St. Louis Bankruptcy Lawyers Blog

One way a savvy creditor can make sure they get paid is to file a wage garnishment. A wage garnishment is a tactic commonly used by creditors where they take a portion of your check. Wage garnishment laws vary from state to state. Missouri wage garnishment laws state that creditors can take up to 25 percent of your paycheck or up to 10 percent if you qualify as head of household.

Creditors love to use garnishment as a scare tactic, and often tell people who are behind in payments that they will put a garnishment on their check. However, creditors have to follow certain legal procedures before they will be allowed to garnish your wages. If you fall behind in payments, the creditor may file a law suit against you to collect the debt, and obtain a judgment against you for the amount you owe. Once the creditor has received a judgment, they can then file paperwork with the court to have your wages garnished.

Garnishments do have time limits, and in Missouri most last about 180 days. However, creditors can continue to renew their garnishments until the debt has been paid in full. Unfortunately, this means your check could be garnished for an indefinite period of time. Garnishments are not only embarrassing, but can make it difficult, if not impossible, to cover your living expenses, which just pushes you further into debt. Fortunately, there is a way to stop the garnishment for good.

Filing a Chapter 7 bankruptcy will stop wage garnishments and wipe out debt. Chapter 7 bankruptcy can also stop repossession, as well as foreclosure, and can keep creditors from making further attempts to collect their debts.

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Everyone who files for bankruptcy has to attend a Meeting of Creditors. This meeting is also commonly referred to as the 341 meeting, because the requirement to attend this meeting arises from Section 341(a) of the United States Bankruptcy Code. The hearing will take place approximately 30 days after the case is filed. Though it is referred to as the Meeting of Creditors, creditors rarely actually appear. However, if creditors do appear they are allowed to ask you questions.

Most 341 meetings last approximately 5 minutes and consist of the Trustee asking a series of standard questions to make sure that your paperwork is accurate and that you have disclosed all of your assets.

An experienced bankruptcy attorney can guide you through the entire process.

People who file bankruptcy can’t get credit for 10 years.
This is completely false. A bankruptcy filing will show up on your credit report for 7 to 10 years, but it will not prevent you from obtaining credit. In fact, you will very likely start receiving credit solicitations in the mail as soon as your case is discharged. The interest rate and other terms will not be as favorable as what is offered to those with perfect credit, but the offers will still make their way to your mailbox. Obtaining credit and making timely monthly payments is the best way to rebuild your credit score after a bankruptcy filing.

If I file bankruptcy I will lose some or all of my property.
This is not the case for the vast majority of filers. When filing for bankruptcy, you are allowed to protect certain types of property with exemptions. For example, in the state of Missouri, a debtor is allowed to have up to $15,000.00 of equity in their home and $3000.00 of equity in their vehicle. Exemptions protect equity in assets and prevents the Trustee from liquidating the property. An experienced bankruptcy attorney will be able to advise you regarding this issue prior to your case being filed. However, in a majority of Chapter 7 cases, debtors do not have assets valued in excess of their available exemptions and are able to keep all of their property.

My creditors can still harass me, even after filing for bankruptcy.
This is incorrect. Bankruptcy law provides for ‘automatic stay’ protection, which means that as soon as the case is filed creditors must cease any attempt to collect their debt. If a creditor does not follow the rules, the debtor may have a cause of action against the creditor for ‘punitive damages,’ whereby a bankruptcy judge could actually punish a creditor with fines and penalties for not following the procedures set out in the bankruptcy code.

There are five types of bankruptcy filings.

Chapter 7
Chapter 7 is the liquidation chapter of the Bankruptcy Code, and is sometimes referred to as “straight bankruptcy.” In a Chapter 7 case, a Trustee is appointed to collect and sell any property that is not exempt in order to pay creditors. Debtors can protect certain property from liquidation with exemptions. Upon completion of the case, Debtors receive a discharge of their debts.

Chapter 9
Chapter 9 is solely for municipalities and governmental units.

The question I am asked most often is, “How much does it cost to file bankruptcy?” Most people are not happy with my answer, “It depends.” The only set fee is the filing fee, which is paid to the court at the time the petition and schedules are filed. The Chapter 13 filing fee is $274 and the Chapter 7 fee is $299. Additionally, prior to filing bankruptcy, a debtor must complete a credit counseling course through a court approved agency, which costs anywhere from $15 to $60. These are standard costs that will be the same regardless of where you file.

The amount of attorneys fees charged for a bankruptcy case varies widely depending on your geographic location, the size of the firm, and, most importantly, the complexity of the case. Not all cases are created equal. For instance, a straightforward Chapter 7 filing is going to cost a lot less than a complex Chapter 7 case with a lot of non-exempt assets and/or other issues. When an attorney is determining how much to charge, he or she must consider how much time will be devoted to that particular case.

Chapter 13 fees are set by the court. In the Eastern District of Missouri, the Chapter 13 flat fee is $3000. This seems like a lot of money, but it is typically paid out over a five year period of time, which averages out to about $50/month. Some firms choose to take a reduced fee of $2300, but are then able to file fee applications if the time spent on your case exceeds that amount, which can sometimes result in the attorney being paid in excess of $3000. Make sure you understand the fee structure before you sign an attorney fee agreement/retainer.

The holiday season is the time of year where people start maxing out their credit cards. In this bad economy, most budgets are already stretched too thin and putting presents on plastic could mean a sobering wakeup call for many when the post-holiday bills start to arrive come January.

Don’t be fooled into thinking you can max out those cards and then turn around and file bankruptcy to get rid of the obligations. Congress provided for such thinking in the bankruptcy code.

Section 523(a)(2) exempts from discharge, any debt that was obtained if an individual made material and false representations about his financial condition. Section 523(a)(2)(C) provides that: