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Iowa has Homestead Exemptions Says Iowa Bankruptcy Lawyer

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Generally speaking, in a Chapter 7 bankruptcy, the trustee sells non exempt assets and pays the creditors from the sale proceeds.

“While many people think they lose everything in a Chapter 7 bankruptcy, this is rarely the case,” said Kevin Ahrenholz, an Iowa bankruptcy lawyer. “The fact is that bankruptcy is governed by federal law and every state has its own rules about what a person can protect from creditors. These are referred to as ‘exemptions’ and Iowa has several powerful ones, with the homestead exemption being perhaps the most powerful. Very few states have an unlimited homestead exemption, which means you can protect your home no matter how much it is worth, but Iowa is one of those states.”

While there may be limitations on the number of acres that may be retained, there is no dollar limit in a vast majority of cases. “Be aware that there are some limitations on what you can claim,” Ahrenholz said. Generally speaking, for those wanting to file bankruptcy, find out what the exemptions are in the state of residence.

Other states are not very generous with their exemptions, such as Massachusetts, South Carolina and Idaho. “In Massachusetts, the debtor can keep a house worth $300,000; in South Carolina, the house can be worth $5,000 and in Idaho, it can be worth $50,000. How do you figure all that out? It’s usually done by figuring out what the current market value of the house happens to be and then subtracting loans against it,” Ahrenholz said.

“One of the first things you should know is that since your home is typically the most valuable property you own, it will play a major role in whether or not you file for Chapter 13 or Chapter 7,” Ahrenholz said. Before deciding what route to take to file bankruptcy, the debtor has to figure out if they have anything they consider really valuable that they don’t want to lose in their state, and then discuss this with a bankruptcy lawyer.

Many states also have a list of what can be kept and what cannot. Some even have a miscellaneous category for those items that do not seem to fit in any specific category. In some states, a home’s equity is listed too. “Always ask a bankruptcy lawyer what is relevant in the State where you live. It is better to have too much information than not enough,” Ahrenholz said.

Kevin Ahrenholz is an Iowa bankruptcy lawyer and Iowa bankruptcy attorney. To contact him, visit http://www.iowachapter7.com or call 1.877.888.1766.

Posted on Wednesday, March 30th, 2011 and filed under News and Press.
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