Filing Chapter 7 Bankruptcy In Iowa
Chapter 7 Bankruptcy is the least expensive, the quickest and the most common type of bankruptcy. The first step in Chapter 7 Bankruptcy is to meet with a bankruptcy attorney who will review your financial situation.
If you decide Chapter 7 Bankruptcy is your best option, an Iowa Bankruptcy Attorney will file your bankruptcy petition and a Statement of Your Financial Affairs in the appropriate Iowa Bankruptcy Court. These forms will identify your creditors, the amount and type of debt you owe, your income and expenses and your property you own.
Fortunately, filing the bankruptcy petition will provide you at least a temporary “automatic stay” which will delay debt collection efforts. Chapter 7 Bankruptcy may not halt collection efforts all together. Efforts may continue if a Bankruptcy Judge decides there is “cause”.
A trustee will be assigned to your bankruptcy case and will sell your assets and use the money from the sale to pay your creditors. Priority creditors will be paid first according to federal bankruptcy law. At the completion of the Chapter 7 Bankruptcy process, which is usually four to six months, your qualifying debt will be discharged. Dischargeable debt can include hospital expenses, unsecured personal loans and credit card debt. Corporations, married couples, individuals and partnerships all may qualify to file Chapter 7 Bankruptcy.
In 2005 under the Bankruptcy Abuse Prevention and Consumer Act (BAPCA), it became more difficult for most individuals to qualify for Chapter 7 Bankruptcy. Under the BAPCA, you must pass an income test. The income test will determine if your median income is below other residents in the state of Iowa. If it is below, you probably will be able to file Chapter 7 Bankruptcy, if it is above, additional “means testing” will need to be done.
Means testing will subtract certain expenses from your income such as your house payment, car payment, certain amount of school tuition and taxes owed. If your remaining income allows you to pay $6,000 or $100 per month toward debt in the next 60 months, you may not qualify for Chapter 7 Bankruptcy. If you fail this test, but you can still pay up to 25% in debt repayment, you may not qualify for Chapter 7 Bankruptcy.
The goal of the new legislation is to require more individuals to have to repay their debt. The BAPCA also requires credit counseling prior to filing bankruptcy and completion of a financial management course prior to the dismissal of your debt.
To determine your median income, you can compare your income to other residents in the state of Iowa. The United States Trustee program publishes a list of the state median incomes in the State Median Income Chart. In the state of Iowa, after March 15, 2009, for a single wage earner the median income is $41,381. For a family of two it was $54,628 and for a family of three it was $63,888. For a family of four it was $74,047.
To determine if you can file Chapter 7 Bankruptcy, it is important to contact an Iowa State Bankruptcy Attorney who can complete the means test for you.
