with the bank.

Redemption

Redemption means paying the creditor what the property is worth in a lump sum during the bankruptcy.  Some lenders will loan you the money to do it. That can make sense if you owe more than the vehicle is worth and already have a high interest rate.

Surrendering the property

This means returning the property to the lender.

Keeping the property and continuing to make payments

I generally discourage my clients from reaffirming debt secured by vehicles and most real property, especially if they have no equity. If you want to keep the property, I recommend you just keep making the payments. Your lender may stop sending statements or coupon books and may stop reporting to the credit bureaus. You also may not qualify for loan modification programs if you haven’t reaffirmed.

Loan modifications: “Modification Smodification”

First off, I wish you the best of luck with this. Second, I don’t represent debtors in renegotiating their mortgages, in Chapter 7 or Chapter 13. If you ask, I can give you a letter that allows the lender to negotiate with you directly. A lender may refuse to consider a loan modification if you haven’t reaffirmed, and some lenders stop processing applications once the bankruptcy is filed. If you’re pursuing a loan modification, I recommend waiting to file until after it’s done. If you plan to pursue one after the bankruptcy, consider reaffirming. In Chapter 13, a loan modification can’t be finalized without the court’s permission.

Chapter 13 Bankruptcy Process in Missouri

Chapter 13 is for individuals with regular income. A plan is proposed to repay some or all of your debt, and a trustee oversees it. To qualify, your debts must be under the Chapter 13 limits: less than [$526,700] in unsecured debt and less than [$1,580,125] in secured debt for cases filed April 1, 2025 through March 31, 2028.

The Chapter 13 plan

• Secured creditors are generally paid in full, or according to the contract if you keep the property (such as home loans and vehicles). Some secured claims may be modified.
• Administrative and priority creditors must be paid in full.
• Unsecured creditors are entitled to receive at least what they’d receive in Chapter 7, or the amount you can afford to pay over the life of the plan, whichever is greater.
• Plans run [3 to 5 years, verify. The current page says as little as 10 months or as long as 5 years]. The minimum length depends on your income and allowable expenses.
• Payments usually start right away, by payroll deduction if you’re employed or directly from you if you’re self-employed. The first payment is due no later than 30 days after you file.
• You can’t take on new debt during the plan without the court’s approval.
• The court treats bonuses as part of your disposable income, and your employer may be directed to pay them to the trustee.

Tax returns

All required tax returns must be filed before the meeting of creditors, and all later returns must be filed on time. [Reconcile with the 120-day rule below, and verify.] I’ll need a copy of your most recent federal and Missouri tax returns. The trustee and any creditor who asks is entitled to a copy, and an IRS transcript can be used instead. Any unfiled returns must be filed within 120 days of filing the bankruptcy.

Child support and alimony

If you pay child support or alimony (maintenance), you must keep those payments current after you file. If you don’t, the case can be dismissed. Whether or not you have support obligations, a declaration must be filed when the trustee is getting ready to close your case. The trustee will tell us when it’s time to prepare it.

Common questions

How long does a Chapter 7 Bankruptcy process take? About three to six months from filing to discharge.

What’s the difference between Chapter 7 and Chapter 13? Chapter 7 can eliminate most unsecured debt. Chapter 13 reorganizes your debt into a repayment plan over [3 to 5 years].

Do I have to go to court? Usually not before a judge, but you do attend a meeting of creditors (the 341 meeting).

Can I keep my car? Often, yes. See the options above for reaffirming, redeeming, or continuing to make payments.

Talk to me

If you’re not sure whether bankruptcy is right for you, call me at 636-486-1093 for a free consultation. If it’s not, I’ll tell you so.

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We help people file for bankruptcy relief under the Bankruptcy Code.

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Modified October 15, 2026