Bankruptcy is a legal procedure that allows an individual or business to have some or all of their debts discharged. It is typically considered as an option of last resort, because while it can stave off financial disaster, it has some substantial long-term consequences warranting careful consideration of the costs and benefits. Since it's a creation of federal law, bankruptcy is handled in federal courts. Therefore, the rules and procedures governing it in Iowa will be the same as everywhere else in the country. Distinct courts in Johnston, Iowa will have some unique rules, however, so you should consult with a local lawyer before you file.
Chapter 7 Bankruptcy in Johnston, Iowa
There are 2 typical types of consumer bankruptcy in Johnston, Iowa: Chapter 7 and 13. Chapter 7 bankruptcy involves a liquidation of some of the debtor's assets, which pays off part of his or her debt. Once this is done, the remaining debt is excused. Fortunately for debtors, many forms of property are exempt from liquidation, including homes, vehicles, necessary personal items, and retirement accounts.
Once the appropriate property is sold, and the funds transferred to the creditors, the dischargeable debt is absolved. Some forms of debt, however, can't be excused in Chapter 7 Bankruptcy in Johnston, Iowa. These include student loans, criminal fines, and taxes, among others. If most of your debt can't be excused, Chapter 7 may not be the best choice for you.
Chapter 13 Bankruptcy in Johnston, Iowa
Chapter 13 bankruptcy in Johnston, Iowa is markedly different. It may or may not be a better option than Chapter 7, depending on the facts of your specific case. Chapter 13 does not absolve any debt, but it creates a new payment plan that should give the debtor some breathing room. Typically, all of the debts are consolidated into 1 periodic payment. While this may make it take longer to pay off the debt, if the debtor is willing to make a few sacrifices, the plan should be manageable.
Which Type of Consumer Bankruptcy Should I File in Johnston, Iowa
Which Bankruptcy type to file under depends strongly on the facts of each distinct case. If you have a stable stream of income (enough to make a payment plan manageable), and a large amount of non-exempt property that you don't want to part with, Chapter 13 may be best for you. If you don't have a stable income or large amounts of non-exempt property, you may be better off filing for Chapter 7.
Whatever your situation, you should speak with a local Johnston, Iowa bankruptcy lawyer. Your attorney will be able to advise you of your options and their likely results, which will help you make a more educated decision.