Your Guide to Chapter 7 Bankruptcy Iowa

 

The law offices of Henkels & Baker PC can help you with your Chapter 7 bankruptcy Iowa application. Book an appointment with us today.

What Is Chapter 7 Bankruptcy in Iowa?

If you are going through a financial hardship and are considering filing for bankruptcy, this guide is for you. Chapter 7 bankruptcy is a court-supervised process allowing individuals to wipe out their debts. The court will assign you a trustee who will gather and liquidate your non-exempt assets and then repay creditors.

Filing bankruptcy under Chapter 7 can provide a pathway to financial recovery, even if selling your assets doesn’t sound like a great start. The good news is that you will be able to keep some important assets. Under Iowa bankruptcy exemptions, you are entitled to keep the following personal property:

  • One homestead
  • $10,000 in life insurance cash proceeds if the beneficiary is your spouse, child, or other dependent
  • Alimony and child support, pensions, and public benefits
  • Accident, health, or disability insurance policy
  • $2,000 in family jewelry
  • $7,000 in household goods, equipment, and clothes
  • One motor vehicle of not more than $7,000 in value

This list is in no way comprehensive, so it’s crucial to consult a bankruptcy attorney to help you identify and take advantage of all your exemptions. Your attorney will also help you decide whether Federal law exemptions are a better option for you.

If your Chapter 7 bankruptcy petition is approved, you will be able to discharge most, if not all, of your unsecured debts, including personal loans, medical bills, credit card debt, and more.

What Is the Difference Between Chapter 7 and Chapter 13 Bankruptcy?

Besides Chapter 7, individuals can file bankruptcy under Chapter 13, which may be a better option in some cases. The primary difference lies in how your debts are handled and repaid.

Filling bankruptcy under Chapter 7 involves selling your non-exempt assets to repay creditors. After liquidation, your debts will be repaid to secured creditors, priority unsecured creditors, and then non-priority unsecured creditors.

To qualify for Chapter 7 bankruptcy, your income must be below the Iowa median income or your five-year disposable income below 25% of your nonpriority unsecured debt.

On the other hand, Chapter 13 bankruptcy is mainly a reorganization of your debts. Instead of selling assets, you create a repayment plan to repay debts over a certain period (usually 3-5 years). Your plan will set a monthly payment to be paid to your creditor within a set period.

Chapter 13 is a great option if you have a regular income but need more time to pay your past-due car and mortgage payments, for example.

What Is the Process for Filing Chapter 7 Bankruptcy?

If you are ready to file for bankruptcy under Chapter 7, here’s a quick guide to the filing process:

Consult a bankruptcy attorney

Filing for Chapter 7 bankruptcy in Iowa is a challenging process, as it involves several steps and paperwork preparation. Working with an attorney will make the process easier and less risky for you.

 

Obtaining a Credit Counseling Certificate

Filling bankruptcy under Chapter 7 requires completing a credit counseling course from an approved agency within six months before filing. It aims to provide you with a clear understanding of your financial situation and whether there are other options for you to resolve your financial issues without resorting to bankruptcy.

 

Filing the Petition

You or your attorney file the bankruptcy petition with the Iowa bankruptcy court and pay the filing fee. If you are filing alone, make sure to file all the required documents at the specific timeframes provided by the court. After receiving your petition, the court will assign you a trustee who will be in charge of liquidating your assets and managing your case.

 

Attending the Meeting of Creditors

About a month after filing bankruptcy, the court-appointed trustee will hold a meeting of creditors. It is known as a 341 meeting and is attended by the trustee, your creditors, and you. It is crucial to obtaining a Chapter 7 discharge and requires careful preparation.

The meeting of creditors gives the bankruptcy trustee and other creditors a chance to ask you questions about your financial situation and payment plans, if any. The trustee will also ask questions to verify the information you provided in your petition and documents. You will be under oath, so it’s crucial to be as honest and accurate as possible.

Having an experienced bankruptcy attorney can be invaluable before and during the meeting of creditors. The attorney can help prepare you for the questions creditors and the trustee may ask. Your lawyer can also accompany you and provide guidance and support throughout.

 

Completing Debtor Education Course

The debtor education course, also called the financial management course, aims to educate you on how to make better financial decisions. It’s a two-hour course that can be taken online or on the phone. Completing this course is mandatory to receive a discharge.

 

Receiving Debt Discharge

If all requirements are met, your liquidated assets will be used to pay creditors, and all remaining unsecured debts will be discharged about three to six months after filing. However, bear in mind that certain debts can’t be discharged. In general, alimony and child support, as well as criminal restitution or debts arising from personal injury or death caused by operating a vehicle while intoxicated, can’t be discharged.

 

Can Tax Debts Be Discharged Under Chapter 7 Bankruptcy?

Under the U.S. bankruptcy code, certain tax debts can be discharged in Chapter 7 bankruptcy, but there are strict qualification requirements. Typically, income tax debts might be eligible for discharge if they are for taxes owed at least three years before filing for bankruptcy, provided the tax returns for those years were filed at least two years prior to the bankruptcy filing. It’s essential to consult with a bankruptcy lawyer to understand the nuances of bankruptcy law and how it applies to specific tax debts in your situation.

What Is the Impact of Chapter 7 Bankruptcy on Joint Debts?

When an individual files for personal bankruptcy under Chapter 7, it can provide relief from many joint debts. However, the non-filing co-debtor might still be on the hook for the debt. For instance, if a couple has a joint credit card debt and only one partner files for bankruptcy, creditors can still pursue the other partner for payment. The homestead exemption and vehicle exemption in places like Des Moines might protect certain assets, but it’s crucial to understand the means test and other relevant information. A knowledgeable bankruptcy lawyer can provide guidance on how Chapter 7 impacts joint debts.

Henkels & Baker PC Can Help You

Filing for bankruptcy can be your only way to a fresh start, but you must evaluate your options and be fully aware of how and when to file. Experienced bankruptcy lawyers at Henkels & Baker, PC, can handle your bankruptcy case from the initial filing up to receiving a discharge. Book your free consultation with us today!

FAQs

 

Will I Lose Everything If I File Bankruptcy in Iowa?

You won’t lose everything in bankruptcy because you can use bankruptcy exemptions to protect your personal property. But you have to be careful – Iowa state law doesn’t recognize federal exemptions. You can only use exemptions offered by the Iowa state law.
Fortunately, most Iowa Chapter 7 filers can hang on to most of their property. But, there are certain limitations. For instance, contributions to filler’s retirement accounts made within the 12 months before they filed bankruptcy may be considered non-exempt if the contributions exceed their customary contribution amount. 

How Long Does the Chapter 7 Bankruptcy Process Take?

In most cases, Chapter 7 bankruptcy in Iowa takes about four to six months from the filing date. However, the timeline can vary depending on various aspects.

The size of your debt and the number of creditors can influence the processing time, as more documents will need to be processed. The court schedule and backlog can also delay your discharge.

 

How Much Does It Cost to File Chapter 7 Bankruptcy in Iowa?

The filing fee for Chapter 7 bankruptcy in Iowa is $338. Other expenses you should keep in mind include attorney fees and the costs of credit counseling and debtor education courses.

Client Reviews

Mark F.

5star
Dustin was Excellent – professional, thoughtful, empathetic. Would definitely refer him to others.
1/6/2022

Liz P.

5star
The care and knowledge I received before and during my bankruptcy with your firm was 100% helpful.
11/5/2020