How to File Bankruptcy in Iowa
Learn the step-by-step process of how to file bankruptcy in Iowa with the expert guidance of Henkels & Baker PC. Contact us today for assistance.
Filing Bankruptcy in Iowa
If you are struggling and your debts are piling up, filing for bankruptcy might be the solution. Although many may view it as the end, bankruptcy can actually give you a fresh start.
Filing bankruptcy is a legal debt relief option. It can help manage your debt, protect you from creditors, and help you get back on your feet. However, we understand that the filing process can be a bit daunting and time-consuming. It is not tailored for those with little to no legal knowledge.
It’s crucial to carefully follow the process as required by law and court rules to ensure your case won’t be dismissed or delayed. An experienced bankruptcy attorney can guide you throughout the process and ensure you receive the anticipated discharge.
If you want to learn more about the Iowa bankruptcy filing process, keep reading.
How Does Bankruptcy in Iowa Work?
In most aspects, Iowa bankruptcy filing is the same as filing in another state because the process is governed by federal law. However, it is the Iowa state law that determines which property the debtor can keep in a bankruptcy case.
Bankruptcy is designed to help debtors reorganize their finances and gives them certain protections that are typically unavailable outside the bankruptcy process. At the end of a successful bankruptcy case, the debtor may end with little to no debts. However, not all debts can be discharged.
Unsecured debts such as those listed below can be discharged through bankruptcy.
Credit card debt
Old utility bills
On the other hand, secured debts can’t be discharged. These debts include child support, tax debt, debts to the government, as well as fines and debts related to personal injury cases.
What’s the First Step to Filing for Bankruptcy in Iowa?
Under the U.S. Bankruptcy Code, the debtor must take a credit counseling course before bankruptcy filing. During the course, the debtor can learn their debt relief options and more about Chapter 7 and Chapter 13 bankruptcy. That way, a debtor can decide what type of bankruptcy would be best for their situation.
The course must be completed within 180 days before filing for bankruptcy. After completion, the debtor will receive a certificate that can be included with other bankruptcy documents when filing.
Steps to Iowa Bankruptcy Filing
The bankruptcy process includes the following steps:
- Collecting bankruptcy documents
- Submitting a petition to the bankruptcy court
- Attend the 341 meeting with creditors
- Taking the debtor education course
- Receiving discharge
Let’s look closely at each step.
Collecting the Necessary Bankruptcy Documents
When filing for bankruptcy, you are required to prepare and submit a lot of financial documents. Required documents can include:
- Tax returns from the last two or four years, depending on the Chapter you are filing under
- Paycheck stubs or other proof of income
- Bank statements from the last two to six months
You will also have to compile information about debts, expenses, and property values. Any statements from creditors or letters from collection agencies can be helpful when compiling this information.
Submitting a Bankruptcy Petition
You can submit your petition to the bankruptcy court once you have gathered the necessary documents and filled out the required forms. The Iowa Bankruptcy Court is divided into the Northern District and Southern District of Iowa. Make sure you submit your petition to the court covering your area. You will also have to pay a filing fee.
After filing, it will take a few days for the court to mail your creditors the notice of automatic stay. That means they have to stop any collection actions against you.
Also, the bankruptcy court will assign a bankruptcy trustee to oversee and administer your case. You must send bankruptcy documents to your trustee before meeting with creditors.
Attending the 341 Meeting With Creditors
The trustee will schedule a meeting with the debtor and creditors. The debtor will answer questions from creditors or the trustee under oath about the information you included in your bankruptcy forms and your debt repayment plan, if any. In some cases, the trustee will be the only one present.
Taking the Debtor Education Course
The debtor has to complete this course within 60 days after the meeting with creditors. The course covers topics involving the management of personal finances. Failing to do so will result in the court dismissing the bankruptcy case. After finishing the course, the debtor will get the certificate that must be filed with the court.
After the successful completion of these steps, the bankruptcy court judge will decide whether or not you qualify for a discharge. If granted, you will be relieved of any remaining, qualified debts.
How to Choose the Right Bankruptcy Type in Iowa?
When it comes to personal bankruptcy, individuals can choose between Chapter 7 or Chapter 13.
Chapter 7 bankruptcy can work well if you don’t have a lot of income and don’t own luxury items. The bankruptcy trustee can sell the nonexempt property, which will be liquidated to pay off the creditors. In return, the bankruptcy court will discharge most of the remaining unpaid debt.
Fortunately, Chapter 7 filers may use bankruptcy exemptions to keep a homestead, a vehicle, and certain pieces of personal property. Iowa doesn’t allow using federal exemptions unless you’ve lived in Iowa for less than two years.
Chapter 13 bankruptcy allows debtors to catch up on their debts, such as car and mortgage payments. It involves creating a three or five-year repayment plan that your creditors have to approve. You may keep your assets if you stay current with your monthly payment plan. However, missing a payment can result in losing your car or home.
Your secured and unsecured and secured debts combined have to be less than $2,750,000 to be eligible for Chapter 13.
What Is the Income Limit for Chapter 7 Bankruptcy in Iowa?
To be eligible to file under Chapter 7 bankruptcy, the debtor has to pass a means test. First, the test compares the debtor’s average monthly household income to the state’s median income of households of the same size.
For cases filed on or after May 15, 2023, the annual median income limit is $60,971 for one earner. If the debtor’s income is less, they will pass the means test. If it’s not, the debtor must undergo the second part of the means test. In this part, the debtor’s disposable income for the last five years will be calculated and compared to their debts. If their five-year disposable income is enough to repay their unsecured debt, they may not qualify.
Debtors who do not qualify for Chapter 7 may be referred to Chapter 13 bankruptcy.
Need a Bankruptcy Attorney? Henkels & Baker, PC, Are Here for You
Sometimes, people are reluctant to file for bankruptcy due to the complexity of the process. However, debtors don’t have and should not go through bankruptcy alone. A qualified bankruptcy lawyer can make the process easier and more accessible.
Attorneys at Henkels & Baker, PC, have over 50 years of experience helping people regain control over their finances. We can help you too. Contact us today to schedule a free consultation.
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.