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Filing Bankruptcy in Iowa.
How do people come up with the money to file bankruptcy?
Some clients stop making credit card payments and accumulate that money to pay for bankruptcy. Others borrow from family, which is fine so long as you plan to repay them. The busy season for bankruptcy starts in January when people pay with tax refunds.
Am I eligible for Chapter 7 Full Discharge?
Eligibility depends entirely on your household income for the last six months. You can include kids you are paying child support for in your household. Don't count Social Security but do count all other income including child support, overtime etc. So you add up the past 6 months and double it to get your annualized income for bankruptcy purposes and then compare it to the chart on the main page of this website. If you are under median, you are eligible, period. Other issues can be dealt with, so just email questions to Jeff.
How is Jeff different from other bankruptcy attorneys?
Efficiency, specialization and accessibility. Jeff gets you well organized before the office meeting so that once you are in you can rock & roll. Direct entry of all your information with Jeff cuts out “back and forth” time between you and Jeff that you would have if you had filled out a long client information packet. Consumer bankruptcy is all Jeff does. Jeff refers out litigation cases so he can remain accessible to his clients instead of getting tied up in Court a lot. Jeff also responds fast to email, even after hours as time allows, so you can keep moving forward, and uses technology to keep you informed. Jeff's best clients are "researchers" who come in well informed and leave happy because they know exactly what they are doing! Check Jeff's client reviews at Google Places.
"Everything was handled very quickly, efficiently and professionally and with a minumum of fuss. I love the up-front pay policy, thanks for everything!"
Can you represent me even if I live outside of Des Moines?
Jeff handles clients from all of Iowa. You would have one meeting with Jeff in Jeff's office, 4800 Mills Civic Pkwy, Suite 218, West Des Moines, Iowa 50265, one hearing in Des Moines about 30 days later and then discharge about 9 weeks after the hearing. If you bring everything, we would complete your entire petition during the office appointment, no packet required.
What is the deal with the Credit Counseling?
The Credit Counseling certificate requirement was part of the 2005 changes to the bankruptcy law. www.cricketdebt.com is convenient to get your certificate online. You should be able to pay them with your debit card or from your checking account. The course is $36 and you need two certificates for joint married filing. They will ask you about your debt, expenses etc. Clients who are fast with the keyboard report doing it in as little as 30 minutes. Others report taking an hour or two although you can stop and come back later to finish it. Just print off the certificate(s) once you get it and bring it along to the office, that is the best way to make sure we have it. If they ask you for an attorney code, I don't use that, it is for attorneys who pay for the course and then charge you for it, you can leave it blank. The certificate is good for six months, so you can go ahead and do this first. Please don't wait until the day before our appointment to do it, people often postpone appointments because they get too busy at the last minute to get it done. After your case is filed, there is a second online "debtor education" course, but don't take that one until Jeff tells you to.
What about my credit?
If you have high debt your credit has already been affected. For most of our clients, discharging high debt improves their credit. Most of our clients receive many offers of credit as soon as they are discharged. Banks know you cannot file a Chapter 7 for another eight years, and with little or no debt you become a good credit risk. But we encourage you to avoid using credit and live on a cash basis. We encourage clients to borrow only for major purchases like home and car. Living on a CASH BASIS will set you free!
Can I keep one credit card off my bankruptcy for future use?
You are required under the bankruptcy code to disclose all assets and all debt. So you do have to list all your bills. As a practical matter, the credit card companies subscribe to services that notify them of all bankruptcy filings, even if they are not listed on the petition. Once they discover you have filed bankruptcy they will close your account, often after you have made another payment. You are much better off to just use a debit card for future reservations, Internet purchases etc.
How long does it take?
Because we do DIRECT ENTRY, we do your entire petition during your first visit to the office. You just bring your bills, recent pay stub and other financial information. This means you do not do any paperwork. Once we file your case your hearing will be 20 to 40 days later and you will be discharged about 8-9 weeks after that and you are done.
What is the new bankruptcy law about?
The new bankruptcy law started on October 17th, 2005. It is designed to force more debtors into a repayment plan under Chapter 13. It also requires two classes (online or telephone) and has many procedural requirements like filing copies of your last 60 days worth of check stubs from work and your most recent tax return with the Court. Most people should still be able to file a Chapter 7 (full discharge).
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.
Iowa Bankruptcy Hearing
What is the difference between Chapter 7 and Chapter 13?
Chapter 7 provides for a complete discharge. Under Chapter 13, you pay back part of your debt over three to five years. With Chapter 13 you can repay your back home or car loans over time. But beware, many clients delay the inevitable by filing a Chapter 13, making some payments and then failing and having to file a Chapter 7 anyway.
What debt is discharged, what debt is not?
Credit Card Bills
Back rent, utilities etc.
Miscellaneous Consumer Debt
Most Back Taxes
Criminal fines, penalties and restitution
Should I reaffirm my home or car loans?
A reaffirmation is a new contract that makes you liable again for debt you listed in your bankruptcy. If you are keeping your home or car, the bank may request a reaffirmation agreement because they want to be able to sue you and garnish your bank account and wages if you are later unable to make the payments. Our Judge is not a big fan of reaffirmation agreements and normally does not approve them, especially if your monthly expenses exceed your income or you don't have equity, meaning you owe more than your home or car are worth. She would much rather you just make payments. Under the Iowa Consumer Code, banks can't foreclose or repossess so long as you are current on payments. Some banks will threaten not to auto deduct your monthly payment unless you reaffirm. In my experience they normally will resume auto debits after your case is discharged even if you don't reaffirm, they want to get paid. If your bank does not report your payments to the credit bureaus you can request a payment history from your bank annually and forward it to the credit bureaus, here in the midwest, Equifax is the most important, so that your on-time payments are reflected in your credit score. Before 2005 when a lot more people did reaffirm, I got a lot of calls from past clients who had lost their job or become ill and were defaulting on reaffirmed debt, it was depressing, since they had to wait 8 years to re-file bankruptcy and were facing crushing garnishments; 25% of their wages and all the funds in bank accounts. Although there is some hassle involved, not reaffirming is a lot better in my opinion and I'm glad our Judge sees it that way.
