There are many contributing factors that are associated with financial troubles. Some common reasons include personal debt, serious illness, divorce, foreclosure, or sudden unemployment.
In fact, the average credit card debt in Iowa is a whopping $4,410 per person. In addition, foreclosure rates are also as staggering, one out of every 3,064 IA homes is currently in foreclosure.
If you have found yourself in similar situations, then you are probably struggling with other personal problems that come with being in debt. The fear of losing your car, house or your income can drain a person emotionally & physically. You may have even considered Claiming Bankruptcy .
If you are thinking “Can I File Bankruptcy?” you are undoubtedly not alone. Almost 1 million people file bankruptcy each year in America. Bankruptcy is a device provided by the US Government to help struggling Americans find relief from substantial debt. You may want to consider filing bankruptcy if it’s best for you.
What Is Bankruptcy?
Bankruptcy offers people the time to get out from underneath considerable debt while still working with lenders in a legal capacity. It is started by a person filing a Petition with their nearest bankruptcy court. The Petition can be filed by a person or married couples jointly. When the bankruptcy is complete, the filer will ‘exit’ with a fresh new start.
During a bankruptcy, a trustee is appointed to oversee the particulars of the matter. His or her duties will vary and depend on whether the individual has filed for Chapter 7 or Chapter 13 bankruptcy.
Did you know that Iowa ranks #39 in the nation for bankruptcy filings. In 2017 the number of personal bankruptcies was approximately 165 out of every 100,000 residents.
What Is The Difference Between Chapter 7 And Chapter 13?
People in Iowa, who claim bankruptcy, will elect to file under Chapter 13 or Chapter 7 of the U.S. Bankruptcy Code. What is the difference? Take a look at the descriptions below for more information:
In exchange for dissolving all past due debts, the trustee of the bankruptcy will liquidate the assets, such as cars, homes, and other property of value in a Chapter 7 Bankruptcy proceeding.
The proceeds collected during liquidation will be used to repay debtors that were listed on the bankruptcy filing.
If you have the means to pay some of your debts, a chapter 13 bankruptcy plan may work for you. You will be allowed to retain your valuable assets over a 3- to 5-year time frame.
In order to determine which type of bankruptcy a person can file, they will have to assess their ability to repay under the Bankruptcy Means Test.
What Is A Bankruptcy Means Test?
The ultimate goal of the Bankruptcy Means Test is to determine who is eligible to apply for debt forgiveness through a Chapter 7 Bankruptcy. It considers your:
- income and expenses
- household size and composition
- debt-to-income ratio
For those who do not qualify for a Chapter 7 filing, he or she will be able to file for Chapter 13, as described above.
What Are Bankruptcy Exemptions?
Specific states have certain exclusions that are enacted by congress as federal bankruptcy exemptions for filers. These exemptions will determine what you are able to retain throughout and after Chapter 7. In a Chapter 13 situation, the exemptions will determine what amount you will have to pay certain financial institutions in your repayment plan.
- Real property or apartment, unlimited in value, but cannot exceed 1/2 acre in a city or town or 40 acres elsewhere (spouses cannot double the stated property size).
- Motor vehicle up to $7,000; musical instruments, appliances, household furnishing, clothing and its storage containers as well as other personal property up to $7,000; books, pictures, paintings, portraits, and bibles up to $1,000 total; burial plot up to 1 acre; Jewelry up to $2,000; health aids; wedding and engagement rings, if purchased after marriage or within the last 2 years there is a limit of $7,000 (minus any amounts used under the general jewelry exemption); rifle or musket; shotgun; residential utility or security deposits up to $500 or advance of rent; wrongful death proceeds need for support.
- The greater of 75% of disposable earnings or 40 times the federal minimum wage. Iowa has an alternate wage determination formula, as well–consult with a local attorney.
- Tax exempt retirement accounts (including 401(k)s, 403(b)s, profit sharing and money purchase plans, SEP and SIMPLE IRAs, and defined benefit plans).
- IRAS and Roth IRAs to $1,283,025.
