Bankruptcy is a court proceeding which lets a person or business have some or all of their debts excused. It should typically only be considered as an option of last resort, because it can have serious long-term consequences, even if it can stave off financial disaster. This means that the costs and benefits need to be carefully considered before filing. Bankruptcy is governed by federal law and handled in federal courts, so the procedural and substantive rules involved in Missouri are often the same as anywhere else in the U.S. However, individual bankruptcy courts have slightly different rules for items such as exemptions, so it would be a good idea to consult with a local Lexington, Missouri bankruptcy lawyer beforehand.

Chapter 7 Bankruptcy in Lexington, Missouri

There are 2 typical forms of consumer bankruptcy in Lexington, Missouri: Chapter 7 and 13. Chapter 7 bankruptcy involves a liquidation of some of the debtor's assets, which pays off part of his or her debt. Once this is done, the remaining debt is excused. Fortunately for debtors, many types of property are exempt from liquidation, including homes, vehicles, necessary personal items, and retirement accounts.

Once appropriate assets are sold, and the money turned over to the creditors, most remaining debt is excused. However, there are certain types of debt that cannot be excused in bankruptcy, including student loans, taxes, child support, and criminal fines. If most of your debt is non-dischargeable, it may not be a good idea to file for bankruptcy in Lexington, Missouri.

Chapter 13 Bankruptcy in Lexington, Missouri

In Lexington, Missouri, Chapter 13 is substantially different from Chapter 7. Chapter 13 may or may not be the best choice for you; this depends on the facts of your specific situation. Chapter 13 does not absolve any debt, but it creates a new payment plan that should give the debtor some breathing room. Usually, all of the debts are consolidated into 1 periodic payment. While this might make it take longer to pay off the debt, if the debtor is willing to make a few sacrifices, the plan should be manageable.

Which Type of Consumer Bankruptcy Should I File in Lexington, Missouri

This depends entirely on the facts of your specific case. If you have a decent amount of steady income, and a large amount of non-exempt property which you don't want to part with, Chapter 13 might be the best option for you. If most of your property is exempt, and you don't have much steady income, Chapter 7 might be the best option.

In any case, it would be a good idea to consult a local bankruptcy attorney in Lexington, Missouri. Your attorney can make an educated judgment as to what your best option is, and advise you accordingly (of course, the choice to file for bankruptcy is ultimately yours).