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?
Large medical providers are like large banks, the left hand does not know what the right hand is doing. If you discharge Mercy Medical Center, the actual health care workers who treat you have no clue and could care less. In my experience, even with small offices. if you have health insurance providers continue care even if you discharge past debt. If you don't have health insurance, they can request payments as you go, but they can do that even if you don't file bankruptcy.
Are judgments discharged? Yes, most judgments are discharged in bankruptcy. Filing your case also stops wage garnishment, eviction, foreclosure and repossession.
Do Garnishments Stop? Filing bankruptcy places an automatic stay on collection efforts including wage and bank garnishments, so garnishment does have to stop. When we file your case we will notify the Clerk of Court and fax the Sheriff. If you can, bring a copy of the garnishment order. The challenge with wage garnishment is payroll people. Once they prepare payroll they don't want to change it. So if at all possible, file your bankruptcy before garnishments start. Best to file once the creditor gets a judgment since garnishment of bank accounts usually occurs first and then wages. If you have a garnishment in progress we can stop it but they may garnish 1-2 more paychecks. We would get that money back but it can take time and be tough to pay the bills while you wait.
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. We can help you deal with this issue.
You keep $1,000/$2,000 joint married plus all Earned Income Tax Credit (see pg 2 of your Federal 1040). You can also use part of your wild card exemption to claim some additional amounts.
Joint Married couple filing. Both work for wages. $3,000 refund with $1,000 Earned Income Credit (see page 2 of your Fed. 1040). In this case, you could keep the entire refund since you get to keep $1,000 each plus all EIC.
Joint Married couple filing. Wife does home day care, so does not work for wages or have withholding. $3,000 refund with $1,000 Earned Income Credit. Here you would keep $1,000 plus all the EIC and a portion of the remaining $1,000 depending on what other assets you have that require exemption with the wild card.
If your refunds exceed the exemptions, you can wait to file your bankruptcy after your refunds are received and spent, but be sure to tell Jeff how you plan to spend the money & don't give/repay any to family, whatever you do. It is fine to pay for your bankruptcy with tax refunds.
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.
Over Median Income
If your income is over the Iowa Median Income for your houshold size, you may not be eligible for a Chapter 7 and may need to consider Chapter 13. This is based on gross household income over the past six months, times two. Be sure to tell Jeff right away if you are over median income. If you are below median you should have no trouble doing a full discharge Chapter 7.
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.
With joint married filing, you get to exempt one vehicle per debtor up to $7,000 in equity. So if your car is worth $15,000 and you owe $16,000 you don't have any equity, so you don't even need an exemption. If your car is worth $10,000 and you owe $5,000 you have $5,000 in equity and need to exempt that.
You must be on the title in order to exempt your one vehicle. So if you are married and have two vehicles with significant equity, please check your titles and tell Jeff who is on there when you come in.
Old junkers are not worth the bother for the Court, so you usually can keep those.
Whole Life Beneficiary
If you have whole life insurance with cash value, we need to know who the beneficiary is. Most people get life insurance through work- term life, meaning they have no cash value. If you have purchased a whole life policy and have cash value that cash value is exempt only if the beneficiary is your spouse or child(ren). If someone else is the beneficiary, we may need you to cash out your whole life cash value before filing your bankruptcy, but we can discuss that. Just tell Jeff who your beneficiary is when you come in.
When you file bankruptcy you discharge scheduled debt. Banks request reaffirmations (new contract) on your home and cars in some cases because they want you back on the hook. If you default later due to job loss, illness etc. they want to be able to sue you for the deficiency, and garnish your bank account and wages. Since the Iowa Consumer code protects buyers with on-time payments from foreclosure and repossession, our Judge is not a big fan of reaffirmation agreements. She would much rather you simply continue to make payments. I personally have had way to many calls from prior clients who had reaffirmed and had a job loss or other problem that caused default after their bankruptcy. Unable to file bankruptcy again for 8 years, they are terrified of being picked clean by the bank. So I totally agree with the Judge's view and encourage you to just keep making payments. Most banks will resume auto debits after your case closes, even though they often claim they won't unless you reaffirm. If the bank is not reporting to the credit bureaus, you can also annually request a copy of your payment history from the bank and forward it to Equifax and the other bureaus and ask them to update your reports. Doubtless there is some inconvenience involved in this, but much less than if you reaffirm and run into more financial trouble in the future.
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 we can set an appointment.
How can I get a copy of my Credit Report?
The quickest way is at www.equifax.com. Beware: Not all creditors report and credit reports are not necessarily accurate.
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.
Many dealers are willing to lend to you once you are discharged from bankruptcy.
It is ok for family to loan money to you for a car purchase after you file bankruptcy.
You can purchase an inexpensive old reliable to drive temporarily.
You can borrow a car from family to drive temporarily.
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 childrens 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 email@example.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?
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?
If you are married and you file bankruptcy, but your spouse does not, the Court will consider the income of your spouse if you are together and they assist in your support. 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.
I have a same sex marriage, can we file a joint bankruptcy?
The United States Supreme Court has struck the Defense of Marriage Act, and yes, we can file same sex married couples jointly!