Welcome to Iowa Chapter 7 Bankruptcy Law!

Quick Questions

Why Chapter 7 bankruptcy?

Chapter 7 bankruptcy is the "full discharge" (no repayment) fresh start. Chapter 13 bankruptcy requires repayment of at least part of your debt over five years. For most people, Chapter 7 is the quickest way to get back on your feet financially although there are times when a Chapter 13 is needed, such as if your income is too high or you need to better manage payment of back taxes.

What can I discharge?

With Iowa bankruptcy, most credit cards, medical and other personal debt are discharged. This includes judgments and liens. You normally cannot discharge bach taxes, student loans or child support. Filing Chapter 7 also stops wage garnishment and foreclosure.

What do I get to keep?

Iowa bankruptcy exemptions allow debtors to keep their home, car, furniture, appliances, retirement accounts etc. As long as we do some intelligent pre-bankruptcy planning and properly use Iowa bankruptcy exemptions, you should not lose property.

Am I eligible for Chapter 7?

Eligibility for Chapter 7 bankruptcy depends primarily on your income. If you are below the state median income, chances are you can file a Chapter 7 full discharge. Jeff can spot most of the obvious problems during a quick online bankruptcy consultation or phone call before you come to the office.

Iowa Annual Median Income
1 Person $37,265
2 People $50.432
3 People $58,764
4 People $67,693
5 People $73,993
(add $6300 for each additional household member)

Note- Social Security income is Not included.

How long does it take?

Jeff does your entire Iowa bankruptcy petition during the first appointment so there is no delay or packet to fill out. Jeff files weekly, normally on Thursdays. Hearings are about 30 days later and your Iowa bankruptcy is discharged about 9 weeks after the hearing, so the entire process takes a little over 3 months. Jeff keeps his fees low by keeping things moving along.

How much does it cost?

Attorney Fee: $900, Filing Fee: $299, Classes: $100

*Add $100 for married couple filing jointly (Additional Certificate Fees)

Will I ever get credit again?

Although bankruptcy remains on your credit report for 10 years you may be surprised at how quickly you are offered credit. Banks know you cannot file another Chapter 7 for at least 8 years. Many of my clients have purchased homes within 2 years of bankruptcy. See; Declaring Bankruptcy Can Improve Your Credit Score, SmartMoney. Despite this, I encourage you to avoid using credit cards after your Iowa bankruptcy and use cash and your debit card instead. Also see: Tips for Getting Credit After Bankruptcy.

What are the most common Iowa bankruptcy Mistakes?

*Large credit card usage, including balance transfers and cash advances, especially within 90 days of filing;

*Repaying debt to family within 1 year of filing;

*Taking out 2nd mortgages and home equity loans to pay credit card debt;

*Transferring assets before filing bankruptcy;

*Filing bankruptcy while anticipating a large tax refund;

*Keeping debt you cannot afford to pay when you do file bankruptcy.

Read more common bankruptcy mistakes.

Full Iowa bankruptcy Q&A.

Frontiersman Daniel Boone borrowed to fund his fur-hunting expeditions, but it did not always work out. In some cases unfriendly Indians took his fur in exchange for letting him keep his scalp. Boone's lawyer said he had more lawsuits entered against him than any other man of his day. Boone's motivation for settling Kentucky was to avoid his creditors back east.

Eligibility for Chapter 7 Bankruptcy in Iowa

Check your household income against the chart below. If you are below the median income you have a much better chance of a successful complete discharge through Chapter 7 Iowa bankruptcy. Some debtors who are over the median income will not be eligible for Chapter 7, but may want to consider Chapter 13 bankruptcy repayment. Jeff will not accept your fees or your case if he does not believe your case will succeed. This requirement is part of the new bankruptcy law.

Iowa Annual Median Income

1 Person $37,265
2 People $50.432
3 People $58,764
4 People $67,693
5 People $73,993
(add $6300 for each additional household member)

Note- Social Security income is Not included.

“The best thing was the computerized filing process. Every base was covered in very little time, I would be happy to recommend your services anytime!”

-Recent Client

More Iowa Bankruptcy Videos

Iowa Bankruptcy Process

Pre-Filing Credit Counseling

You can do your required credit counseling class online for about $50 each before coming to my office. You should email your certificate to me as soon as you receive it. www.cccsinc.org seems to be pretty good for this. Joint couples require two certificates.

