Chapter 13 Bankruptcy in Missouri: The Repayment Plan Option

If you are behind on a mortgage, facing a foreclosure or repossession, or simply buried under debts you cannot pay all at once, Chapter 13 can stop collection in its tracks and give you a structured path back to solvency. This guide explains who qualifies, how the means test and the applicable commitment period set the length and size of your plan, the tools Chapter 13 offers that Chapter 7 does not — including the automatic stay, lien stripping, and cramdown — and how a case proceeds from filing through plan confirmation to discharge, including how Missouri's exemptions still matter even though you keep your property.

What is Chapter 13 bankruptcy?

Chapter 13 is a form of reorganization for individuals (and sole proprietors) with regular income. Instead of surrendering property, the debtor proposes a repayment plan consolidating debts into a single monthly payment made to a Chapter 13 trustee, who distributes the money to creditors over the life of the plan. The plan generally lasts three years for lower-income debtors and five years for higher-income debtors, and cannot exceed five years.

The defining feature of Chapter 13 is that you pay your projected disposable income — your income after reasonable, allowed living expenses — to creditors during the plan period. In exchange, you keep your assets and, on completing the plan, receive a discharge that wipes out most remaining unsecured debt — a "pay what you can over time" approach, as opposed to Chapter 7's "give up non-exempt property now."

Chapter 13 is especially valuable when you have secured debts in arrears you want to keep current (a mortgage or car loan you have fallen behind on), non-exempt assets you would lose in a Chapter 7 liquidation, income too high to pass the Chapter 7 means test, or debts that survive Chapter 7 — certain taxes or support arrears — you need time to pay.

Who is eligible to file Chapter 13 in Missouri?

Chapter 13 is available only to individuals (or married couples filing jointly), not corporations or partnerships, though a sole proprietor can file. Eligibility under 11 U.S.C. § 109(e) turns on two requirements.

• Regular income. You must have a stable, regular source of income sufficient to make plan payments. This need not be a traditional paycheck — Social Security, a pension, self-employment income, or even regular contributions can qualify, so long as it reliably funds the plan.
• Debt limits. Your debts must fall below statutory caps. Congress has periodically adjusted these limits, so confirm the current figures before filing.

You must also receive credit counseling from an approved agency within 180 days before filing, generally be current on recent tax returns, and stay current on plan payments once the case begins.

How the means test and commitment period set your plan

Two related calculations determine how long your plan lasts and, in part, how much you must pay unsecured creditors.

The means test and current monthly income

The first step compares your household's current monthly income — generally your average gross income over the six months before filing — to the median income for a household of your size in Missouri. The state's median figures are published and updated periodically by the U.S. Trustee Program, so the threshold depends on your filing date and family size.

The applicable commitment period

That comparison drives the applicable commitment period under 11 U.S.C. § 1325(b):

• Below median income. If your income is below the Missouri median for your household size, your commitment period is generally three years, though you may propose a longer plan to cure arrears.
• At or above median income. If your income is at or above the median, your commitment period is generally five years, and you must devote all of your projected disposable income to the plan.

For above-median filers, disposable income is calculated using standardized expense allowances rather than your actual budget alone, so higher earners generally pay more, for longer.

What can Chapter 13 do that Chapter 7 cannot?

This is the heart of why people choose Chapter 13. Several powerful tools are unavailable in Chapter 7.

Curing mortgage arrears and keeping your home

If you have fallen behind on your mortgage and a foreclosure is looming, Chapter 13 lets you cure the default over time — spreading the past-due payments across the life of the plan while resuming regular monthly payments. This is often the single most important reason a Missouri homeowner files: it can stop a trustee's sale and let you keep the house even after many missed payments, something Chapter 7 cannot do. The same logic applies to a vehicle — you can cure arrears on a car loan and keep the car.

The automatic stay — including protection for co-signers

The moment you file, the automatic stay under 11 U.S.C. § 362 takes effect, immediately halting most collection activity — foreclosure sales, repossessions, wage garnishments, lawsuits, and collection calls. Creditors must stop and seek the court's permission to proceed.

