Bankruptcy is a legal procedure that allows an individual or business to have some or all of their debts discharged. It is normally considered as an option of last resort, because while it can stave off financial disaster, it has some considerable long-term consequences warranting careful consideration of the costs and benefits. Since it's a product of federal law, bankruptcy is handled in federal courts. Therefore, the rules and procedures governing it in Iowa will be the same as anywhere else in the country. Particular courts in Knoxville, Iowa will have some unique rules, however, so you should consult with a local lawyer before you file.
Chapter 7 Bankruptcy in Knoxville, Iowa
There are 2 main forms of consumer bankruptcy in Knoxville, 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 absolved. Fortunately for debtors, many types of property are exempt from liquidation, including homes, vehicles, basic personal items, and retirement accounts.
Once the qualifying property is sold, and the funds transferred to the creditors, the dischargeable debt is cleared. Some types of debt, however, can't be absolved in Chapter 7 Bankruptcy in Knoxville, Iowa. These include student loans, criminal fines, and taxes, among others. If most of your debt can't be absolved, Chapter 7 might not be the best choice for you.
Chapter 13 Bankruptcy in Knoxville, Iowa
Chapter 13 Bankruptcy in Knoxville, Iowa differs substantially from Chapter 7. It might be a better option than Chapter 7, depending on the facts of your case. Chapter 13 does not excuse any debt, but it creates a new payment plan that should give the debtor some breathing room. Usually, all of the debts are consolidated into 1 periodic payment. While this might 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 Knoxville, Iowa
Which Bankruptcy type to file under depends heavily on the facts of each particular case. If you have a steady 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 steady 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 Knoxville, Iowa bankruptcy attorney. Your lawyer will be able to advise you of your options and their likely outcomes, which will help you make a more educated decision.