Written by Attorney Karra Kingston.
Updated July 11, 2019
If you are overwhelmed with debt, filing for a Chapter 7 Missouri bankruptcy may be an option to help you get back on your feet and start over. It is important to understand that if you have found yourself in this position, you are not alone, and taking the initiative to get back on the right path already puts you ahead of the game. More people file bankruptcies in Missouri than in most of the country. Missouri ranked 14th in the nation in 2017 for the highest number of bankruptcy filings. Many times, people filing for bankruptcy associate only negative thoughts with the process, and assume their lives will be over. Instead, bankruptcy should not be looked at negatively, but as a tool that will help you get back on your feet. In fact, bankruptcy laws were enacted to help the “honest” but “unfortunate debtor” get a fresh start.
In 2005, Congress reformed the bankruptcy laws to prevent people from filing fraudulent petitions and abusing the system. One of the major changes Congress made was the additional requirement of the Means Test that debtors must pass in order to file bankruptcy in Missouri. This made it more difficult for people to file bankruptcy because people now had to fall below a certain category of income in order to file a Chapter 7 bankruptcy and have their debts eliminated.
Chapter 7 bankruptcy is the most popular bankruptcy type. However, not everyone can file a Chapter 7 bankruptcy. In order to qualify for a Chapter 7 bankruptcy, you must pass the bankruptcy Means Test in Missouri. The bankruptcy Means Test, is a tool to determine who can file a Chapter 7 bankruptcy in Missouri and have their debts forgiven. The Chapter 7 Means Test takes into account your income, expenses and family size to determine whether or not you qualify for a Chapter 7 Bankruptcy. The bankruptcy Means Test determines if your monthly income is below the median income for a family of your size in Missouri. If your income is above Missouri’s median income, and you do not qualify for a Chapter 7 bankruptcy right off the bat, then you will have to go to the second part of the Means test, which looks at your disposable income after your monthly expenses. If you still do not qualify, then you may consider looking into filing a Chapter 13 bankruptcy instead.
The higher your disposable income, the less likely you will be able to qualify for a Chapter 7. The Bankruptcy Court will presume that, since you have money left over, those funds should be used to pay back your creditors. Simply qualifying under the Means Test does not mean that you should file a Chapter 7 Bankruptcy. The court will also look at Schedules I and J to determine your income versus your expenses. If you have a significant amount of monthly income left over, the Bankruptcy Court could require you to convert your case from a Chapter 7 to a Chapter 13.
In order to determine if you qualify, you can use the chart below to compare your family size with the median income levels in Missouri.
Missouri Median Income Levels
Missouri Median Income Standards for Means Test for Cases Filed On or After May 1, 2021
|Household Size||Monthly Income||Annual Income|
Discharge in Bankruptcy for Missouri
A bankruptcy discharge is the result you want when your Chapter 7 bankruptcy is complete. This is when the Missouri Bankruptcy Court issues an order stating that you no longer must pay your creditors. Normally, the discharge order is issued before the case is closed. After the discharge is ordered, then the case is usually closed a short period of time after. It is important to understand that not every debt may be discharged even though you receive a discharge order. Filing a Missouri Bankruptcy will not eliminate certain debts such as: child support, alimony, debts for personal injury, student loans, fines, penalties, and most tax debts. This means that you will be responsible for continuing to make payments to these creditors even though you received your Chapter 7 bankruptcy discharge.
It is also important to understand that obtaining a Missouri Bankruptcy discharge is not the same as having your bankruptcy case closed. The Court can close a bankruptcy case without ordering a discharge. The court may not issue a discharge for various reasons, such as abuse or fraud, etc. If the Court closes your bankruptcy case without a discharge, this means that you still must continue to pay your debts back as if you had never filed bankruptcy. The only time that you will not have to pay your debts back is when the discharge is ordered.
Since obtaining a Missouri bankruptcy discharge is your goal, it is important to make sure that you are on the right path to achieving your Chapter 7 discharge from the onset of your case. If your income is too high and the court feels like you should/can pay your creditors back, then the court will not grant your discharge. In order to ensure your bankruptcy case moves forward smoothly, it is important that you are honest so that the Missouri Bankruptcy Court does not think you are committing any type of fraud, and that you do qualify under Missouri’s Means Test.
Missouri Means Test Calculator
In order to determine whether your income is below Missouri’s median income level, you will need your paystubs. You will have to calculate your average household income within the last six months. Your paystubs must show your gross income along with your deductions. If you are married, you will also need proof of your spouse’s income. If you do not get paystubs, and own your own business, then you will need to provide a profit and loss statement showing your proceeds for the last six months. If you receive social security, pension, disability, or child support than you will need to provide proof. Once you figure out your average household income within the last six months, you can compare it with Missouri’s household median income. If you fall below the average, you qualify and are done calculating. However, if your income is higher than Missouri’s median income level for your household size, then you will have to complete the next portion of the Chapter 7 Means Test.
In order to complete the second part of the Means Test, you will need to know your monthly expenses and deductions. It is extremely important that you are careful when calculating your income and expenses on the Means Test. Please read everything carefully and only list expenses that are allowed.
Sometimes you may be exempt from qualifying under the Means Test. If your debts are primarily non-consumer debts, such as business debts, then even though you may be above Missouri’s median household income, you may still qualify for a Chapter 7 Bankruptcy.
Many law firms and websites use calculators to calculate the Means Test. If you are computer savvy, then finding a Missouri Means Test calculator should be quite simple. But even if you’re not, you can type in the words “Chapter 7 Means Test calculator” into your search engine, and you will see quite a few results pop up. Make sure that you understand how to use the calculator and that the information being provided to you is accurate, as your whole case relies on the accuracy of the Means Test. It is important to note that figures for the Means Test are updated every few months. This means that some calculators may be outdated. Upsolve is a nonprofit organization that helps low income Americans file bankruptcy free of charge. You can use some of our free forms and tools on our website to help calculate the Means Test and see if you qualify for a Chapter 7 Bankruptcy in Missouri.
What Happens If I Fail The Means Test for Missouri?
If you do not pass the Chapter 7 Means Test, then you may want to consider reviewing the numbers you entered to make sure they were accurately entered. Sometimes, even if there is a slight mistake, it may throw off the calculation. Further, you may be able to wait to see if you qualify in a few months. Since the Means Test averages the last six months, if your income significantly changed, then you may qualify down the road. For example, if you were making $120,000 the past five months but lost your job last month and now have no income, you may qualify if you wait to file.. Lastly, if all other options have been exhausted you may consider filing a Chapter 13 Bankruptcy.
If you believe that you “fail” the Chapter 7 Means Test, then you may want to speak with a Bankruptcy lawyer. A Bankruptcy lawyer can review your information to see if you entered the information correctly. Many lawyers give free consultations, and they may be able to help determine if you qualify. You can follow the steps to file bankruptcy without using an attorney in Missouri, however, if your case is more complicated and you are worried that you do not qualify we can help you find an attorney.