Chapter 13 Bankruptcy Iowa

Chapter 13 Bankruptcy Iowa helps residents who have a consistent income but more debt than they can handle. It may allow you to get past financial issues and rebuild your credit. Contact Zisman Law for a free initial review of your financial situation. If you don’t qualify for Chapter 7 bankruptcy or want to keep more property, Chapter 13 may be the right option.

What is Chapter 13 Bankruptcy?

Chapter 13 reorganizes debt. Known as the Wage Earners bankruptcy, it enables you to pay creditors while keeping your property. It’s intended to help individuals who have a job but don’t earn enough to pay their bills. Chapter 13 has many of the same benefits as Chapter 7, such as:

• Pausing foreclosure/eviction
• Preventing utility disconnection
• Stopping creditor calls
• Avoiding repossession
• Halting wage garnishment

The Automatic Stay is a powerful bankruptcy tool. It goes into effect as soon as your case is filed with the bankruptcy court. An automatic stay temporarily stops all legal action against you, including foreclosure, repossession, and garnishment. Creditors must stop contacting you directly and work through your attorney.

What is the difference between Chapter 7 and Chapter 13 bankruptcy Iowa?

Chapter 7 and Chapter 13 bankruptcy in Iowa both provide debt relief, but they have different eligibility requirements.

Chapter 7 Bankruptcy

To be eligible for Chapter 7, you must make below the Iowa median income or pass the Means Test. It offers a fresh start by discharging most if not all your unsecured debts after selling your non-exempt assets.

Chapter 13 Bankruptcy

For Iowans with a steady paycheck but more debt than they can handle, filing Chapter 13 may be the right step. The primary feature of this bankruptcy is the payment plan that is scheduled to last three to five years. At Zisman Law, we can help you create a realistic budget. It considers not only unsecured creditor payments but also necessities, including your mortgage or rent, vehicle, and utilities. The Iowa bankruptcy trustee assigned to your case negotiates with your creditors, based on the budget you submit and get approved by the court.

During Chapter 13 bankruptcy, you do not have to deal with creditors. Instead of paying multiple companies, you make one payment each month to your Iowa bankruptcy court-appointed trustee. This person distributes it to the creditors as agreed upon. Most remaining debt is discharged at the end of your payment plan. You can begin rebuilding your credit immediately upon your case being closed (completed).

What are the Benefits of Chapter 13 Iowa?

Chapter 13 Bankruptcy Iowa helps you get the breathing room you need to get your finances in order. In many cases, the bankruptcy trustee can negotiate lower payments, which can help you pay more creditors. The primary benefits of Chapter 13 bankruptcy include:

• The Automatic Stay – It pauses all legal action against you, and creditors cannot legally contact you once you file for bankruptcy consideration.
• Catch up on missed mortgage or car payments – Although the debt is not wiped out, in some cases the amount you pay is less than before Chapter 13 bankruptcy.
• Keep more non-exempt property than Chapter 7 – Since the debt is restructured, not discharged (wiped out), you can keep more of your property, minimizing the effect of bankruptcy on your lifestyle.
• Wipe old debt – Certain types of debt have a statute of limitations. Your bankruptcy can wipe out this debt.
• Include back taxes – If you owe taxes from previous years, you can include that debt in the payment plan.
• Catch up on spousal and child support – If you file Chapter 7, you still must make scheduled and missed spousal and child support payments. However, with Chapter 13 bankruptcy, you can make arrangements to make up missed payments without retribution from the court.

Do I qualify for Chapter 13 in Iowa?

To be eligible for Chapter 13, you must be within the debt limits. For Iowa residents, it’s approximately $419,275 of unsecured debt and $1,257,850 of secured debt. These amounts are current through 2023 but may change in the future. Unsecured debts include:

• Medical bills
• Credit cards issued by banks (i.e., Visa, American Express, MasterCard, Discover)
• Personal loans

Home equity lines of credit, mortgages, and auto loans are among the most common examples of secured debt.

Requirements of Chapter 13 Bankruptcy in Iowa

Iowa Bankruptcy cases follow the Federal Rules of Bankruptcy Procedure. The general requirements for Chapter 13 bankruptcy also include:

• Attend credit counseling within 180 days of filing
• No bankruptcy petition dismissed in the last six months
• Submit the previous four years’ tax returns
• Be current with tax filings

You must provide proof of income within 14 days of filing bankruptcy. This demonstrates that you have the means to pay down the debt. There are also local bankruptcy rules that are relevant to judicial orders. Missing deadlines or omitting required information could result in your case being dismissed. An experienced bankruptcy lawyer in Fairfield, Iowa can go through the process with you and ensure the case is filed correctly.

Help for Bankruptcy in Fairfield, IA

The longer you dodge collection calls and miss payments, the bigger your problem can get. Trying to fix it on your own can make your situation worse, and more expensive. If owe too much and get paid too little, contact us today and schedule a free phone consultation or call 641-472-5141. Let us help you eliminate, restructure, or reorganize debt. Bankruptcy is not forever, and it lets you start over, be smarter about money, and ready to handle the future.