Chapter 13 adds a feature Chapter 7 lacks: the co-debtor stay under 11 U.S.C. § 1301. For consumer debts, this stay protects a co-signer — often a friend or relative who guaranteed a loan — from collection while the case is pending, as long as the plan provides for the debt. If your mother co-signed your car loan, filing can shield her in a way Chapter 7 generally would not.

Lien stripping of wholly unsecured junior mortgages

Chapter 13 can sometimes "strip" a junior mortgage — a second mortgage or home-equity line — off your home entirely. If your home is worth less than the balance owed on the senior (first) mortgage, so the junior lien is wholly unsecured (no equity supports it at all), a Chapter 13 plan may treat that loan as unsecured debt. On completing the plan, the stripped lien is removed and the balance is discharged with your other unsecured debts.

The key limitation: the junior lien must be completely underwater. If even one dollar of equity supports it, it generally cannot be stripped. This tool is not available in Chapter 7, another reason Chapter 13 appeals to underwater homeowners.

Cramdown of certain secured debts and the 910-day car rule

Cramdown lets you reduce a secured debt to the value of the collateral, paying the creditor only what the property is worth, with the remaining balance treated as unsecured — dramatically cutting what you owe on a depreciated asset. There is an important exception for cars. Under the 910-day rule, you generally cannot cram down a car loan if you bought the vehicle for personal use within 910 days (roughly two and a half years) before filing; for those recent purchase-money loans, you must provide for the full secured claim. Cramdown is more readily available on older car loans, certain investment or rental property, and other non-residence collateral. You generally cannot cram down a mortgage on your principal residence — that loan is protected from modification, which is why curing arrears is the tool for a primary home.

A worked example: putting the tools together

Consider a single filer in St. Louis County who owes:

• $180,000 on a first mortgage; the house is worth $170,000.
• $25,000 on a second mortgage (a home-equity line).
• $18,000 on a car loan for a vehicle bought four years ago, now worth $11,000.
• $40,000 in credit-card and medical debt.
• $6,000 in mortgage arrears from a job loss.

Because the home is worth less than the first mortgage balance, the $25,000 second mortgage is wholly unsecured and may be stripped — treated as unsecured debt rather than a lien. Because she bought the car more than 910 days ago, she may cram down the loan to its $11,000 value, with the remaining $7,000 joining the unsecured pool. She cures the $6,000 mortgage arrears over the plan while resuming regular first-mortgage payments, keeping the house. Her credit-card and medical debt, the stripped second mortgage, and the unsecured portion of the car loan all join the general unsecured pool, paid only to the extent of her disposable income — and the rest is discharged when she finishes.

This is the central appeal of Chapter 13: she keeps her home and car, stops the foreclosure clock, and pays a manageable monthly amount instead of facing every creditor at once.

The Chapter 13 trustee and plan confirmation

Every Chapter 13 case is assigned a standing Chapter 13 trustee, a federal appointee who administers it. The trustee does not liquidate your property as a Chapter 7 trustee would. Instead, the trustee reviews your plan, collects your monthly payments, distributes the funds to creditors, and may object if the plan does not comply with the law.

To take effect, the plan must be confirmed by the court under 11 U.S.C. § 1325. Confirmation generally requires that the plan:

• Was proposed in good faith.
• Pays unsecured creditors at least as much as they would receive in a Chapter 7 liquidation (the "best interests of creditors" test).
• Devotes all projected disposable income to the plan for the applicable commitment period (if a creditor or the trustee objects).
• Provides for full payment of priority claims, such as recent taxes and support obligations.
• Is feasible — you can realistically make the payments.

Creditors and the trustee can raise objections, resolved at a confirmation hearing. Once confirmed, the plan's terms bind both you and your creditors.

