When Can I File for Bankruptcy in Iowa?

While most people have a broad understanding of what bankruptcy is and how it relieves individuals and families of their debt, fewer understand exactly how the bankruptcy process works, and what it specifically does for the filer. One topic that is cause for frequent confusion, for instance, is bankruptcy eligibility. Bankruptcy eligibility refers to the legal ability of someone to file for bankruptcy in Iowa. If you didn’t know that you had to fit a specific set of requirements before filing for bankruptcy, don’t worry – you’re not alone. Bankruptcy is a financial solution intended for people with specific debt problems. Simply put, bankruptcy is not for everyone. So how can you know if bankruptcy is right for you? What are some of the main reasons you wouldn’t be eligible for bankruptcy?

Before diving into this topic, it should be noted that a Chapter 7 and Chapter 13 bankruptcy have vastly different requirements. For the sake of this article, assume I’m referring to Chapter 7 bankruptcy (the more common “straight bankruptcy”) unless noted otherwise.

The first qualifier that might eliminate you from bankruptcy eligibility is so simple that you may not even have considered it. If you have enough income to pay your debts, you ARE NOT eligible to file for Chapter 7 bankruptcy. Basically, Chapter 7 is intended for those with so much debt that it would be impossible for them to pay back their creditors. This is determined by whether you make more or less than the median income in Iowa. If you make less than median income, you are probably eligible for Chapter 7. If you make more, you probably aren’t. While this is a guideline, you should read an older post on our site regarding median income and the Bankruptcy Means Test. If you set up a meeting with us and we determine that you do indeed make too much to qualify for Chapter 7 bankruptcy, you still may be eligible for a Chapter 13 bankruptcy. This type of bankruptcy is more of a debt payment plan rather than a full discharge of your debts.

While your ability to pay your debts – or lack there of – is the main aspect that may qualify or disqualify you from bankruptcy, there are several other conditions as well. If you have already filed for bankruptcy before, enough time must have passed since your debts were discharged to file for bankruptcy again. Several weeks ago, I wrote about the four different scenarios in which you might be trying to file another bankruptcy, and the amount of time you have to wait for each. A similar situation is filing a bankruptcy immediately after your previous bankruptcy was dismissed. In general, you must wait 180 days before filing for bankruptcy after a dismissal.

There are more specific and uncommon reasons you might not be able to file for bankruptcy – such as defrauding creditors and other illegal activity – but these three that I’ve detailed are more likely to affect you.  Now that you’ve read this post, it’s time to consider your own situation. If you are considering filing a Chapter 7 bankruptcy case, did you meet all of the requirements and avoid any red flags? If you’re still not sure, or want to discuss your situation further, call us today to schedule a risk-free, no-cost consultation. We’ll thoroughly examine your financial situation, and give you an honest, straightforward answer to whether Chapter 7, Chapter 13, or bankruptcy in general is the right choice for you.

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