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 Mount Pleasant, Iowa will have some unique rules, however, so you should consult with a local lawyer before you file.

Chapter 7 Bankruptcy in Mount Pleasant, Iowa

In Mount Pleasant, Iowa, there are 2 commonly-used types of consumer bankruptcy: Chapter 7 and Chapter 13. Chapter 7 bankruptcy involves liquidation of some of the debtor's assets. It requires some percentage of the debtor's property to be sold in order to pay off as much of his or her debt as possible. However, the majority of property that most people own is exempt. This typically includes homes, vehicles, insurance policies, and retirement accounts. These do not have to be sold.

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 Mount Pleasant, 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 Mount Pleasant, Iowa

Chapter 13 bankruptcy in Mount Pleasant, 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 Mount Pleasant, 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 Mount Pleasant, 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.