The Basics of a St. Louis Bankruptcy From Start to Finish

Most people who come to see me about potentially filing a St Louis bankruptcy understand the basic idea behind what this type of legal action is supposed to accomplish, but they lack a good understanding of all the basic steps that each case has in general. So whether it is a Chapter 7 or a Chapter 13, I would like to use this article to describe how everything works (and a decent idea of how the bankruptcy process works in the state of Missouri).

If you are like most people who come to see me, then you have probably already racked up quite a few bills (credit cards, medical bills, payday loans, etc.) And the pressure you are starting to receive from your creditors has begun to mount (with endless phone calls, threatening letters, and maybe even a lawsuit filed against you for breach of contract). As you look at your finances and household budget, it becomes clear that there is no way to make ends meet (even by paying the monthly minimums of each debt). So you eventually decide to set an appointment to come and see me for a free consultation.

At this consultation, we will discuss all the basics of your case. This would include not just an understanding of your debts (whether they are secured, unsecured, or priority in nature), but I will also want to get plenty of information on any assets you own (whether it is real estate, motor vehicles, retirement instruments, bank accounts, jewelry, etc.), and details on any household income (whether that comes in the form of regular wages, governmental assistance, or business income). All of this information is gathered by me and used to determine which chapter of bankruptcy would work best for you.

So let’s say you decide to file a St Louis Chapter 7 bankruptcy. In order to prove that you qualify for a Ch7, we will need to show the court that you are below the median income level for your household size. For example, the average (or median) income for a household of four is: $83,180 (as of August 2018). If after calculating all sources of income for you household the total is less than this figure, then there is a good chance you will qualify for a Chapter 7 (assuming you have not filed a Ch7 within the last eight (8) years). I will then need accurate and current information on all of your assets. Just so you know, the word “assets” in the world of bankruptcy is pretty broad. Obviously this would include things like real estate and motor vehicles. But I’ll need to get a good idea of values on all your other stuff (like furniture, appliances, pots & pans, firearms, and clothes). The reason for why I need all of this detailed information is because I want to make sure that I can protect all of your assets from being liquidated by the Bankruptcy Trustee (whose main job is to identify an asset with a lot of equity, sell it, and use the proceeds to pay off your unsecured creditors).

But let’s go ahead and assume for the purposes of this example that your household income is in fact below the median, and that you do not own any assets that the Trustee would be interested in. I will next need for you to provide me with specific information about your financial affairs. For instance, I’ll be asking about any money you may have paid to friends and family in the last year; any assets you may have sold in the last couple of years; whether you have closed any checking or savings accounts in the last year; etc. This information is just as necessary as anything else, because depending on what all has occurred recently in your life, it could cause problems for a potential St Louis bankruptcy.

Once my office has retrieved all necessary documentation from you, then we can begin the arduous task of reducing all of this information into the forms and schedules that the Bankruptcy Court requires. But before we can file the bankruptcy petition, you must first sign off on it. There are roughly seven or eight places where your signature will be required, and each time you put down your John Hancock, you are doing so under penalty of perjury. In other words, you had better be sure that all of the information on the schedules and forms is accurate (to the best of your knowledge) before signing. Also, the court requires that you complete a Debtor’s Education Course before filing your case. This course can be completed online, and it only takes about an hour. Many clients have indicated to me that they enjoyed this course, because it is supposed to provide helpful hints on how to better budget your money. My office will supply you with the necessary information on how to complete this course.

The next step is to electronically file your Ch7 bankruptcy (at the federal level, which is where a bankruptcy is filed, all pleadings are presented to the court electronically). The court will then give you a court date (roughly thirty (30) days from the date of filing). This hearing is required for everyone who files for bankruptcy (whether it is a Ch7 or Ch13). It is called the “341 Meeting of Creditors”. Theoretically, it is an opportunity for any of your creditors to show up, and ask you questions on the record. But in reality, creditors very rarely make an appearance. Instead, this hearing is primarily used by the Bankruptcy Trustee to ask you a series of questions (some of which are required by governmental statute, and some that are at the whim of the individual Trustee).

Most of the questions can be answered with a “yes” or “no” response: Did you list all of your creditors? Yes. Did you list all of your assets? Yes. Did you list all of your income? Yes. Are there any errors or omissions to bring to my attention? No. And so forth… As mentioned above, the main goal of the Bankruptcy Trustee is to try and find an asset that has a lot of equity, and sell it. Of course, our objective is to never file a Chapter 7 bankruptcy that would put one of your assets into jeopardy. But every once and awhile, my clients still want to file a case (even though they fully understand that they might lose an asset). For example, let’s say your wages are currently being garnished (to the tune of 25% of the net earnings from every single paycheck), you have two other creditors who have recently filed lawsuits against you (with pending court dates coming up very soon), and the bill collectors are calling you constantly (from early in the morning, until late at night); it is tax season, and you are going to receive a great big tax refund (of about $4,000); we could hold off on filing your bankruptcy until you have a chance to file your taxes, get your refund, and spend it… but this would mean we would have to wait several months before getting any relief from the bankruptcy court; so instead, you make the decision to go ahead and file the Ch7 now (which will automatically stop the wage garnishment, put an end to the pending lawsuits, and prevent those collectors from ever contacting you again); you will likely end up having to turn over a good portion of your tax refund to the Trustee (for this year only), but at least you can now start enjoying that fresh start / clean slate that you’ve been hearing so much about!!

Assuming your 341 hearing goes smoothly (as I’m sure it will), the Trustee will abandon his / her interest in your case, and recommend to the judge that you receive a discharge of your debts. The last step in the process will be the post-counseling course (similar to the online pre-counseling course described above). But once this is completed, you are home free!! And all you need to do in order to reach this point is to give us a call! We will answer all your questions, describe your full range of options, and get you back on the road towards financial recovery. We look forward to hearing from you!!

At The Bankruptcy Company, we want to make sure that you receive the very best bankruptcy services in all of the St Louis Missouri area. Our team will get you back on your feet, help to dramatically improve your financial standing, and put you in the best position possible for the future. The attorney fees for a standard St Louis MO Chapter 7 are $675, and the upfront fees for a St Louis MO Chapter 13 are $300. But the initial consultation is free of charge!!