How to File for Bankruptcy in Iowa

While Iowa has not suffered as severely from this country’s economic downturn as many other states, there were still 10,000 bankruptcies filed in the state in 2009, which are over three per 1,000 citizens.  How many more will have to decide if bankruptcy is the solution to their financial woes?  With more restrictions on who can file, including a “means” test to determine whether the filer has qualifying income and required financial counselling at the filer’s expense, it is vital to get knowledgeable advice from a legal and financial expert before taking this difficult step.

Finding a Bankruptcy Attorney

Finding a skilled bankruptcy attorney can be a difficult task, since many claim those qualifications today.  The key to finding someone who knows the bankruptcy laws and how to apply them to the economic conditions of the culture and the circumstances of their clients is research.  It is important to not only interview several possible legal representatives, but to research their client rating, any news reports or public conflicts, and their success rate.

Bankruptcy Options

There are six types of bankruptcy, although the most common for individuals and families are Chapter 7 and Chapter 13.  They are both forms of debt relief, but use far different plans:

• Chapter 7 is considered “straight” bankruptcy, by which some of a debtor’s property may be liquidated to pay creditors before discharging, or erasing, much of the remainder of consumer debt.  This is appropriate for those with few, if any, assets to lose.
• Chapter 13 is a plan by which a debtor who has a regular income has their finances and debts reorganized to allow them to keep their property and satisfy their creditors in three to five years.

Iowa Exemptions

Though some property may be liquidated under Chapter 7 bankruptcy, both federal and state laws allow debtors to protect essential property by claiming specific exemptions.  Iowa requires debtors to use the state exemptions, which include:

Filing the Petition

Before a debtor and their lawyer can file their bankruptcy petition, the debtor must complete a credit counselling course.  At that time, a bankruptcy trustee takes charge of the proceedings, examines the debtor and their claims, and presents the case to the creditors at a required 341 meeting.  If there are no irregularities, the case proceeds to court and is generally approved, allowing the debtor to experience the debt-relief bankruptcy provides.