Bankruptcy in Smithville, Missouri is a court procedure through which a person or business who is unable to pay their debt is able to have some of their debt legally excused, or "discharged." This theoretically allows the debtor to move on with a clean slate. However, bankruptcy is not a free ride, allowing someone who simply doesn't feel like paying their debts to get out of that legal requirement. It is designed to prevent debt which has minimal chance of ever being paid back from ruining the life and finances of the debtor. It also carries significant long-term consequences, which must be carefully weighed against the potential benefits. For example, bankruptcy makes it very difficult for the debtor to obtain credit in the near future.

Accordingly, you should speak with a good Smithville, Missouri bankruptcy lawyer. Your Smithville bankruptcy lawyer can inform you of the costs and benefits of filing for bankruptcy, and give his or her professional advice as to whether or not it's a good option, given your individual circumstances.

Types of Bankruptcy in Smithville, Missouri

In Smithville, Missouri, 3 types of bankruptcy procedures are in common use: Chapter 7, Chapter 11, and Chapter 13. Being governed by federal law, the procedures involved in filing for bankruptcy in Smithville, Missouri will be roughly the same as everywhere else in America. Chapter 7 bankruptcy, or "liquidation," requires the debtor to sell some of his or her property to the highest bidder, and using the funds from the sale to pay down as much debt as possible. Once the sale is fulfilled, all dischargeable debt is deemed paid in full, whether or not the sale was able to raise the full amount owed. You should note that some property (usually the types of property deemed essential) is fully or partially exempt from liquidation, meaning that the debtor gets to keep it. This includes houses, cars, and retirement accounts, among others. Some types of debts, however, cannot be discharged in bankruptcy, including taxes, child support, and student loans.

The other typical bankruptcy scheme used by consumers in Smithville is Chapter 13 bankruptcy. In this system, debt is not discharged. Instead, it is restructured. This allows the debtor to have the terms of the contracts that gave rise to their debts in the first place thrown out, and replaced with new terms that call for a structured repayment plan, designed to allow the debtor to survive on whatever income they have, and allowing the creditors to get paid back eventually. Once a payment plan is authorized, creditors are not allowed to attempt to collect payment under the original agreements. Chapter 11 bankruptcy is usually used by businesses, though it can be used by individuals (which is quite rare). Chapter 11 bankruptcy requires that the debtor come up with a reorganization plan - basically telling the court how they propose to cut costs, streamline their operations, and pay their debts. This plan must be authorized by the participating creditors through a simple majority vote.

A major advantage of Chapter 11 bankruptcy is that businesses can continue their operating while going through the process. Also, they can continue to buy and sell their stock.

How Can a Smithville Bankruptcy Lawyer Help?

Filing for bankruptcy in Smithville is a very important decision, and should not be made easily. Before filing, one should consult with a seasoned Smithville bankruptcy attorney for help.