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Frequently Asked Questions On Iowa Bankruptcy

This page contains a condensed, convenient online version of our frequently asked questions document. Download the detailed faq document (pdf) for your reference here.
How much does it cost to file for bankruptcy?

The attorney fees and filing fees for a personal Chapter 7 or a Chapter 13 bankruptcy vary from case to case, but generally the total amount of fees and costs are $1,595.00, with a possible $200.00 discount, making the costs $1,395.00. Our fees are some of the lowest in Iowa. If you’re filing a business bankruptcy, charges are billed on an hourly basis, and the advanced retainer may be closer to $2,500 to $3,500, depending on the complexity.

You do not have to pay any fees until your case is filed, but we do have installment options to assist clients in budgeting.  Your case cannot be filed until the fees are paid. We accept credit cards. If issues arise after filing, you will be billed on an hourly basis several months after filing.

I’m broke, so how can I pay the bankruptcy fees and costs?

If you cannot borrow the money from friends, employers, colleagues or family members, start saving your money instead of paying your unsecured creditors (i.e. credit cards, medical bills, etc.). Any creditor you intend to discharge through bankruptcy, stop paying them and use that money toward your bankruptcy fees.

You may be able to sell some assets before you file and use the proceeds for bankruptcy fees. Your attorney will advise you on which assets you may sell and which you can protect through a bankruptcy proceeding. If you sell an asset for less than its fair market value, or sell it to a family member, business associate or friend, the Bankruptcy Court may undo the sale. Transfers of assets within two years of filing bankruptcy are subject to extreme scrutiny, so consult an attorney and be sure to disclose all transfers.

What happens after a petition is filed?

Approximately one month after filing you need to attend the first meeting of creditors, or the 341 meeting. You will receive notice of this meeting from the bankruptcy court. All individual debtors must provide picture identification to the trustee at the meeting of creditors. Do not miss this meeting. You also will be required to bring bank and brokerage statements to the 341 meeting and sign and return all Reaffirmation Agreements before this meeting.

You may be required to appear in court again if your creditors object to your property exemptions or the debts you’re asking to have discharged. If they do, the bankruptcy court will decide which side will win.
Prior to closing your case, you must complete a course in Personal Financial Management.

Do I have to list all debts?

Yes. Failing to list a debt, concealing assets, or attempting to secretly transfer assets to others within one year of filing bankruptcy without disclosing it on your schedules is fatal to your case. You will be kicked out of bankruptcy and forced to pay back the debts you attempted to discharge in bankruptcy.

What about judgments and garnishments?

It is doubtful that any judgment or garnishment will attach between the time that you pay the retainer and the time you file. In the event a judgment is obtained, we can discharge it in bankruptcy, and we can stop any garnishment action with the filing of your case in bankruptcy.

If a judgment was entered prior to the filing of your bankruptcy, it may appear as a lien on your real estate. Bankruptcy does not eliminate, discharge, or remove liens on real estate, but it will discharge the personal liability or obligation you have to repay the debt.

The creditor can still foreclose the real estate to satisfy the debt if there is a judgment lien. You can remove these liens from your homestead by hiring an attorney to do a lien avoidance proceeding during the bankruptcy, or to do a homestead plat after your bankruptcy is concluded.

Will I lose everything if I file bankruptcy?  Can I keep my car?  My home?

Most people who file bankruptcy are aware of some of the exemptions or protections available to debtors and their assets.  You may protect your home, a car (up to $7,000 of equity), household goods and furnishings, musical instruments and clothing (up to $7,000), jewelry (up to $2,000), tools of the trade (up to $10,000), retirement plans and cash value life insurance (if you name a spouse or child as a beneficiary), and a small amount in checking or savings (up to $1,000 in addition to the accrued wages and tax refund).   There are a few other minor miscellaneous exemptions as well.  These exemptions are doubled for joint debtors.  If your car or home is secured by a loan against it, you may keep the asset only if you agree to pay that debt.  Some creditors want you to sign a document called a “Reaffirmation Agreement”.  If you do not want to repay these secured loans, you must “surrender” the home or car.  If your budget does not justify reaffirming a car or other personal property secured by a loan, the bankruptcy court may reject your Reaffirmation Agreement which could allow the creditor to repossess the item, though this is not likely if you remain current on your monthly payments. Surrendered secured assets, such as cars and homes, can be kept for a few weeks to a few months depending on how vigilant the creditor is.  (If you are significantly behind in your house payments and you want to keep your house, we will discuss the benefits of a Chapter 13 bankruptcy to your situation, as that may be the best alternative for you).

Home, cars, secured debt, and Reaffirmation Agreements

You can choose whether to keep your secured assets (home, car) and keep paying back the loans that secure those assets, or you may surrender those assets and discharge the loans.  If you wish to keep a secured asset, you must remain current on the monthly payments to the creditor, or the creditor has the right to repossess or foreclose, even though you have filed bankruptcy.  You will most likely receive a document called a Reaffirmation Agreement where your lender will encourage you to sign a contract obligating you to repay the original loan under the same terms and conditions.  They will lead you to believe that you are required to sign the document to keep your car or your home.  In reality, very few creditors repossess a secured asset for failure to sign a Reaffirmation Agreement, so long as you remain current on your monthly payment.

