What’s the first thing that comes to mind when you think of Iowa? Is it cornfields, wind farms and prairie dogs? One thing is for sure – debt isn’t anywhere on that list. However, credit card and medical bills can follow you everywhere, even to Iowa.
If you have lived in Iowa for at least a year and are haunted by unpaid bills and debt collectors, consider filing for Chapter 7 bankruptcy. Filing a Chapter 7 can erase most of your debts and give you a chance to enjoy the little things in life again.
Filing for Chapter 7 is as Easy a Milking a Cow
Chapter 7 bankruptcy is also known as a straight or liquid bankruptcy, due to the fact that it wipes your debt out of existence. Once your credit card bills, medical debts and other assorted bills are gone, you won’t have to spend your days avoiding debt collectors and worrying about garnishments.
While Chapter 7 can erase most debts, it can’t eradicate all of them. Some of the things that Chapter 7 can’t erase are:
- Student loans
- Recently filed tax debts
- Liens
- Alimony
- Child Support
What Are You Waiting for Iowans, Check to See if You Qualify
In order to file, you need a bankruptcy attorney to help you fill out your Chapter 7 petition and represent you in front of the judge and bankruptcy trustee (who represents your debtors). The first thing that your bankruptcy attorney will do is check the income limits for Iowa residents, which are as follows:
- Family of 1 - $40,456
- Family of 2 - $56,036
- Family of 3 - $63,510
- Family of 4 - $75,569
- Family bigger than 4 - add $7,500 for each person
If your income falls into within the limits, you can file Chapter 7. But, if your salary is higher, your bankruptcy lawyer can use the means test to see if you still qualify for a Chapter 7 Bankruptcy. The means test, according to the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, states that if your income exceeds the specified limits for your state, your attorney can use the test to determine if your debts are excessive. This test uses a special mathematical process which evaluates your financial information to determine your worthiness for bankruptcy. If your debts are high, you may still be able to file Chapter 7. If not, you may have to go with a Chapter 13 Bankruptcy.
Get Started Filing Your Chapter 7 Bankruptcy Today
When you go to meet with your bankruptcy attorney, you’ll need to bring the following documents with you:
- A list of your debts. Whether they qualify for dismissal or not, you’ll need a list of all creditors. In some cases, you may also need past statements and other information.
- Your last six months' worth or paystubs.
- Last year’s filed tax return (and your spouse’s return, as well)
Your bankruptcy attorney will then help you fill out the Chapter 7 petition, which needs to be filled out correctly. An improperly completed Chapter 7 petition will be dismissed immediately, and you’ll have to go through the process all over again.
Debtor’s Education
After your initial meeting with your bankruptcy attorney, you will be required to take two education courses on credit and debt management and attend a hearing during your Chapter 7 bankruptcy. Your attorney will use the paperwork you have provided to file your petition electronically and communicate with the bankruptcy court for any additional information.
The debtor’s education courses are required by the bankruptcy court in order to successfully discharge your bankruptcy. The courses are short lasting approximately an hour and a half and they can be taken over the Internet. Once you have completed them, you will need to submit the certificates to your attorney. After that, you will only need to attend a short hearing called a “341 Meeting.” The judge and trustee may ask you and your attorney a few simple questions before moving your case forward to the next step.
The best part is that once you file for Chapter 7, by law, your creditors can no longer contact you – they’ll have to deal directly with your bankruptcy attorney. You won’t have to dodge calls or worry about your accounts being garnished, because once you file, your debts will be wiped away.
Some Assets are Exempt
Iowa residents filing for Chapter 7 bankruptcy are allowed to keep a specified amount of property or assets. While Iowa only lets residents use state exemptions and not federal exemptions like other states, debtors still have a way to retain some property after the Chapter 7 case is finished. These exemptions can change from year to year; check with your attorney for the most recent codes before you file.
Iowa state exemptions include:
- Home exemption: A primary residence with a 1/2 acre of city land is 100% exempt, along with 40 acres of farm land.
- Personal property:
- Vehicle: Up to $7,000 in value
- Group limit up to $7,000 of:
- Appliances
- Household furniture
- Clothing
- Up to $1,000 of paintings, books, and photographs
- Up to $2,000 in jewelry
- Tools of trade:
- Farming and business equipment up to $10,000 is exempt
- Benefits and insurance:
- 100% unemployment compensation
- 100% Veteran’s benefits
- 100% Social Security benefits
- 100% public aid benefits
- 100% life insurance proceeds
- 100% group life insurance proceeds
- Other exemptions:
- Specified amounts of your wages are exempt.
- 100% of alimony payments
- 100% of child support income
- 100% of ERISA benefits
It’s important to check with your bankruptcy attorney about what additional exemptions may apply to your Chapter 7 bankruptcy filing. He or she may be able to protect more assets.
Filing for bankruptcy, Chapter 7 or otherwise does not need to be a painful process. The help of a skilled attorney will make the process go quickly and smoothly. Once your bankruptcy has been discharged you will be able to completely walk away from your debts, feeling free.
Iowa Bankruptcy Courts
425 Second Street, S.E., Suite 800
Cedar Rapids, Iowa 52401-1816
Phone: (319) 286-2200
United States Courthouse Annex
110 East Court Avenue, Room 300
Des Moines, Iowa 50309
Phone: (515) 284-6230
United States Courthouse
320 South Sixth Street, Room 106
Sioux City, Iowa 51101-1210