St. Louis Bankruptcy Lawyers Blog

No, you cannot. Domestic obligations such as child support and alimony (or any arrearage thereof that you have fallen behind on) are described as non-dischargeable debts. In other words, after your bankruptcy goes through its normal course, all other debts will get discharged (such as credit cards, medical bills, payday loans, etc.). But child support and alimony payments will continue to exist.

This is true whether you file a St. Louis Chapter 7 bankruptcy or a St. Louis Chapter 13 bankruptcy. However, it is possible to repay child support arrearage back through a Chapter 13 repayment plan. This spreads the payments out over a period of time (over the course of three to five years), giving you a little bit of breathing room so that you aren’t forced into a situation of having to get caught up on the arrearage over a short period of time (sometimes as short as six months).

Additionally, if the state of Missouri is garnishing your wages as a result of back child support not being paid, the filing of the bankruptcy will stop the garnishment. This can provide some additional relief. But it should be noted that the state will still expect you to make arrangements to come current on the arrearage sooner rather than later.

Probably because Congress felt like that sounded like an appropriate number of years when they drafted the code (actually, it was the credit industry and their lawyers who drafted the code, and the members of Congress simply voted “Yes” for it). But regardless of why they chose the 3-5 year period, what is important for an individual contemplating bankruptcy is to understand which length of time is best for them.

To begin with, there is definite hard rule when it comes to the length of a St. Louis Chapter 13 bankruptcy. If you are above the median income level, you will have to do a five year plan. If you are below the median income level, you can do a three, four, or five year plan. Why the variability as to median income levels? Congress can tell you anything they want, but the real reason is because they assume that if you are above the median income level, you can afford to be in the Chapter 13 plan for a greater length of time (so that you end up paying more in interest).

Median income levels are determined by the federal government, and are actuated by way of various standards set by the IRS (and are commonly referred to as ‘cost of living’ standards). These levels are adjusted from time to time (in an attempt to mirror what the average (or median) income levels are across the United State). So for instance, according to the federal government, the median income for a household of two is: $51,120.00. If your household income (wages, unemployment benefits, child support, etc.) is above this figure, you will have to do a five year plan in a Missouri Chapter 13. If you are below that level, you can opt for the three or four year plan.

Yes, you will. And a lot quicker than you may think.

When you file for bankruptcy, unsecured creditors (such as credit cards, medical bills, payday loans, etc.) are discharged. They are knocked out forever. When this happens, there is instant relief. But most people believe that their chances of ever owning a credit card again are dashed once the discharge occurs. Well, the exact opposite is true. In fact, once you receive your official discharge of debts, you will be flooded with credit card applications. The sheer weight of all the credit apps you’ll receive will nearly cause your mailbox to collapse.

And the reason for this is simple: Overnight, you will have become the most attractive candidate in the world. All of your old debt will have been wiped out, which presumably means you’ll be able to make monthly minimum payments much more easily. And the creditors know that you won’t be able to get another bankruptcy discharge for several years (for example, the rules state that you can only file a St. Louis Chapter 7 bankruptcy every eight years; and a discharge of unsecured creditors in a St. Louis Chapter 13 bankruptcy can be had so long as several requires are first met).

Yes, it does. In fact, the threshold question as to which chapter of bankruptcy you can file very often comes down to what your household income is. That’s why it is so important to disclose to the court all sources of income in the six months preceding the filing of a Missouri bankruptcy.

So let me give you a real world example: Let’s say you are a household of four (yourself, spouse, and two children). According to the federal government, the average (or median) income for a household of four is: $69,832.00. In other words, the government’s statistics show that a household of this size should bring in on average this amount of income. If the total household income (from your employment, your spouse’s employment, child support, unemployment benefits, food stamps; literally, from all sources) is less than $69,832, then you will generally qualify for a St. Louis Chapter 7 bankruptcy. A Chapter 7 bankruptcy is a situation in which all unsecured debts (like credit cards, medical bills, payday loans, etc.) are discharged.

If your household income is substantially higher than $69,832.00, than it may involve a situation in which a St. Louis Chapter 13 would be filed. A Chapter 13 is described as a repayment plan over the course of three to five years. Depending on your particular set of circumstances, a Missouri Chapter 13 can be enormously beneficial. It provides an opportunity to get caught up on things like mortgage arrears, tax debt, and delinquent child support; there is an opportunity to pay off your car with a much lower interest than you’re currently stuck with; and there is still a chance to get your unsecured debt discharged.

In short, because they can. I can’t even begin to tell you the number of clients I have had over the past several years who have described to me the following story: They fall behind on their mortgage because of a loss of income or loss of job; they still want to keep their house, and they have heard about several new programs out there that allow you to modify your home loan; they contact the mortgage company, who in turn assures them that they do indeed offer such a program; the mortgage company tells the individual that all they need to do is fill out the paperwork, collect the necessary documents (and have them signed and notarized), send them into the mortgage company, and all will be well; after spending a huge amount of time doing precisely that, and turning everything in on time, the mortgage company turns around and claims that they never got the information; the individual home owner then fills all the paperwork out again, gets it notarized, and sends it all over; the mortgage company again claims that they didn’t receive all the documents, but to please try again. This happens over and over again, sometimes for as long as a year. All the while, the individual is being reassured by the mortgage company that a modification can be had, and therefore the individual should not worry that they are falling further and further behind in arrears.

And I have seen situations in which a foreclosure sale date is set by the mortgage company because of the arrearage building up during the modification process, but the mortgage company still insists that the modification will go through. Only to pull the rug out from underneath the individual at the eleventh hour (literally, as in the night before the foreclosure is set to take place).

I’ve come to believe that the foregoing situation is a tactic on the part of the mortgage company. In other words, it is a purposeful delay that they initiate so as to ensure either one of two things: 1) you give up on your efforts to reach a modification (because of all the delays and misrepresentations about whether or not they actually received the information), or 2) that the transaction results in a foreclosure, because they are wanting to get the asset off their books (because they probably should not have signed a loan agreement with you in the first place). Either way, it puts you in a heck of a bind, especially if the goal is to keep the house.