There are advantages to refusing to sign this agreement.  The major one is that if you ever decide you do not want the secured asset in the future, due to the asset losing its value or inability to repay (or any reason), you can stop paying back the loan at any time and not be legally obligated to repay it, but you will also be required to surrender the asset to the secured creditor.  Not signing the agreement gives you some flexibility.  For example, a car loan for $10,000 on a car worth $5,000; if you were to get into a car accident, rendering the vehicle worthless, you could walk away from the remaining $10,000 loan if you never signed a Reaffirmation Agreement.  On the other hand, if you signed one, you would still be required to repay the remainder, even though you filed bankruptcy earlier.  Due to the unforeseen nature of what your circumstances will be in the future, I can never advise anyone to sign one, and yet, most of my clients choose to sign one anyway.  The other draw back is that the work we perform relating a reaffirmation agreement costs on average $100 – $150 per agreement, which we bill at the conclusion of your case.

The benefits of signing a reaffirmation agreement is that you have the security of knowing that the creditor will not repossess (as unlikely as that is if you continue making monthly payments), and it may improve your credit score in the future.  It may also help you refinance loans in the future, obtain credit, and remain friendly with this particular creditor who may be willing to extend more credit to you in the future.  Sometimes your credit report will reflect that you have discharged the debt in bankruptcy, and that you are not repaying the loan if you choose NOT to sign the reaffirmation agreement, so this is perhaps the biggest benefit of choosing to sign one.  There are pros and cons each way, and if you decide you wish to sign a Reaffirmation Agreement, that is fully within your rights.  The court will set a hearing, and if the court thinks it is in your best interest, the court will approve the reaffirmation agreement.  Read the document carefully to make sure that the amounts, interest rate, and terms of the loan are correct, and to make sure that you sign the document in all the correct locations, then send it directly to the creditor at their address for filing with the court.  It will be up to your creditor to file the document with the court in time.  If you indicate in your questionnaire and during our meetings that you want to reaffirm these debts, we will proceed accordingly if your creditor requests one.  You will need to notify us ahead of time if you do not want us to perform that work, or incur that expense.

You also may receive some a Reaffirmation Agreement for some unsecured debts.  Under no circumstances should you sign one of those.  Even if you do, the court would probably not approve it, as the court will review any Reaffirmation Agreement to determine whether they should be approved or not.  The court review is done at a hearing, so by signing a Reaffirmation Agreement, you may have to attend an additional hearing.

What do I do with my credit cards?

It may be possible to keep a credit card by having a zero balance at the time you file bankruptcy. Keep in mind that anything you charge on a credit card within 90 days of filing bankruptcy may have to be repaid.
Bankruptcy will remain on your credit report for up to ten years, but, it is possible to obtain credit from certain lenders after filing bankruptcy.

Many credit card companies and car dealers do not view bankruptcy as an impediment to obtaining future credit. Your interest rates may be higher, but credit may become available to you in the near future, depending on your income, assets, and debt ratio.

What About My Tax Refunds?

You may be able to protect some of your tax refund (less than $1,000.00 of your combined State and Federal refund less accrued wages at the time of filing, and $2,000 for joint debtors), but failing to turn over your refund to the Trustee, may result in your case being dismissed.

Do not spend your refund until you are sure that the Trustee is not making a claim for it.  To ensure compliance you may wish to send all refund money to my attention, and I will disburse the exempt portion of the refund back to you once the Trustee has claimed the non exempt portion. If you usually receive more than $1,000.00 in tax refunds, you may want to consider changing your W-4 before filing, or waiting to file until after you have received and spent your refund.

Will my bankruptcy be reported in the paper?

Whether your bankruptcy filing is reported in the paper is up to the paper. Bankruptcy is a public filing and the petition will be a public record. Many papers do publish the names of those who have filed for bankruptcy, but that does not always happen.

How do I handle phone calls from creditors until I file bankruptcy?

We recommend using caller ID and turning off the answering machine, only answering calls you recognize. You have no duty to talk to creditors, so don’t.

A WARNING ABOUT OTHER BANKRUPTCY WEBSITES !!!!

Not all bankruptcy websites are equal.  Many are nothing more than large marketing conglomerates operated by out-of-state lead brokers (not licensed to practice law in Iowa), who are attempting to sell your personal information to a third party.  You can distinguish these websites from legitimate Iowa bankrupcy law firm websites in that they do not have an attorney’s name or their Iowa location prominently displayed on the website.  They often have you complete a multi-part evaluation form which provides the lead broker with personal information they can sell to a third party, who will then contact you in an effort to sell you something.  Anything you share with us through this website is protected by the attorney-client privilege, which means we are bound by law to keep your information secret.  As a result, no third-party salesperson will be calling you based on anything you share with us through this website.  Information you share with a non-attorney lead broker is NOT protected by the attorney-client privilege and could be published for anyone to see.

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