Iowa Chapter 7 Summary

Iowa Bankruptcy Lawyer Jeff Mathias

Here in Iowa the majority of clients file under Chapter 7 of the United States Bankruptcy Code. Chapter 7 provides for a complete discharge of credit card, medical and most other consumer debt. The major non-dischargeable debts are back taxes, student loans and child support. The other major consumer bankruptcy chapter is Chapter 13 repayment. Under Chapter 13 you repay normally for five years based on your “ability”.

Because your ability to repay is calculated after allowing limited expenses using the IRS Collection Guidelines the repayment amount can be fairly high. Most of the people who file Chapter 13 bankruptcy cannot make the payments, often due to unforeseen expenses. People who fail in a Chapter 13 have their case dismissed and are back at square one. Hence, unless there is a really good reason to file a Chapter 13 repayment (like better treatment of tax liabilities or fraud claims) you are normally better off to file a Chapter 7 from the start.

All debtors are required to take a Credit Counseling Class before filing bankruptcy in Iowa. Although the class can be taken over the telephone or in person, most people find it convenient to do online. You will be asked for your income and expense information and how much you owe. I have had the best luck with CCCS of Atlanta. Their site seems to be fairly easy to navigate and they can email your certificate to me directly if you ask them. You can have them email me at jeff@mathiaslaw.com. Normally they can have your certificate to you within a few days. If you do not have it the day you come to my office that is fine, I will get it soon enough. The cost of the certificate is $50 and they can debit the funds from your checking account if you wish. If you are filing a joint bankruptcy you will need two certificates.

Once you file your Chapter 7 the Automatic Stay in Section 362 of the bankruptcy code prevents creditors from starting or continuing collection action against you. So if your wages are being garnished, it must stop. Foreclosures stop. Collection calls and letters have to stop. Of course there are exceptions like child support, taxes, student loans and criminal prosecutions which can continue. In practice, your student loans will normally give you about six months to resume payments after filing bankruptcy.

All debtors are also required to complete the Financial Management Class after the bankruptcy is filed. CCCS of Atlanta is good on this certificate too. Again, they can email the certificate directly to my office.

Your Iowa Chapter 7 bankruptcy hearing usually is set around a month after your case is filed. Creditors can appear at the 341 Examination (hearing) but they normally do not attend. The bankruptcy trustee is an attorney appointed by the Bankruptcy Court to examine you at your hearing and determine if there are any assets available to be distributed to creditors. In most cases there are not. Our trustees in Des Moines are Tom Flynn, Don Neiman, Anita Shodeen and Charles Smith. I've had many cases with each of the trustees and know what their expectations are and how to gude your case smoothly through their office. At your hearing the bankruptcy trustee can examine you concerning the accuracy of your petition and any assets that may be available to administer. But the Court wants you to be able to continue your life so you are allowed many Iowa exemptions that allow you to keep most or all of your property. Your Iowa bankruptcy attorney can advise you before filing your bankruptcy what is and is not exempt.

Pre-bankruptcy planning is totally legal so with some forsight most debtors avoid loss of property. The most common exception is tax refunds. If you file late in the year and are going to receive more than $1,000 individually or $2,000 jointly on your taxes, it may be better to delay your bankruptcy filing until after those funds are received and spent. Just make sure you discuss how you are spending your refunds with your attorney before doing so to avoid preference payment issues. The most common preference problem is money paid to family within one year of filing bankruptcy, so you should avoid payments to family for past due debt within one year of filing your bankruptcy.

After your hearing, creditors have time to object to your bankruptcy discharge, but usually there are no objections. Normally your discharge letter will come about 9 weeks after your hearing, so the entire process takes about 3-4 months although in my office it is quicker because I do not make my clients fill out long packets just to get started. Instead, we will complete your entire petition during your first appointment so we can file fast. Most of my clients report that their Iowa bankruptcy was easier and less stressful than expected. Even though you have received your discharge letter it is important to follow through on any remaining trustee requests like copies of tax returns. If you do not, your discharge can be revoked.

After you file your Iowa Chapter 7 bankruptcy you may be surprised at how many offers of credit you receive. I encourage you to throw credit applications away and live on cash as much as possible. Although the bankruptcy remains on your credit for 10 years you can usually qualify for a good interest rate on a home mortgage about two years after your bankruptcy. Try to keep steady employment and avoid taking on new credit card debt or other installment debt like furniture loans. Having a good debt to income ratio is a big help when you try to purchase a home. See Moran Law's discussion of Credit After Bankruptcy.

Iowa Chapter 7 Bankruptcy Timeline:
1. Initial Appointment/Petition Preparation with Jeff.
2. Hearing- About 30 days later in Des Moines.
3. Bankruptcy Discharge- About 9 weeks after hearing.

Iowa Bankruptcy Resources: Median Income Charts, Credit Counseling Providers, Financial Management Certificate Providers, Jeff's Iowa Bankruptcy Web Site.

Considering Iowa Bankruptcy due to foreclosure? Jeff's Iowa Foreclosure Law site includes more information on foreclosure law.

Questions? Ready to get Started?
Email Iowa Bankruptcy Attorney Jeff Mathias
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Call Jeff: Des Moines 515-261-7526, Toll Free 1-800-997-1395. Also see Jeff's Iowa Bankruptcy Law and Iowa Chapter 7 Bankruptcy guide and Iowa Foreclosure Law information. Nolo bankruptcy information. For more on bankruptcy, see Wikipedia bankruptcy law page.

Des Moines Iowa Chapter 7 bankruptcy lawyer Jeff Mathias -Des Moines office located at 4800 Mills Civic Parkway, Suite 205, West Des Moines, Iowa 50265. Tel. 515-261-7526.