Step-by-step: the Chapter 13 plan timeline

Although every case differs, a Missouri Chapter 13 generally follows this path:

1. Pre-filing credit counseling. Within 180 days before filing, you complete a credit-counseling course.
2. Filing the petition, schedules, and plan. You file the petition with schedules of assets, debts, income, and expenses — and, within the time allowed, the proposed repayment plan. Filing triggers the automatic stay.
3. First plan payment. You must begin paying the trustee within 30 days of filing, even before the plan is confirmed.
4. The meeting of creditors (§ 341 meeting). Generally 20 to 40 days after filing, you answer questions under oath before the trustee and any creditors who appear.
5. Confirmation hearing. The court approves the plan — often within a few months — after resolving any objections.
6. Making plan payments. Over the three to five years of the plan, you make the monthly payments, and the trustee distributes them to creditors.
7. Completion and discharge. When you complete all payments and a required post-filing financial management course, the court enters a discharge of your eligible debts.

If your circumstances change — a job loss, a medical event — you can often ask the court to modify the plan, and in some cases pursue a hardship discharge if completing it becomes impossible through no fault of your own.

The Chapter 13 discharge and its broader scope

Completing the plan earns you a discharge under 11 U.S.C. § 1328, eliminating your personal liability for most remaining dischargeable debts. Because it comes only at the end of a multi-year plan, it requires real commitment — but it can reach further than a Chapter 7 discharge.

Historically, the Chapter 13 discharge has covered certain debts that survive a Chapter 7 — for example, some obligations from divorce property settlements (as distinct from support). Amendments to the Bankruptcy Code have narrowed this gap, so the modern discharge is less expansive than it once was. Even so, the timing advantage remains: Chapter 13 lets you manage non-dischargeable priority debts — recent taxes and support arrears — by paying them through the plan over years instead of all at once.

Some debts are never discharged, including most domestic-support obligations, many student loans (absent undue hardship), and certain taxes. And a discharge only erases your personal obligation; a valid lien that is not stripped or paid off generally survives and stays attached to the property.

Why Missouri exemptions still matter

Even though Chapter 13 generally lets you keep your property, Missouri's exemptions remain central — they set the floor for what unsecured creditors must receive under the "best interests of creditors" test. The more non-exempt value you own, the more your plan must pay, since creditors cannot receive less than they would in a Chapter 7 liquidation.

Missouri has opted out of the federal bankruptcy exemptions, so Missouri filers must use the state scheme in RSMo Chapter 513 (together with certain federal non-bankruptcy exemptions). Key Missouri exemptions include:

• Homestead exemption (RSMo § 513.475). Protects equity in your primary residence up to a statutory dollar amount. Confirm the current cap rather than assuming a number.
• Personal property exemptions (RSMo § 513.430). Protects household goods, certain wearing apparel, a motor vehicle up to a set value, tools of the trade, and similar items, each subject to its own cap.

Because Missouri opted out, these protections are generally lower than the federal alternatives some states allow, making accurate valuation of your home and property especially important. The interaction between Missouri's exemption caps and the best-interests test often determines your plan payment — exemptions are not just a Chapter 7 concern.

Where Missouri Chapter 13 cases are filed

Missouri is divided into two federal judicial districts, and your case is filed in the U.S. Bankruptcy Court for the district where you live:

• The Eastern District of Missouri, which includes the St. Louis area and eastern Missouri.
• The Western District of Missouri, which includes the Kansas City and Springfield areas and western Missouri.

Each district has its own bankruptcy court, local rules, standing trustees, and model plan forms, so procedural details can vary. Filing in the correct district is essential.

When should you talk to a Missouri bankruptcy attorney?

Chapter 13 is procedurally demanding, and a defective plan can cost you the very protections you filed to obtain. Consider getting advice when:

• You are facing a foreclosure or repossession and want to keep the home or car by curing arrears.
• Your income is too high to qualify for Chapter 7, but you still need debt relief.
• You may be able to strip a second mortgage or cram down a car or other loan.
• You have non-exempt assets to protect, or significant equity in your home.
• You owe priority debts — recent taxes or support arrears — you need time to pay.
• A co-signer is being pursued for a debt you guaranteed together.

An attorney can run the means test, value your collateral, calculate your disposable income, and design a plan that meets the confirmation requirements in your district.

Frequently Asked Questions