Many people have difficulty paying off their debt. People normally will do everything they can to pay off debt including making big personal sacrifices. Eventually though, it can become impossible to pay off large debt while still having money left over even for necessities. Also, if we continue in debt, then we are not able to save for future emergencies, or expenses like college for the kids or even our own retirement. This is where Iowa bankruptcy law comes in. The three most common causes of bankruptcy are job loss, divorce and illness. In my experience, the common view that irresponsible people file bankruptcy is nonsense. Even many people with medical bankruptcies started out with good health insurance coverage. But once you get really sick you can't work. Then you lose your employer sponsored coverage. Uninsured medical is crazy expensive. I find that most of my clients are just like me, normal hard working people who would do anything to avoid this situation.
Chapter 7: Chapter 7 or "liquidation" is full discharge with no repayment. For most people the liquidation part is theoretical since they don't have valuable non-exempt assets. Iowa exemptions, when properly claimed, protect your home, cars, retirement, furniture, bank balance etc. The most common liquidated asset is probably tax refunds, although less than in the past since we can now exempt up to $2,000 individual/$4,000 joint, plus you keep all your Earned Income Credit. Most Ch 7 cases are "no asset" meaning you do not lose anything and creditors are not paid anything from the bankruptcy estate.
I just got my notice in the mail today that my bankruptcy is final! I
received your thank you on Friday so I knew something was up. Anyways, I
just wanted to say thank you. I was so horrified when I arranged my
meeting with you but you put everything at ease. Humor helps, a LOT in
my book. Take care and if I come across anyone who needs to file, I will send them your way!"
– Recent client
Chapter 13: Chapter 13 involves repayment of debt over 5 years. IRS collection guidelines are used to determine how much you are allowed to live on. Most Ch 13 cases fail because people can't afford the payments, often resulting in a conversion to Ch 7.
Chapter 11: Chapter 11 is mainly used to reorganize businesses and by some high asset individuals. Celebrities often file Ch 11. The attorney fees on Ch 11 are very high compared to Ch 7 or Ch 13. The filing requirements are also very complex.
Chapter 12: Chapter 12 is for family farmers although some farmers with smaller operations are okay under Ch 7.
Courts consider bankruptcy to be the responsible thing to do if we are no longer able to pay our bills. Otherwise, we would continue to acquire debt that we are unable to pay. So when we file Iowa bankruptcy, we are ?drawing a line in the sand? and agreeing that we will be responsible for all future debt, even if we cannot pay off past debt. Iowa Bankruptcy Guide: You can also check out Jeff's Iowa Bankruptcy Guide for more information about filing personal bankruptcy in Iowa.