Bankruptcy is a legal procedure that allows an individual or business to have some or all of their debts discharged. It is usually considered as an option of last resort, because while it can stave off financial disaster, it has some significant 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. Individual courts in Muscatine, Iowa will have some unique rules, however, so you should consult with a local lawyer before you file.
Chapter 7 Bankruptcy in Muscatine, Iowa
In Muscatine, 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 usually includes homes, vehicles, insurance policies, and retirement accounts. These do not have to be sold.
Once the eligible property is sold, and the funds transferred to the creditors, the dischargeable debt is excused. Some forms of debt, however, can't be discharged in Chapter 7 Bankruptcy in Muscatine, Iowa. These include student loans, criminal fines, and taxes, among others. If most of your debt can't be discharged, Chapter 7 may not be the best choice for you.
Chapter 13 Bankruptcy in Muscatine, Iowa
Chapter 13 bankruptcy in Muscatine, Iowa is markedly different. It may or may not be a better option than Chapter 7, depending on the facts of your particular case. Chapter 13 does not eliminate 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 Muscatine, Iowa
Chapter 13 is usually a good option for people who have a stable income, and a large amount of non-exempt property that they can't part with. On the other hand, if most of the debtor's property is exempt, and he or she does not have a stable income, Chapter 7 might be more beneficial.
Regardless of your situation, you should speak with an attorney in Muscatine, Iowa who is accomplished in bankruptcy before making a decision. They will be able to advise you of your options, and the likely consequences of each one, allowing you to make a much more informed decision.