First Appointment

You will bring your fees ($1199 total) and the documents listed below to Jeff's office at 4800 Mills Civic Parkway, Ste. 205, West Des Moines, Iowa, 50265. Jeff will go through your case in detail before accepting your fees. If you are not eligible, Jeff will not accept your fees and you pay nothing. If you are eligible, with your assistance Jeff will do your entire petition during this first appointment. That way we can file a complete and accurate petiiton quickly and you are not sitting at home filling out a long, confusing packet. We don't use packets. Jeff maintains a low bankruptcy fee by taking this efficient approach.

Needed Documents:

*$1199 in cash or money order
*Credit Counseling Certificate (you can get this online at www.cccsinc.org)
*All bills you intend to discharge (credit cards, medical etc.) w/ account numbers, full address
*Creditor information (full address, account #'s) on debts you will keep like home or car loans
*Last two months pay stubs from work (including your spouse even if they are not filing)
*If you do not receive wage income, bring records of other income for the last six months
*Most recent state and federal tax returns
*W2's for the last two years
*Legal Description of your Iowa home if you own from your abstract or tax bill
*Proof of valuation of your Iowa home such as tax or other appraisal if you have them
*Photo ID and Social Security Card or proof of social security number

Set an Appointment Online

Jeff's Office

Hearing

Jeff will attend your Iowa bankruptcy hearing with you. There is no Judge or courtroom, just a trustee who will ask if you listed all your bills, all your assets, whether you had more than $1,000 ($2,000 joint Iowa bankruptcy filing) in your bank accounts on the day of filing and so forth. Jeff will assist you if creditors appear with questions or the trustee is concerned about any issues on your bankruptcy. Iowa bankruptcy court. Map to hearing location, 210 Walnut, Des Moines,

Discharge

About 9 weeks after your Iowa bankruptcy hearing you will receive your discharge order in the mail meaning you are no longer responsible for the debt. If you continue to receive bills from any of your discharged creditors you can send them to us and we will take care of them.

See Iowa bankruptcy process for more details.
Questions? Email Iowa Bankruptcy Lawyer Jeff Mathias.

Directions to Jeff's Des Moines Office

Jeff's Des Moines office is located in Sommerfield Village Center at 4800 Mills Civic Parkway, Suite 205-02 , West Des Moines, Iowa 50265 at the intersection of 50th & Mills Civic. Jordan Creek Town Center is about 1 miles West of Jeff. Look for the Walgreen's just East of Intestate 35. Above is the lobby. There is an elevator. Coffee Cafe is on the left. Quizno's sandwiches is in the same building. Restrooms are at the top of the stairs.

American Author Mark Twain spent nine years in Europe avoiding creditors of his defunct typewriter invention business. Twain returned to the United States in 1864 to file bankruptcy.
 

Iowa Chapter 7 Bankruptcy Law-

Bankruptcy Law Sections

Although filing Iowa bankruptcy involves both Iowa state and federal bankruptcy law, the current federal bankruptcy law is found in the United States Bankruptcy Code. Following are some of the sections of the bankruptcy law that are of most interest to consumer bankrutpcy cases. Section 101 of the bankruptcy law concerns definitions of bankruptcy law terms. Section 341 covers the bankruptcy law-meeting of creditors.

Section 521 covers bankruptcy law-debtors duties. See Section 524 for bankruptcy law-Effects of Discharge. Section 525 bankruptcy law - Protection from Discrimination covers prohibited conduct. The section on bankruptcy law - Redemption allows you to keep your car with a lower payment after your Iowa Chapter 7 bankruptcy in some cases. This is administered by USBank. The bankruptcy discharge prevents creditors from collecting against you when your bankruptcy is finished.

“They helped me through a very bad time with a minimum of embarrassment.” -Fomer Client

Important Iowa Bankruptcy Law Cases and Code Citations

Below are several bankruptcy law cases covering issues that may be of interest to debtors in general.

Bankruptcy Law re. Automatic Stay

The automatic bankruptcy stay (which takes effect the day your bankruptcy case is filed) is effective against all entities and brings almost all forms of civil legal action against you to an abrupt halt, 11 USC 362(a)(1)-(8), Willford v. Armstrong World Industries, Inc., 715 F.2d 124, 126 (4th Cir. 1983). This is a U.S. Bankruptcy Court decision from the 4th Circuit.