- Peace officers.
- Public employees.
- Disabled firefighters and police officers, but only for benefits being received.
- Police officers and firefighters.
- Other pensions, annuities, and contracts are fully exempt; however, contributions that were made within the year prior to filing for bankruptcy are not exempt; retirement plans, Roth IRAs, IRAs, ERISA-qualified benefits, and Keoghs.
- Federal government pension.
- Aid to dependent children.
- Unemployment compensation, Veterans’ benefits, Social Security, and any public assistance benefit, including earned income tax credit and child tax credit
- Workers’ compensation.
- Adopted child assistance.
Tools of Trade
- Non-farming equipment up to $10,000; farming equipment, including livestock and feed, up to $10,000; National Guard articles of equipment.
Alimony and Child Support
- Alimony and child support needed for support.
- Life insurance proceeds if policy prohibits use to pay creditors.
- Employee group insurance policy or proceeds.
- Fraternal benefit society benefit.
- Life insurance proceeds (limited to $10,000 if acquired within 2 years prior to filing for bankruptcy) paid to spouse, child or other dependent; accident, disability, health, illness, or life proceeds; illness or disability benefits; upon death of insured, up to $15,000 of all matured accident, health, disability and life insurance policies that were exempt from beneficiary’s debts contracted before the insured’s death.
- Liquor licenses.
- $1,000 of any other personal property including cash.
Want to know if you can include Student Loans in Bankruptcy or Medical Bills in Bankruptcy? Check out our Bankruptcy FAQ’s section.
Filing Bankruptcy Alone vs. Filing With An Attorney
You are not required by law to hire an attorney to declare bankruptcy. Individuals are permitted to represent him or herself as a pro se debtor. You will simply contact the local bankruptcy court and obtain all forms and requirements directly through them. Going it alone is not recommended.
Filing Bankruptcy without an Attorney
A basic Chapter 7 Bankruptcy that doesn’t have a lot of debtors or assets may be easy to manage on your own.
A basic bankruptcy that may not require an attorney might look like:.
- Your income is below the state median;
- You have no property;
- Your debts will be considered dis-chargeable.
Working With An Attorney
In most cases, it is usually in one’s best interest to work with a bankruptcy attorney. A bankruptcy lawyer is there to represent you and not in the interest of creditors.
An attorney is also accustomed with exemption laws. Plus, they can come up with creative strategies to keep your assets through practical repayment strategies that are fair to everyone involved.
While you may have the fight and ability to manage a Bankruptcy on your own, it tends to make things a lot easier on an already stressful situation, especially when there is so much at stake.
What Does Bankruptcy Include?
Once you file for bankruptcy in IA, the courts put in place an order called an Automatic Stay. This order will stop debt collection calls, wage garnishments, and additional claims. Keep in mind that payments regarding child support and criminal cases will still need to be made during this time.
In any event, Bankruptcy will be able to include:
- credit card debt
- protection from eviction
- avoidance of foreclosure
- utility bills
- medical expenses
Again, unless you are filing a complex Chapter 13 case, you will lose all assets associated with a Chapter 7 Bankruptcy protection. You will, however, be able to prevent any and all collections from occurring as long as they were incurred before the date of filing and discharge.
Final Thoughts And Considerations On Filing For Bankruptcy In Iowa
As you can see, there a lot of information associated with successfully filing for bankruptcy and then exiting it unscathed or satisfied. Only a licensed bankruptcy attorney can guide you through this arduous process, particularly when it comes to complex cases. Be sure to hire someone you respect and trust.
Bankruptcy Courts In IowaUnited States Courthouse Annex
110 East Court Avenue
Des Moines,IA 50309
Iowa Southern Bankruptcy Court
United States Courthouse
111 Seventh Avenue
Cedar Rapids,IA 52401
Iowa Northern Bankruptcy Court
United States Courthouse
320 Sixth Street
Sioux City,IA 51101
Iowa Northern Bankruptcy Court
Additional Iowa Resources
Foreclosure Help Program
Disability SSDI Benefits