Chapter 13 Bankruptcy Iowa
If you need a Chapter 13 Bankruptcy Iowa attorney, get in touch with Henkels & Baker PC. We are knowledgeable in bankruptcy law. Call us now.
What Is Chapter 13 Bankruptcy?
Are you experiencing financial difficulties and are considering filing Chapter 13 bankruptcy? It’s crucial to know as much as possible before you initiate the process.
Filing bankruptcy under Chapter 13 may help you get back up on your feet. Also known as the wage earner’s plan, Chapter 13 bankruptcy helps debtors restructure their debts and develop a plan to repay them within 3 or 5 years. Unlike Chapter 7, you don’t have to give up any property to settle your debts, so Iowa bankruptcy exemptions don’t apply here.
Moreover, filing bankruptcy will stop any collection actions taken by your creditors and protect you from future claims during the repayment period. This gives you more time and room to get hold of your financials and get back on track.
Eligibility for Chapter 13
Chapter 13 is available to all individuals and sole proprietors with a regular and steady income. To qualify for filing under this chapter, you must meet the following requirements:
The total of your secured and unsecured debt doesn’t exceed $2,750,000.
You didn’t withdraw a prior bankruptcy petition within the last 180 days because creditors sought relief.
The bankruptcy court didn’t dismiss any bankruptcy petition within 180 days due to your failure to appear or comply with court orders.
You obtained a credit counseling certificate within 180 days before your initial filing.
Your disposable income, your monthly income minus necessary living expenses, is enough to cover the monthly payment amount throughout the repayment period.
What Debts Can You Discharge in Chapter 13 Bankruptcy?
Your Chapter 13 plan should include all the debts and creditors you will repay. Your debts will be categorized into three types:
Priority unsecured debts, which include tax debt and domestic support obligations, such as alimony and child support
Secured debts, which include loans you took against collateral, such as a house or a car
Unsecured debts, which include all debts against which creditors have no collateral
Your Chapter 13 repayment plan must repay priority debts in full and then repay secured creditors at least the value of the collateral (house or car). Your unsecured creditors must be paid at least the amount they would have received under Chapter 7.
All unsecured debt that’s not paid by the end of the debt settlement period, including medical bills and credit card debt, will be discharged.
What Are the Advantages of Chapter 13?
Chapter 13 bankruptcy is a great option for those looking to start afresh without giving up too much because it:
- Provides an opportunity to save your home from foreclosure by paying past-due mortgage payments.
- Allows you to reschedule secured debts, which can extend beyond the life of the bankruptcy plan if the creditor agrees.
- Protects you from any debt collection lawsuits and stops current claims.
Chapter 13 Bankruptcy Filing Process in Iowa
If you meet the requirements for filing bankruptcy under Chapter 13 and are ready to go with it, here’s an easy step-by-step guide to the filing process:
Consult a Bankruptcy Lawyer
The first step you should make is to consult a bankruptcy attorney. Chapter 13 bankruptcy process involves several steps and an overwhelming amount of paperwork. Consider working with an attorney who’s well-versed in bankruptcy law and procedures.
Credit Counseling Course
Before filing, you must obtain a counseling course certificate from a court-approved agency.
File the Bankruptcy Petition
Complete a bankruptcy petition and file it with the bankruptcy court that serves your county. You must also file financial documents such as schedules of assets and liabilities, the schedule of current income, the schedule of executory contracts and unexpired leases, tax returns and transcripts, etc.
After filing, you will be assigned a trustee who will distribute the monthly payments to the creditors and oversee your case throughout the repayment period.
Develop a Repayment Plan
Develop and file a repayment plan within 14 days of the initial filing. Your plan must detail how you will pay creditors over the plan period. The court must approve your plan before it goes into effect.
You start making the agreed monthly payments to the trustee within a month of filing, even if the court has not yet approved the plan. After the plan confirmation hearing, the trustee will distribute the payments to your creditors in priority order.
Receive a Discharge
After completing your repayment period and taking the debtor education course, you may be entitled to a discharge. The court will assess whether you paid all your priority debts, and if you qualify, the remaining unsecured debts will be discharged.
How Chapter 13 Bankruptcy Addresses Tax Debts and Car Ownership in Iowa
Chapter 13 bankruptcy, often referred to as a “wage earner’s plan,” allows debtors to develop a plan to repay all or part of their debts over a period of three to five years. One of the significant advantages of Chapter 13 bankruptcy in Iowa is how it addresses tax debts.
Tax debts, especially those considered priority debts, are often not dischargeable in most bankruptcy cases. However, under Chapter 13, these debts can be included in the monthly plan payment, allowing debtors to pay them off over the duration of the bankruptcy plan.
This approach provides relief to those burdened by significant tax debts, as it spreads the money owed over an extended period. It’s essential to note that while some tax debts can be incorporated into the plan, others, like certain business debts, might be treated differently.
On the topic of personal property, many individuals worry about losing their vehicles when they file bankruptcy. In Iowa, Chapter 13 bankruptcy offers a safeguard for this concern. Debtors can often keep their cars by including them in the repayment plan.
The interest rate reduction feature of Chapter 13 can even reduce car loan interest rates, making payments more manageable. Additionally, the personal property exemption in Iowa protects a certain amount of equity in your car. If your vehicle’s value falls within the bankruptcy exemption limits, and you can maintain your monthly plan payment and any payroll deductions, you’re typically allowed to retain it.
It’s crucial for debtors to be aware of the Iowa median income levels, as these can influence the duration of the repayment plan. Those with an average monthly income below the annual median income might qualify for a three-year plan, while others might be looking at a five-year plan.
Before filing, it’s advisable to complete the required debtor education courses and consult with a knowledgeable bankruptcy attorney to navigate the complexities of bankruptcy forms and ensure a successful bankruptcy discharge.
Why Choose Henkels & Baker PC For Your Bankruptcy Case?
Experienced bankruptcy lawyers at Henkels & Baker, PC, are here to handle your bankruptcy case from start to finish. We will guide you through the process, explain what debts you’ll have to repay, and help you create a repayment plan that works for you and your creditors. We can also negotiate with your creditors for extended repayment periods and convince those on the fence not to challenge your plan.
We have over 50 years of experience providing efficient services to our clients across Iowa, so you can rest assured that you are in safe, experienced hands.
Book a free consultation with an experienced Iowa bankruptcy lawyer today!
How Much Does It Cost to File a Chapter 13 Bankruptcy in Iowa?
Chapter 13 bankruptcy filing fee is $310. You might need to set apart attorney fees, which vary depending on how complex your case is.
How Long Does a Chapter 13 Bankruptcy Process Take?
The length of the Chapter 13 bankruptcy process depends on the repayment plan. If your monthly is less than Iowa’s median income, the repayment period is generally three years, but the court can approve a longer period. If your monthly income exceeds Iowa’s median income, the repayment period is five years.
Dustin was Excellent – professional, thoughtful, empathetic. Would definitely refer him to others.
The care and knowledge I received before and during my bankruptcy with your firm was 100% helpful.