The bankruptcy petition operates as the stay and is automatic and self-operating, NLT Computer Services Corp. v. Capital Computer Systems, Inc., 755 F.2d 1253, 1258 (6th Cir. 1985). This is a U.S. Bankruptcy Court decision from the 6th Circuit.

Bankruptcy Stay applies to non-bankruptcy Court

Counsel bringing an action against the debtor has a duty to take action to halt a non-bankruptcy court action, In re. Atkins, 176 B.R. 998 (Bankr. D. Minn. 1994). This is a U.S. from the Bankruptcy Court in Minnesota.

Bankruptcy stay Violations

Actions taken in violation of thebankruptcy stay are void as a matter of law, see In Re Schwartz, 954 F.2d 569, 26 C.B.C.2d 649 (9th Cir. 1992) (IRS violation of stay was void, not voidable). This is a U.S. Bankruptcy Court decision from the 9th Circuit.

Innocent Bankruptcy Stay Violations

Even when a violation begins innocently, refusal to rectify it after notice of the case renders in willful, see In re Carrigg, 216 B.R. 303 (B.A.P. 1st Cir. 1998). This is a U.S. Bankruptcy Court decision from the 1st circuit Bankruptcy Appellate Panel.

Creditors Duty

The duty is on the creditors, especially when they are regularly involved in bankruptcy cases, to establish procedures that ensure compliance with the automatic stay, see In re. Price, 103 B.R. 989 (Bankr. N.D. Ill. 1989). This is a U.S. Bankruptcy Court decision from Illinois.

Collection Agencies

If either the creditor or its collection agency has knowledge of the bankruptcy case, the creditor may be held in contempt for attempts to collect, see In re. Fowler, 16 B.R. 596 (Bankr. S.D. Ohio 1981). This is a U.S. Bankruptcy Court decision from Ohio.

Bankruptcy Stay Violations

Attorney fees and costs are mandatory for willful violation of the automatic bankruptcy stay and punitive damages are also available, United States v. Ketelson, 880 F.2d 990, 993 (8th Cir. 1989). This is a U.S. Bankruptcy Court decision from the 8th Circuit.

Creditors cannot sit on their hands

Willful violation occurs when a creditor fails to act affirmatively to prevent an action prohibited by the automatic stay, see Matter of Sams, 106 B.R. 485 (Bankr. S.D. Ohio 1989). This is a U.S. Bankruptcy Court decision from Ohio.

Pre-Bankruptcy Stipulations not binding

Bankruptcy Courts are not bound by stipulations made prior to filing bankruptcy that debt will not be discharged (sometimes these stipulations are found in divorce decrees), In re Cole, 226 B.R. 647 (Bankr. 9th Cir. 1998). This is a U.S. Bankruptcy Court decision from the 9th Circuit.

Bankruptcy Law and Co-debtors

The Chapter 7 automatic bankruptcy stay does not effect actions against co-debtors, Credit Alliance Corp. v. Williams, 851 F2nd 119, (4th Cir. 1988). This is a U.S. Bankruptcy Court decision from the 9th Circuit.

Pay deductions must Stop

Acceptance of payroll deductions after filing violates the automatic stay, Matter of Hellums, 772 F2d 379 (7th Cir. 1985). This is a U.S. Bankruptcy Court decision from the 7th Circuit.

Driver’s License and Bankruptcy Protection

A driver’s license revocation based on an unpaid accident judgment cannot be continued after discharge, Perez v. Campbell, 402 U.S. 637, 91 S. Ct. 1704 (1971). This is a U.S. Supreme Court decision.

College Transcripts once Bankruptcy Filed

Withholding of a student’s college transcript for non-payment of a debt discharged in bankruptcy is prohibited, In re Merchant, 958 F.2d 738 (6th Cir. 1992). This is a U.S. Bankruptcy Court decision from the 6th Circuit.

Bankruptcy Law and Social Security Benefits

Administrative recoupments of public benefits such as social security or welfare based on overpayment are not allowed once you have filed bankruptcy, Lee v. Schweiker, 739 F.2d 870, (3rd Cir. 1984). This is a U.S. Bankruptcy Court decision from the 3rd Circuit.

