When you're walking a financial tight rope, any mishap such a medical emergency or a job loss can send you plummeting. Federal law provides a safety net, the right to file for bankruptcy and move on to a debt-free life. Although there are a number of bankruptcy options, most debtors use either Chapter 7 or Chapter 13. Chapter 7 allows debtors to erase most of their debts, although their property may be sold to repay creditors. Chapter 13 allows debtors to keep their property and create reorganization plans that allow them to make manageable payments toward their debts over three to five years. If you live in Iowa, the state's specific laws can affect your filing.
Where to File in Iowa
Iowa has bankruptcy courts in Cedar Rapids and Des Moines, although there are numerous branches. You must file with the court closest to where you live. Visit the United States Bankruptcy Court's website for the Northern District of Iowa to learn where you should file.
Eligibility for Filing Chapter 7
Iowa residents can file for Chapter 7 liquidation bankruptcy if their incomes are less than the state median of $41,933 for single wage earners. The limit increases for additional family members, up to $74,514 for families of four and even higher for larger families. Even if you make more than the median, you might still be able to file under Chapter 7 if you pass a means test that involves complicated calculations.
Repaying Your Debts Under Chapter 13
Your income also determines how long you have to repay your debts if you file for Chapter 13 bankruptcy. If your income is less than the state median, you generally have 36 months, although the court can allow longer if the judge believes there's a good reason. If your income is more than the state median, the repayment plan can be up to 60 months.
Calculating What You Can Keep
Bankruptcy law allows exemptions, dollar amounts of certain property that you may keep. Common exemptions include equity in homes, cars, jewelry, pensions and appliances. Although the federal government has its own set of exemptions, you must use the state's list if you live in Iowa. In many cases, Iowa's exemptions are more generous. For example, Iowa's exemption for a residence is unlimited, while the federal homestead exemption is $21,625 per person or twice that for married couples. Iowa also allows residents to keep up to 90 percent of their weekly earnings. The federal level is 75 percent.
You must meet a two-year residency requirement to use Iowa's exemptions. If you haven't lived in the state that long, an attorney can help you figure out what exemptions you're permitted to use.
Getting the Help You Need
For specific information regarding your bankruptcy case, please contact an Iowa bankruptcy lawyer.