Get More Information about Bankruptcy in Des Moines, IA
Will filing for bankruptcy put an end to creditor calls?
The answer is yes. According to the automatic stay law, creditors are barred from taking any further action to collect past due debts. When an individual becomes delinquent in paying bills, creditors will try different methods of reaching them in an effort to collect on the debt. Some of the actions they may take include calling your work, home, friends, family members, or employer. Those that co-signed or guaranteed the loan on your behalf may also be contacted. More drastic measures may be taken as well such as vehicular repossession, foreclosure, and seizure of furniture and appliances. Filing for bankruptcy or reorganization stops any collection activity against you or your possessions. Creditors will no longer be able to call you, send notices, or apply any wage garnishes. Repossession actions and foreclosures must come to a halt and, even in the case of reorganization, collection activity can be stopped against guarantors and co-signers on certain types of debt. Some actions cannot be stopped with bankruptcy, and those include any orders for payment of alimony or child support. The advantage is that a reorganization plan can provide the means for being able to catch up on any past due alimony or child support.
Can bankruptcy stop garnishments if they are already in place?
Yes, bankruptcy can stop garnishments. Even if a creditor already has a judgment against you and has begun to garnish your wages, such garnishment can be stopped immediately by the filing of a Chapter 7 or a Chapter 13 bankruptcy proceeding.
Will my property be seized?
Iowa law specifies that there are certain items that are protected under the legal process and cannot be taken away or the equity you own in the asset will be protected. For example, if you own a vehicle and the loan amount is for $5,000 and you already paid $3,000 for it, the amount you already paid will be protected with your exemption. In general, the majority of people can protect all or most of their furnishings and household items, as well as their clothes, pensions, and retirement plans, the cash value of their life insurance, and the tools they use for their trade up to a maximum amount of $10,000. In order to obtain additional information on all the property that is exempt and the chances of losing your property, it is best that you consult with a bankruptcy attorney. If any property is not exempt, then it will not be protected and can be sold by a Chapter 7 trustee to repay creditors. If the individual has ownership of a large amount of assets that are non-exempt, it may be possible to keep them by filing a Chapter 13 bankruptcy and repaying their creditors at minimum the value of the assets.
How do I know which debts are non-dischargeable?
Not every type of debt is eligible to be discharged during bankruptcy. Some examples of the type of debt that is non dischargeable includes debts to spouses and former spouses, government fines, child support, alimony, or maintenance. Also, debts that are owed to creditors who were not told about the bankruptcy cannot be discharged. In general, student loans cannot be discharged unless specific guidelines are met by the debtor. If there are particular debts that have been incurred as a result of malicious or deceptive behavior by the debtor, they cannot be discharged. In addition, debts resulting from personal injury to others where drunk driving was involved are also non-dischargeable. When filing for Chapter 7, these debts can usually not be discharged; however, under Chapter 13, these debts can be repaid over a period of time set forth in the repayment plan. In addition, there may be certain exceptions where these types of debts can in fact be discharged under Chapter 7 bankruptcy.
How can bankruptcy stop repossession of my car or other property?
When a bankruptcy proceeding is filed, your creditors must back off and leave your secured property and other assets alone. Creditors cannot legally repossess collateral or seize assets once the automatic stay of bankruptcy has been imposed by the court. This is true even if the creditor would have otherwise had the right if you had not filed for bankruptcy. If a creditor wants to repossess an asset, it must first obtain approval of the court. This process can take several weeks once the motion for relief from stay is filed. In Chapter 13 proceedings, creditors will be barred from taking your property as long as you are making your Chapter 13 plan payments and complete the Chapter 13 plan. Sometimes it is even possible to have a repossessed item returned, if it has not already been sold.
Do both husband and wife have to file bankruptcy?
Even if you are married, you are not obligated by the federal bankruptcy laws to file a joint petition with a spouse. Married people can file separate bankruptcies, or one spouse can file bankruptcy alone. However, if both spouses are responsible for an obligation, and only one spouse files for bankruptcy, creditors have the right to come after the non-filing spouse as if bankruptcy had not been filed. In circumstances where parties have recently married and a substantial portion of the outstanding debts are related to only one of the spouses, having been incurred prior to the marriage, it may be advisable for just one spouse of the marriage to file a bankruptcy.
How long does a bankruptcy case take?
Usually a Chapter 7 bankruptcy takes about 3 months to complete, and with a Chapter 13 you may be making payments for three to five years. However, both Chapter 7 and Chapter 13 cases are effective at the instant you file them. All bankruptcies start with a court order called an automatic stay, which halts collection activity against you. This means creditors can’t sue or garnish you, repossess your car, or foreclose on your home, as soon as you file your case. Bankruptcies are generally finalized with a discharge, or court order that says you don’t have to pay the bills. This order comes about three months after you file a Chapter 7, or three to 5 years after filing a Chapter 13. During the 3 to 5 year payment period of a Chapter 13, you are protected from creditors by the automatic stay.
Can I choose which creditors to file bankruptcy on?
The law requires that if you file bankruptcy, you must list all your debts and obligations on the bankruptcy paperwork. However, a debtor may repay as many dischargeable debts as desired after filing under Chapter 7. By voluntarily repaying one creditor, a debtor does not become legally obligated to repay any other creditor. The only dischargeable debt that a debtor is legally obligated to repay after filing under Chapter 7 is one for which the debtor and the creditor have entered into what is called a reaffirmation agreement. Usually, it is not advisable to reaffirm general unsecured debts that would be discharged in bankruptcy. If you have any questions on whether or not a debt is dischargeable or whether or not you should reaffirm a debt, you should consult with an Iowa bankruptcy attorney as soon as possible.
