There are millions of Americans who file for bankruptcy each year, many of whom are from Iowa. In order to make an informed decision about filing for bankruptcy, you must understand the process and what to expect.
In this blog post, we will discuss the steps to filing for bankruptcy in Iowa, as well as the types of bankruptcy you can file for. Feeling overwhelmed by your debt and considering bankruptcy? Read on!
What Is Bankruptcy?
Through bankruptcy, an individual can start new by forgiving debts that cannot be repaid and giving creditors a chance to recoup some of their losses. The US Bankruptcy Code outlines how bankruptcy is handled in federal courts.
Reasons Why You May Consider Filing for Bankruptcy
A number of reasons may lead you to consider declaring bankruptcy. Falling behind on your bills, constantly struggling to pay for essentials, or using credit cards to cover necessities may lead to bankruptcy.
Other reasons to consider bankruptcy include:
- Being harassed by creditors
- Facing foreclosure on your home
- Having a hard time making your debt payments
In any of these situations, you may wish to consult a bankruptcy attorney to discuss your options.
Alternatives to Bankruptcy
The decision to file for bankruptcy should not be taken lightly. Before making any major decision, it is important to know your options.
Credit counseling and debt settlement are good alternatives to bankruptcy. However, you should always consult a financial advisor before taking any action.
Consolidating your debt into a single monthly payment can help you repay it faster and save money on interest. Last but not least, creditor negotiations are always worth pursuing. Even though this is a complex process, a successful agreement can prevent bankruptcy.
The Types of Bankruptcy for Individuals
There are two types of bankruptcy that individuals can file in Iowa: Chapter 7 and Chapter 13.
Chapter 7
In Chapter 7 bankruptcy, also known as liquidation bankruptcy, certain types of debts are discharged or eliminated. Since creditors don’t get paid, the process is cheap and can be completed quickly. Individuals with fewer assets can file for bankruptcy under this type of bankruptcy since people who have more assets are at risk of losing them. In addition, if you’re behind on your mortgage or car payment when you file, you may lose them since there are no payment plan options for catching up on delinquent mortgages.
Chapter 13
In contrast, Chapter 13 filers have three to five years to repay their debts. Moreover, Chapter 13 provides benefits that Chapter 7 does not. As an example, you will be able to keep all your property, avoid foreclosure, and avoid repossession. If you cannot discharge a debt in bankruptcy, you can also force a creditor to accept a payment plan.
How to File for Bankruptcy in Iowa
If you are considering filing for bankruptcy in Iowa, it’s important to comprehend how the process works. The steps to take have been detailed below.
- Gather Your Iowa Bankruptcy Documents: You will need copies of your tax returns from the previous two years and your last 60-day pay stubs.
- Take a Credit Counseling Course: Learn more about the credit counseling course here.
- Fill Out the Bankruptcy Forms: You can download the forms free through USCOURTS.gov.
- Pay Your Filing Fee: Chapter 7 bankruptcy requires a court filing fee of $338. When your income does not exceed 150% of the poverty guidelines in Iowa, you can request a filing fee waiver.
- Print Your Bankruptcy Forms: Make sure to print all forms on regular, white 8.5″ x 11″ paper using black ink.
- File the Forms With the Iowa Bankruptcy Court: A bankruptcy case can be filed in the northern or southern district of the Iowa Bankruptcy Court. It is not possible for an individual without a lawyer to file a bankruptcy petition online. Your forms must either be filed in person or mailed to the courthouse.
- Mail Documents to Your Trustee: You will be assigned a trustee after filing for bankruptcy.
- Take Another Course: Attend a debtor education course within 60 days of the 341 meeting.
- Attend Your 341 Meeting: Your creditors can attend this meeting to ask questions.
After Bankruptcy, What Happens?
In bankruptcy, most unsecured debts are forgiven, so you won’t have to pay them back. However, student loans, child support, and alimony cannot be forgiven through bankruptcy. You may also forfeit some belongings depending on the type of bankruptcy you file.
Is Bankruptcy Bad for Your Credit?
Depending on the type of bankruptcy you file, your bankruptcy will affect your credit score for seven to ten years. As a result, you may have difficulty obtaining a loan or credit line in the years to come.
Rebuilding Your Credit Post Bankruptcy
Despite what many believe, bankruptcy does not mean your financial future is over. You can rebuild your credit by:
- Making on-time payments.
- Maintaining a good payment history.
- Getting a secured credit card.
- Becoming an authorized credit card user.
- Taking out a small loan.
- Regularly check your credit report for errors.
Sell Your House and Avoid Bankruptcy in Iowa
No one wants to find themselves in a situation where they must consider filing for bankruptcy, but if that’s the case, we are here to help! You can avoid a hard credit hit by selling your house fast for cash in Iowa.
At Favor Home Solutions, we buy houses as-is to make the process as easy as possible for you. Our team will work within your preferred timeline throughout the process to ensure you feel supported and at ease. Our goal is to offer you a fair cash offer for your house so that you can avoid bankruptcy and move on to the next chapter of your life as soon as possible. Contact us today!
