There are two main Chapters under which most debtors file bankruptcy in Iowa;
Iowa Chapter 7 Bankruptcy - Full Discharge.
Chapter 7 bankruptcy is also known as "liquidation". In theory, your property is sold and the money given to creditors. But in fact, due to your allowable Iowa bankruptcy exemptions, you normally get to keep your home, cars, retirement and other assets, assuming reasonable pre-bankruptcy planning with your attorney and your exemptions are properly claimed. A lot of what we do as bankruptcy attorneys is keep up with frequent changes in application of the exemption rules. For example, one of our trustees recently discovered that whole life insurance cash value is non-exempt if the beneficiary is not the debtors spouse or child. So keeping up with these changes is a big part of what we bankruptcy attorneys do for our clients. Jeff's primary Iowa Bankruptcy website.
Video- Will I lose property if I file Iowa Chapter 7 Bankruptcy?
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Iowa Chapter 13 Bankruptcy -5 Year Repayment of Debt.
The vast majority of people do full discharge Chapter 7 for a Fresh Start but sometimes a Chapter 13 has advantages.
Reasons People Consider Chapter 13 Bankruptcy:
High Income: If your income is too high to qualify for Chapter 7 full discharge, Chapter 13 may be your only option. Some people over Iowa median income can still file Chapter 7, others need to consider Chapter 13. Debtors who are over median income must pass the "bankruptcy means test" in order to still qualify for a Chapter 7.
The challenge with the means test is that you are limited to IRS collection guideline expenses, an application of the guidelines by the way that was never intended by and is not supported by the IRS. Many believe application of harsh collection guidelines that were designed for aggressive collection against tardy taxpayers is inappropriate for the collection of credit card and other consumer debt against struggling consumers, many of whom are in bankruptcy due to job loss, divorce or illness. But we are stuck with it due to the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, which was written by the banking industry with the intent of making it more difficult and expensive to file bankruptcy.
Tax Debt: In some case, Chapter 13 is better for handling tax debt since it can stop penalties and interest.
Catching Up: If you are behind on your home for example and need more time to catch up, (cure the default) you may want to consider Chapter 13. The first analysis here should always be equity. So determine a realistic home market value on your home based on comparable sales. Then add up balances on your first mortgage, second mortgage, home equity loan etc. and total them. If the total of loans is equal to or more than your market value, it may not make any sense to spend money on a Chapter 13 since you don't have equity.
Discharge Second Mortgage: In some cases with Chapter 13 you can keep your home and repay the first mortgage but discharge the second mortgage. Generally the current market value of your home must not exceed the balance of the first mortgage. Des Moines attorney Mike Jankins is great for these cases.
Cram Down: In some cases you may be able to reduce the amount owed on some secured debt like your car. This is known as a cram down because it reduces the loan balance. Unfortunately, the bankruptcy code prohibits adjustment of your home mortgage, the most needed cram down. Several attempts have been made in Congress to give Judges the ability to adjust home loans, without success.
Eligibility for Chapter 13 Bankruptcy
In order to be eligible for Chapter 13 bankruptcy, you must have regular income sufficient to repay your debt at least in part over five years. The regular income needs to be sufficiently stable and regular to enable you to make your Chapter 13 payments. Your attorney files a Chapter 13 plan that is then reviewed by the Court. If the Judge does not believe your income is regular enough to support regular repayments your plan will not be approved. In some cases, if your income drops during repayment you can convert to a Chapter 7 full discharge.
Unsecured debt can not exceed $290,525 and secured debt can not exceed $871,550.
Chapter 13 Repayment
Repayment begins within 30 days after the plan is filed.
Chapter 13 Repayment is normally for Five Years. The code provides for Three year repayment too, but it is difficult or impossible to get a three year plan approved under the more restrictive Chapter 13 code in effect since 2005. Your repayment amount is based on your "ability to repay" after deducting allowable expenses from your income.
See National Standards for Chapter 13 repayment and Iowa bankruptcy Local Housing and Utility Standards. As in many areas of the law, Chapter 13 bankruptcy is as much a matter of art as science. Experienced bankruptcy attorneys know what their local Judges and Chapter 13 bankruptcy Trustees will allow for expenses without a fight, meaning what you can do without spending a lot on attorney fees. US Courts Chapter 13 bankruptcy information.
The Chapter 13 Plan must provide for full repayment of bankruptcy priority debt like back taxes.
Discharge or Dismissal of Chapter 13 Bankruptcy
When your Chapter 13 is successfully completed, you get a discharge. Bankruptcy Discharge = A successful bankruptcy.
When a Chapter 13 is dismissed, it is usually because the debtor could not keep up on the payments. Bankruptcy Dismissal = Failed bankruptcy.
See Jeff's Iowa Chapter 13 bankruptcy
Iowa Chapter 13 Bankruptcy Resources. The Federal Courts have good general Chapter 13 Information, Wikipedia has an article on the Chapter 13 Law. One of our best Iowa Chapter 13 bankruptcy attorneys, Mike Jankins handles both Chapter 7 and Chapter 13.
See Iowa Chapter 13 bankruptcy fees for information on fees. Chapter 13 Court administrative procedures. See bankruptcy rulings including Chapter 13 and Chapter 7.
Some terrific websites include Mark Markus Chapter 13 and Weintraub & Selth Chapter 13 Attorneys in Los Angeles, for legal advice in Missouri, Kansas City Chapter 13 bankruptcy attorney Doug Breyfogle, Colorado bankruptcy attorneys and Donne Goodwin who handles Florida Chapter 13 law.
