I’m often asked this question from people who have had a friend or relative who has filed for bankruptcy in the past. They wonder why it is that for some people, it is necessary to pay back their debts, while others only have to pay back a small percentage (or none at all).
Well, the answer is actually pretty straightforward (believe it or not). To begin with, there are two main chapters of the bankruptcy code for individuals and married couples. A St. Louis Chapter 7 bankruptcy involves a discharge of unsecured debt (like credit cards and medical bills), and a St. Louis Chapter 13 bankruptcy is described as a repayment plan over the course of three to five years. If your household income is below a certain level (for instance, the average income (according to the government) for a household of two is: $51,120.00, as of August 2011), then you generally qualify for a Missouri Chapter 7, and will get a discharge of your unsecured debts. If your household income is above that certain level, then you will most likely have to file a Missouri Chapter 13.
If the route that needs to be taken is a Chapter 13, the question becomes, ‘How much do I have to pay back?’ This is of course the very thing that bankruptcy attorneys spend all their time on, because it is our goal to put you in a plan in which you only have to pay back a small percentage. Depending on how many deductions and/or exemptions can be taken in your particular set of circumstances, the monthly payment to the Chapter 13 Trustee can vary quite a bit. So things like how much you pay towards insurance each month (life or medical) become important to know about; and how much tax withholdings are taken from your check each pay period; and how much you contribute monthly towards charitable organizations; and how much your average monthly medical/dental costs are; and how you pay for child care services; and on and on. Because these expenses are used as deductions from you disposable income to show the court that you only have a certain amount left over at the end of each month. And the amount that you need to pay back to your unsecured creditors in a Chapter 13 is largely dependent upon that.
But this is why it is so very important to hire a law firm that is experienced and knowledgeable. The St. Louis bankruptcy lawyers at Brinkman and Alter, LLC have been practicing in the specialized area of bankruptcy for ten years. Our staff is prepared to guide you through this process, and set you on a path towards financial recovery. And as always, all our phone conversations and office consultations are free of charge.