A Short Introduction to Iowa State Bankruptcy Law
If you are filing for personal Iowa bankruptcy, the most important thing that you should do is visit a credit counselor within the 180 day period before filing. Unless you do this and give the court a certificate proving it, you will not be allowed to file for personal Iowa bankruptcy. The purpose of this procedure is to make sure that there are no credible alternatives to filing for bankruptcy. For a list of approved counseling services, visit the Department of Justice website here.
Filing for Iowa Bankruptcy
Iowa residents may file for bankruptcy at either the Southern District Bankruptcy Court, located at 110 East Court Avenue in Des Moines or at the Northern District locations in Cedar Rapids, Dubuque, Independence, Fort Dodge, Mason City and Sioux City. Some filing may be able to be done by mail.
Filing for Iowa bankruptcy requires dockets worth of paper work. You should be sure you know about which type of bankruptcy you are applying for before you get started since which forms you need depend on which Chapter you plan on filing under. Federal forms can be found here. Local forms can be found here.
Keep in mind that once you bring the court your petition to file for Iowa bankruptcy, you will have to pay a fee for the court’s services in helping you to get a financial fresh start. The fees are $306 for Chapter 7, $1046 for Chapter 11, and $281 for Chapter 13.
Corporate Iowa Bankruptcy
Here are the two most popular types of business bankruptcies:
• Chapter 7: This type of Iowa bankruptcy is intended for businesses with severe long-term financial problems that may not ever be able to become profitable. The court assists the business in turning its assets into money that can be paid to creditors, which in the short-term shuts down operations. In the long term, the business is unlikely to ever open since any debts not paid off the business is still liable to pay back.
• Chapter 11: Businesses that may one day recover and enter profitability are meant to file for Chapter 11 bankruptcy which entails the restructuring of the business in a more cost-friendly manner. The other important duty is ensuring that a satisfactory debt repayment plan is devised.
Personal Iowa Bankruptcy
One important thing to understand is that most types of corporate Iowa bankruptcy are open to individuals in general, but may be restricted due to income and debt levels. Those restrictions mean there are two primary types of personal bankruptcy that Iowans file for:
• Chapter 7: Yes, it’s the same chapter as for businesses, with the same task of liquifying assets to pay creditors. One important distinction lies in how individuals are not responsible for debts not covered by the liquidation assets, and these debts are then dismissed, much to the individual’s benefit. The income restriction on this Iowa bankruptcy chapter is crucial: only those individuals with incomes below the Iowa mean or who pass an Iowa Means Test are able to file for Chapter 7.
• Chapter 13: This is like a version of Chapter 11 for businesses except for those with smaller assets and presumably smaller debts. It involves a debt repayment plan and is the popular choice for individuals who make too much to qualify for Chapter 7.
The Tax Debt Dilemma
Sadly, Iowa bankruptcy law can be of limited assistance if you’re not dealing with credit card bills or dangerously high mortgages but tax debt. Some income tax is covered by Iowa bankruptcy law, but most is not, so before you file, you should consult with an Iowa bankruptcy lawyer to see what, if anything, Iowa bankruptcy law can do for your tax debt problem.