Bankruptcy Law and Criminal Cases

U.S. Bankruptcy Court rules that a criminal case can continue against the debtor despite filing bankruptcy, In re. Guntz, 202 F.3d 1074 (9th Cir. 2000). This is a U.S. Bankruptcy Court decision from the 9th Circuit.

Checks delivered pre Bankruptcy petition

The automatic stay does not prevent cashing a check delivered pre-petition, In re. Roete, 936 F.2d 963 (7th Cir. 1991). This is a U.S. Bankruptcy Court decision from the 7th Circuit.

Actions against Others

Actions pursued against others (by the debtor) are not stayed by filing bankruptcy, see In re Berry Estates, Inc. 812 F.2d 67 (2d Cir. 1987). This is a U.S. Bankruptcy Court decision from the 2nd Circuit.

IRA’s are Exempt

Individual retirement accounts are exempted from the bankruptcy estate, Rousey v. Jacoway, 544 US 320 (2005). This is a U.S. Supreme Court decision.

Garnishment of Social Security Benefits

Under the Debt Collection Improvement Act (Pub. L.No. 104-134, 110 Stat. 1321, 1358 (1996)) up to 15% of the monthly benefit payment may be deducted to collect debts owed to the federal government that have been delinquent for at least 180 days.  This administrative offset procedure may be used even if there has not been a court judgment finding that debtor owes the debt.  See 37 USC § 3716 

Holding Car Title may Violate Stay

The First Circuit ruled that when the lender declines to recover a surrendered vehicle (normally of nominal value), holding a car title may be a violation of the discharge. See In re Pratt 462 F.3d 14.

Debt Settlement vs. Bankruptcy (Tax Consequences)

In this non-bankruptcy case, the debtors owned a home worth about
$350,000 and encumbered by a $185,000 mortgage.  The full amount of the equity was exempt under state law.  The debtors settled $100,000 in credit card debt for about $30,000.  The IRS imposed taxes on the $70,000 in discharged debt.  The court held that the exemption in the home could not be taken into account.  The court also noted that had the debtors filed for bankruptcy then none of the discharged debt would have been taxable.  United States Tax Court, Stuart Raymond Quartemont and Velvet Fenner Quartemont, Petitioners and Commissioner of Internal Revenue, Respondent, Docket No. 3584-06S, Filed February 6th, 2007.

Compiled by Jeff Mathias, Des Moines, Iowa Chapter 7 bankruptcy law lawyer, serving all of Iowa from Des Moines office: 4800 Mills Civic Parkway, Suite 205, West Des Moines, Iowa 50265.

While in debtors prison, Charles Goodyear experimented with rubber mixes. Later he accidentally created weatherproof rubber by mixing in sulpher and applying heat. Goodyear had poor patent protection. The Goodyear company was named in his honor only, he saw few profits himself.

More Iowa Chapter 7 Q & A

Why does Jeff charge less for bankruptcy than other attorneys?

Efficiency. Jeff has many built-in efficiencies that most other attorneys have not, such as direct entry and batch filing. Just doing your entire petition during the first appointment (direct entry) cuts all of “back and forth” time between you and Jeff’s office that you would have to do if you had filled out a long client information packet. Filing cases in batches allows Jeff to handle several hearings at a time. Jeff also answers his own phone as much as possible and promptly responds to your needs, cutting way down on “phone tag.”

"Everything was handled very quickly, efficiently and professionally and with a minumum of fuss. I love the up-front pay policy, thanks for everything!" – N.S.

Should I consider credit counseling?
If you have the ability to pay off your debt we encourage you to consider credit counseling. Beware of distant online firms that claim to pay your bills if you send them a monthly payment. Many will hold your money and ignore your creditors. Creditors can still sue you and garnish your wages. If you are going to try to pay off your debt we suggest you contact Consumer Credit of Des Moines at 287-6428 (this is the agency headed by Tom Coates).

What happens at the hearing?
There is no judge or courtroom. A Trustee swears you in and asks if your petition is correct, if you listed all your assets and debts and several other questions. A typical hearing lasts about 3 minutes. Creditors normally do not show up. Hearings are held at the Federal Building, located at 210 Walnut, in room 783.

What debt is discharged, what debt is not?

