Bankruptcy in Iowa
Did you know that Iowa is thought to be 500 million years old? Though Iowa became a state in 1846, it’s foundation of bedrock dates from 74 million years old in the western part of the state to 500 million years old in the eastern part of the state.
As we all get older (not geologic “old”, just “older”), we tend to accept the ups and downs of life as a matter of course. In this day and age, ups and down abound for people of all ages. Many of those ups and down are financially related and bankruptcy may become a consideration.
If so, this article is for you. We’ll show you how Iowa law protects your assets differently than other states’ laws; discuss whether you should file Chapter 7 or Chapter 13 bankruptcy; and guide you through choosing and preparing to work with a bankruptcy lawyer.
How Iowa Bankruptcy Law Protects You Differently than Laws of Other States’ Law
Here, we have really great news. Many people who think about filing bankruptcy are super scared about losing their home, car, jewelry, and other assets. In Iowa, the amount of assets you can protect is high (higher than most other states).
Though federal bankruptcy exemptions are not available to Iowans, state exemptions usually suffice and federal non-bankruptcy exemptions such as retirement plans are available no matter where in the U.S. you make your home.
- Iowa bankruptcy exemptions offer homestead protection. This means your home is protected no matter how high the value up to ? acre in a city or town or 40 acres out of town.
- Your car, truck, motorcycle, and such are protected up to $7,000 worth (which is doubled to $14,000 for married folks, filing together).
- There are also generous exemptions for personal property and household property as well.
Your Choices in Filing Bankruptcy in Iowa: Chapter 7 or Chapter 13
Making choices in bankruptcy isn’t up to the “eeny meeny miny mo” we all used as children. A qualified bankruptcy attorney will guide you through the bankruptcy process, including whether to file under Chapter 7 or Chapter 13.
Both chapters offer an end to creditor harassment and a fresh start.
Chapter 7 is known as a “liquidation” bankruptcy because the filer’s assets can be sold (liquidated). Most folks get to keep all of their assets.
You can file for Chapter 7 if you qualify financially by way of the “means test” and can pay back debts that aren’t discharged (such as most taxes, student loans, alimony, and child support).
Your attorney will let you know whether you qualify. Qualification for Chapter 7 is mostly based on income, but some exceptions such as high expenses, allow you to qualify with higher income.
If you’re single with no dependents, you automatically qualify if you make under $40,650; if there are two people in your family, you qualify if your income is under $55,217, and so on.
If Chapter 7 isn’t going to work for you, your lawyer will likely guide you to Chapter 13 bankruptcy. Chapter 13 is called the “reorganization” bankruptcy because your debts are renegotiated and reorganized so you can afford to pay them.
How to Choose a Bankruptcy Attorney
Can you get a personal referral from a friend, family member, neighbor, or professional? Sometimes folks tend to keep financial matters private, so you may not realize that many of the people who surround you daily have filed bankruptcy.
If you don’t have access to a personal referral, you can investigate by contacting your local bar association or doing an online search for “Find an Iowa Bankruptcy Attorney”.
You’ll likely notice that when you check out the websites, bankruptcy lawyers offer no cost consultations so you can get good information and decide whether you’d feel comfortable working with that person.
How to Prepare to Work with a Bankruptcy Attorney
Now is the time to do what you’ve likely been meaning to do. If you’re like many folks in financial distress, you may not even know what you owe; you just know you can no longer make the payments.
Pull together all of your bills and debts. Next, jot down your assets and their general fair market value. List your expenses and payments made in the last year. Include everything, better too much than too little.
Lastly, read up on bankruptcy so you can ask good questions and when questions arise, jot them down so you remember to ask your bankruptcy lawyer.