December 18, 2017

When your bills exceed your income, filing for bankruptcy in Iowa can be a good solution. If you’re not sure how to go about it, start by learning the differences between Chapter 7 or Chapter 13 bankruptcy. After choosing the chapter that will best solve your debt issues, you’ll gather together your financial documents. But you’ll need more information before you can complete the paperwork.

In this article, you’ll learn how to protect property in an Iowa bankruptcy, as well as where to find the official bankruptcy forms, Iowa’s means test figures (for qualification purposes), approved courses, and the local bankruptcy court.

Official Bankruptcy Forms

Before the Iowa bankruptcy court wipes out (discharges) your qualifying debt, you must detail your financial situation on bankruptcy forms. You’ll list all of your property, your bills, how much money you make, and certain financial transactions, such as property sales and bank account closures.

You can complete and download the official bankruptcy forms on the U.S. Courts form page. You’ll submit your paperwork to the Iowa bankruptcy court along with a certificate proving that you’ve taken the required counseling course (more information below). You’ll also pay a filing fee or submit a request for a fee waiver.

Iowa Bankruptcy Information

Bankruptcy is governed by federal law and takes place in federal court, so the overall process is the same in every state. However, you’ll still need information particular to the state of Iowa.

Means Testing and Credit Counseling Information

You can find two types of Iowa-specific information on the U.S. Trustee’s website: means test figures and approved course providers.

• Means test data. To qualify for a Chapter 7 bankruptcy, you’ll need to ensure that your income fits within guidelines and that you pass the “means test.” If your family’s gross income is lower than the median, you automatically pass. If it exceeds the Iowa median income, you might pass the test after subtracting allowed expenses. Both the income charts and expense figures are under “Means Testing Information.” You’ll also use the figures to determine your payment amount in a Chapter 13 bankruptcy.
• Course providers. Most filers have to complete a credit counseling class before filing for bankruptcy and a debt management course before receiving a discharge. You’ll find approved providers under “Credit Counseling & Debtor Education” (scroll down to the District of Iowa).

Iowa Bankruptcy Court Locations and Websites

Iowa’s bankruptcy court is broken up into two federal districts. Each has its own bankruptcy court and website.

On each court’s website, you’ll find helpful information by selecting “Filing Without an Attorney” on the navbar. For instance, that’s where you’ll locate the court’s local rules of practice and any local forms you might be required to file. You’ll also find instructions for filing your paperwork.

You can contact the court clerk’s office for help in determining where to file your case. Or, you can use the Court Locator tool. Click on the district name to go directly to the court’s website.

Iowa Bankruptcy Exemptions

You won’t lose all your property when you file bankruptcy, but you might not be allowed to exempt (protect) all of it, either. Each state, including Iowa, decides what property a bankruptcy filer can exempt. You’ll find exemptions in Iowa’s statutory law (the Iowa Code). You can also claim certain federal nonbankruptcy exemptions.

If an item isn’t exempt, the Chapter 7 trustee appointed to manage your case will sell it for the benefit of your creditors. If you file a Chapter 13 bankruptcy, however, you can keep nonexempt property as long as you can pay for it through your three- to five-year plan.

Below are some of the most commonly used Iowa bankruptcy exemptions. Spouses filing a joint bankruptcy in Iowa can double the exemption amount if they both own the property.

• Alimony, support, and separate maintenance. Exempt if necessary for support (Iowa Code § 627.6(8)(d))
• Cemeteries and burial property. Up to one acre. (Iowa Code § 627.6)
• Liquor licenses. (Iowa Code Ann. 123.38)
• Fraternal benefit society benefits. (Iowa Code §§ 512B.18, 633.333)
• Homestead or residential property. An unlimited value in one home or a one-unit apartment. Property located in a city or town is limited to one-half acre; forty acres elsewhere. (Iowa Code §§ 561.2, 561.16, 499A.18)
• Insurance benefits. Public employee’s group insurance benefits; interest in a life insurance policy if the debtor’s spouse, child, or dependent is the beneficiary; group insurance; life insurance proceeds to an extent (conditions apply). (Iowa Code §§ 509.12, 509A.9, 511.37 and 627.6)
• Motor vehicles. Up to $7,000 in a motor vehicle. (Iowa Code § 627.6)
• Pension and retirement benefits. Employee pension systems; Social Security and other pensions exempt to the extent necessary for support. (Iowa Code §§ 97A.12, 97B.39, 294.10B, 410.11, 411.13, 627.6, 627.8). (Other exemptions might also be available for retirement benefits. See Your Retirement Plan in Bankruptcy.)
• Personal property. Up to $7,000 in household goods, clothing, musical instruments; professionally prescribed health aids; up to $2,000 in jewelry; an engagement or wedding ring (if the rings were purchased after marriage and within the last two years, then the exemption is capped at $7,000, minus any amounts already used under the general jewelry exemption); up to $1,000 in private libraries, bibles, and paintings; one shotgun and either a musket or rifle; up to $1,000 in accrued wages and tax refunds. (Iowa Code § 627.6)
• Public assistance. 100% exempt, including earned income and child tax credits. (Iowa Code §§ 239B.6, 627.6, and 627.19)
• Trade implements. Up to $10,000 of trade implements. (Iowa Code § 627.6)
• Unemployment compensation. (Iowa Code §§ 96.15 and 627.6)
• Veterans’ benefits. (Iowa Code § 627.6)
• Workers’ compensation benefits. (Iowa Code § 627.13)
• Wages. 75% of disposable earnings or 40 times the federal minimum wage, whichever is greater. (Iowa Code §§ 642.21, 537.5105) Iowa also has a complicated alternative method of computing wages. (Iowa Code §§ 627.6, 627.11, 627.12, and 642.21)
• Wildcard. Up to $1,000 of any personal property (not real estate) including cash. (Iowa Code § 627.6(14))

Iowa adjusts its exemption amounts from time to time, and additional exemptions exist. Check for the most recent figures and other exemptions on the website for the Iowa Legislature or by speaking with a bankruptcy attorney.

The intent of this article is to provide helpful resources for bankruptcy filers; however, it cannot cover all information you’ll need to know before filing for bankruptcy. Also, each filer is responsible for verifying necessary information and understanding the law. Consider purchasing a book like How to File Chapter 7 Bankruptcy by Attorney Cara O’Neill and Albin Renauer J.D. for more information about important issues that can arise in your case.

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