Discharged: Credit Card Bills, Medical Debt, Repossessions,
Judgments, Collections, Back rent, utilities & Miscellaneous Consumer Debt
Not Discharged: Student Loans, Child Support, Most Back Taxes,
Criminal fines, penalties and restitution

Will someone come to my home and take my property?
We have never had a client visited at home. If you have nonexempt property we can do some legal pre bankruptcy planning to protect it or negotiate a favorable buy back from the trustee. Most clients do not lose any property.

Will my doctor continue to treat me if I discharge his bill?
With the exception of one clinic in Ames, our clients seem to have no difficulty continuing with normal care after filing bankruptcy.

What about wage garnishment?
Wage garnishments must stop even if you file your bankruptcy the day before payday. We are experienced in recovering these funds for you. Please provide us with the name and facsimile number of your payroll clerk so we can take care of this for you.

Will my name be published in the newspaper?
Some newspapers publish bankruptcies regularly, some sporadically. There is no way to keep it from being published, although it may not be anyway.

What are the most common issues that arise on bankruptcy cases?
Motion for Relief on Secured Property (Usually home or car)
If you cannot pay your house or car payment, the creditor can foreclose, although your bankruptcy will slow them down. You would have to file a Chapter 13 case in order to delay repayment. But beware, many Chapter 13 cases fail, leaving the debtor in worse shape than before.

90 Days Before Filing
If you have large charges or cash advances within 90 days of filing, or have taken out new large loans, the creditor can object to discharge of this debt based on the Bankrupcty Law- exceptions to discharge. We can help you deal with this issue.

Tax Return
You keep the first $1000 per working debtor plus an amount equal to your Earned Income Tax Credit. Timing can be important late in the year to make sure you keep tax returns that exceed $1000 per working filer. Most of our clients get back less than $2000 jointly, or $1000 individually. If you have a particularly large return, you should discuss this with your attorney before filing. We are experienced in protecting these funds.

Pre-Aquistion Debt
If you own a home, had high dischargeable debt at the time of purchase, and have equity, you may have pre-aquistion debt. If so, we can tell you how this will affect your case. It should not keep you from going forward with bankruptcy.

High Income
If your income is significantly higher than your expenses, you may not be eligible for a Chapter 7 and may need to consider Chapter 13. This normally is not a problem for our clients. Of course, job loss can make almost anyone eligible for a Chapter 7.

Preference Payments
If you have made a large recent payment to family or a single creditor the trustee may be able to recover that money and distribute it evenly to all of your creditors. You should consult with your attorney before making preference payments.

Actor Gary Burghoff, "Radar" from the film and TV series M.A.S.H. hit hard times after the show ended, filing bankruptcy in 1991. Now he sells his wildlife drawings for up to $25,000 each.

How do I get started?

Complete the Free Online Consultation or email Jeff with your questions. If you appear to be eligible for Chapter 7 and you have your fees and documents ready we can set an appointment.

How can I get a copy of my Credit Report?
The quickest way is at equifax.com. Beware: Not all creditors report and credit reports are not necessarily accurate.

Why do banks "run up" the balance on credit cards with unreasonable interest and fees?

Because they can deduct the total balance from their taxes when they write off your debt, banks have a perverse incentive to run your balance up as high as possible. This way they profit either way; either they make huge profits from the card holder or they get a tax write off of a lot more than they actually lost.

What else should I do right away if I am going to file bankruptcy?

Do not accumulate any more debt.

Do not use credit cards or write any checks you may not be able to cover.

Stop paying credit card and other bills you will discharge.

Do not give away any property.

Do not make preference payments to family members or others.

Do not make any major financial moves without consulting with your attorney.

Start collecting all your past due bills to bring with you to our office.

If you owe more than your car is worth, start considering alternatives to reaffirmation including redemption.

Do start thinking about your financial objectives after bankruptcy. A good start is to set aside a portion of what you have been paying toward credit cards as a savings fund.