What effect will bankruptcy have on my credit?
The misconception exists for many people that filing for Chapter 7 or Chapter 13 bankruptcy will cause their credit to be very low for seven to ten years or more. The majority of credit reporting agencies maintain a record of Chapter 13 bankruptcy that remains on the debtor’s credit for a total of seven years and in the case of a Chapter 7 bankruptcy, the time period is ten years. When an individual considers filing for bankruptcy, there are usually one of two specific instances that occurs. These include firstly, a financial difficulty, or secondly, an anticipation of a pending financial setback. Whichever the case may be, filing for bankruptcy might not hurt the individual’s credit and is in fact one of the primary steps that can be taken to fix it.
One of the most important situations where credit plays a role is in the purchase of a house. According to federal regulation, the individual may not be able to obtain a house until two years after bankruptcy has been filed. However, many people are able to purchase a house before the two years have passed by buying the house on contract or assuming a mortgage. In addition, almost anyone can receive a bank credit card by using the secured credit card option, even in the case of having just filed for bankruptcy. The card can be used in the same fashion as a traditional credit card; however, the money that was deposited guarantees your payments. It is easy to forget the lender’s primary concern is if or when you will repay your loan. If you are removed from debt responsibilities through filing for bankruptcy, you will be in a better position to pay any new debts you may have accrued. Most prospective creditors that look over the bankruptcy record on your credit report are mostly concerned with how you have made yourself a good credit risk since filing for bankruptcy.
What are preferential payments?
The Bankruptcy Code provides that certain payments made just prior to filing a bankruptcy case may be preferential payments. Preferential payments are defined as payments made to a creditor that allow the creditor to receive substantially greater payment at the expense of other creditors in the case. A trustee in a bankruptcy case may avoid or seek return of payments made that prefer one creditor at the expense of other creditors. This often arises in cases where individuals pay off one debt while not making payments on their other debts. It also arises commonly when individuals pay back loans to friends or family members shortly before filing bankruptcy.
Generally speaking, payments of $600.00 or more to an unsecured creditor made within 90 days of a bankruptcy filing is a preferential payment. Also, repayment of debt to a family member within 12 months of a bankruptcy is a preferential payment.
Anyone who is considering filing bankruptcy should always seek the advice of competent bankruptcy counsel before making large payments to any of their creditors. It is possible that these payments may be recovered by the trustee and included in the bankruptcy estate as a preferential payment. Contact an Iowa bankruptcy attorney to learn more about the options available to you.
What are the most common signs that I may need to consider bankruptcy?
The most common sign that you may need a bankruptcy is that you cannot pay your debts as they come due. If you are borrowing on credit cards, using loans to make your monthly payments, or if you are considering a consolidation loan, you may need to consider filing some form of bankruptcy. Another common sign is if collection agencies are calling or writing you, or if you are being sued or garnished. If you are already being garnished, a bankruptcy can stop it and can sometimes even get back the money that was taken from you.
If you are behind on mortgage payments, or if your home is threatened with or in foreclosure, a Chapter 13 bankruptcy can prevent a foreclosure and get you a year or more to bring the payments current. Chapter 13 bankruptcy may be the only way to save your home.
If you are behind on car payments or if a creditor is threatening repossession, a Chapter 13 bankruptcy can stop that. If you owe taxes, and the IRS is threatening to garnish or seize your assets, a Chapter 13 bankruptcy may be the only effective way of dealing with the IRS. If your debts are overwhelming and you can see no way out, bankruptcy can give you a fresh start. If your income has declined so that you can’t meet your obligations, bankruptcy can reduce your obligations or possibly eliminate some of them, so you can support yourself in a reasonable and dignified manner. If any of these situations seem to describe you, consider meeting with an Iowa bankruptcy attorney to learn more about the bankruptcy options available to you.
Will I lose my house if I file bankruptcy?
No. If you file a bankruptcy proceeding and you are current on your house payments and remain current, nothing in the bankruptcy law requires you to surrender your home. In fact, you might even file bankruptcy to avoid losing your home. If you are behind on your mortgage payments, it may be advisable to file a Chapter 13 proceeding to stop a foreclosure. If there isn’t a foreclosure in place yet, but the mortgage company is threatening to foreclose, you can bring all mortgage arrearages current through the Chapter 13 plan. You can then begin making the regular ongoing mortgage payments while you are also making your monthly Chapter 13 bankruptcy payments to the court trustee.
It is important to note, however, that if you have equity in your home and the bankruptcy trustee determines that your home does not meet the requirements to be claimed as exempt (protected), then your home could possibly be sold by the trustee. If it is sold, then the equity would be paid to your creditors.
You are advised to consult with an experienced bankruptcy and foreclosure attorney to determine whether the equity in your home will be protected in your bankruptcy case.
If I filed bankruptcy previously, can I file again if necessary?
You can file a Chapter 7 bankruptcy once every eight years. If it has been more than eight years since you filed Chapter 7 bankruptcy, you are eligible to file for bankruptcy again. If it has been less than eight years since you filed a Chapter 7 which resulted in a discharge, you are still eligible to file a Chapter 13 proceeding.