But I feel “Guilty” about filing bankruptcy.
This is the most common misunderstanding about bankruptcy. Courts view bankruptcy as the Responsible Approach if you can no longer pay your debt. Many people continue to acquire debt they know they will never repay. It is much better to recognize that you cannot repay your debt, “draw a line in the sand” and agree to be responsible for all future debt. Further, you must consider the future. High debt could keep you from affording a home for your family and funding your children’s college tuition. If you cannot fund your retirement you could become dependent on welfare. This is why courts want you to utilize your rights under bankruptcy law if you need to. We encourage you to use this as a real fresh start, adjust your spending and take control of your financial future. You can be financially happy after your bankruptcy if you are determined to. We look forward to helping you get a fresh start.

How can I rebuild my credit after bankruptcy?
In the past it was difficult to gain credit after filing bankruptcy. That has changed. After bankruptcy you should make every home, car and other installment payment on time. If you have substantial income and a manageable debt load you should be able to borrow in the future.
Buying a Home: It is possible to purchase a home right after bankruptcy although the interest rates tend to be higher. Of course if your debt is high now, you are either completely ineligible to buy a home or would pay high interest anyway. We recommend that you spend two years after your bankruptcy saving at least a 5% down payment and maintaining consistent employment with significant income exceeding expenses. So you should avoid taking on other debt prior to buying your home.

Buying a Car: Most dealers are happy to put you in a car as soon as you have your discharge (your discharge comes about 3 months after your date of filing) if you are otherwise eligible. It is important to shop around for the best deals and rates.

Credit Cards: Although you can get secured credit cards right away, we would encourage you to use a debit card on your bank checking account instead. Debit cards can be used for reservations and Internet purchases just like credit cards. We believe that credit cards are overrated and you are much better off making day to day purchases with money you already have then paying 20% or more interest on credit card debt.

Student Loans: Guaranteed student loans should not be affected by bankruptcy. Private loans may be affected, but chances are you would not be eligible for those anyway if you already have high debt. We have represented many college students who have gone on to borrow and continue normally with their studies after discharging their debt.

How much debt do I need to qualify for Iowa Bankruptcy?
There is no minimum debt requirement. We have had clients who have little or no income file Iowa Bankruptcy with debt that would be very manageable for someone with a substantial income, so it just depends on the individual. If you are not sure, email your amount of debt and your monthly income to me at jeff@mathiaslaw.com and I can give you my opinion.

What about co-signers?
Banks rely on co-signers to pay if you don‘t. Many clients ask us how to go about “getting co-signers off” their debt. You could call your bank and ask them nicely to remove the co-signer, but I am guessing they would fall off their chair laughing. If you do not pay your debt due to bankruptcy or any other reason, the bank will collect against the co-signer. However, if you are going to continue to make the payment the co-signer will not be affected.

Does my spouse have to file with me?
No
Many of our clients file bankruptcy alone. If you are both on the debt it usually is better to file together. You still only pay one attorney fee and one filing fee if you file jointly. If your spouse is not on the debt, there would normally be no reason for them to file bankruptcy.

If I file Iowa Bankruptcy alone, does the Court consider my spouses income?
Yes
If you are married and you file bankruptcy, but your spouse does
not, the Court will consider the income of your spouse. So you should be prepared to tell us how much your spouse earns. Normally this is not a problem. However, if your spouse has unusually high income you will want to discuss that with Jeff to find out if you are still eligible for
Chapter 7.

How does my bankruptcy affect my non-filing spouse?
If you file bankruptcy alone, your spouse will be affected. You will be able to take them out to dinner more often since you will not be paying your unmanageable debt. Other than that, they should not be affected. Your bankruptcy should not appear on their credit report.

What do I need to bring to your office?
$1199 in cash or money order
Credit Counseling Certificate (you can get this online at www.cccsinc.org)
All bills you intend to discharge (credit cards, medical etc.) w/ account numbers, full address
Creditor information (full address, account #'s) on debts you will keep like home or car loans
Last two months pay stubs from work (including your spouse even if they are not filing)
If you do not receive wage income, bring records of other income for the last six months
Most recent state and federal tax returns, W2's for the last two years
Legal Description of your Iowa home if you own from your abstract or tax bill
Proof of valuation of your Iowa home such as tax or other appraisal if you have them
Photo ID and Social Security Card or proof of social security number

Famous Architect Frank Loyd Wright lost his home, Taliesin in Wisconsin and was thrown on the street when business dried up in 1922. During the following decade, he designed some of his most famous projects.

More Famous & Bankrupt

Questions? Email Iowa bankruptcy lawyer Jeff Mathias

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