A new subchapter has been added to the bankruptcy code making it easier for small businesses with debt of less than $2,725,625 to seek protection under Chapter 11 of the bankruptcy code.  Previously a Chapter 11 requires so much detailed reporting and documentation that it has been impractical for a small business to file a Chapter 11.  The burdens and costs in doing so were too high, and Chapter 11 bankruptcies were reserved mainly for larger businesses that had sufficient cash flow to justify the time and expense involved.  The new provisions provide some new protections for small businesses that may make filing a Chapter 11 bankruptcy worthwhile going forward.  Chapter 7 bankruptcy will still be available for liquidating small businesses, and business owners can still take advantage of a Chapter 7 or Chapter 13 bankruptcy.

Are you facing the foreclosure of your home?  Has your mortgage company stopped working with you or accepting your payments? A Chapter 13 bankruptcy can be the solution.  If you can afford your monthly mortgage payments, but simply cannot catch up on arrears, a three-year to a five-year Chapter 13 plan could be the solution to helping you catch up, giving you time to become current, and delaying the sheriff sale for the time it takes you to become current.  If you successfully complete the Chapter 13 plan, you will come out on the other side completely caught up on your mortgage, with the foreclosure action dismissed, and you may have discharged or eliminated some of your other unsecured debt (such as credit card debt or medical bills) in the process.  Call Iowa bankruptcy attorney Kevin Ahrenholz today to see if Chapter 13 bankruptcy is the best solution for your situation. He is a bankruptcy lawyer serving all of Iowa, including Cedar Rapids, Des Moines, Waterloo, Mason City, Davenport, Dubuque, Marshalltown, Ames and Ft. Dodge.  Call today at 1-877-888-1766.

People often call me and ask whether there is something called a “medical bankruptcy.” Although that term does not exist in the bankruptcy code, there is something that helps people eliminate and manage their medical debt. It is called a Chapter 7 bankruptcy. Medical debt can be discharged, or eliminated, through a Chapter 7 bankruptcy proceeding, which typically takes about four months to complete through the bankruptcy court. A Chapter 13 bankruptcy can also help manage medical debt, although it generally takes three to five years to successfully complete a Chapter 13 bankruptcy plan. It is much like a court-ordered debt management plan, and is quite different than a Chapter 7. For more information about filing a Chapter 7 bankruptcy, or a Chapter 13 bankruptcy in Iowa for the purpose of dealing with your medical debt, or any debt for that matter, be sure to contact Attorney Kevin Ahrenholz.

Chapter 13 is a debt management plan that the debtor participates in for a period of 3 to 5 years. When filing for Chapter 13 bankruptcy, the debtor and his attorneys will prepare a payment plan, which a court will review. The payment plan proposes an amount that will be paid to every creditor each month, based on the debtors financial situation and ability to pay. At the end of the 3 to 5 year payment term, most remaining debt will be discharged.

A Chapter 13 bankruptcy is also known as a wage earners or repayment bankruptcy.

Chapter 7 allows debtors to discharge most unsecured debt without a repayment plan. Chapter 7 bankruptcy shields an individual from creditors as soon as the bankruptcy petition is filed. The process usually lasts around 4 months, at the end of which the debtor will receive a discharge and clean slate.

A Chapter 7 bankruptcy is commonly known as a straight or liquidation bankruptcy. Its goal is to relieve you of indebtedness.

Both Chapters 13 and 7 allow the debtor to keep some secured assets. Neither type of bankruptcy allows a debtor to discharge tax debt, student loans, fines, alimony or child support. There are certain debts that are dischargeable in Chapter 13 but not in Chapter 7. A qualified bankruptcy attorney can advise you of your options in this regard.

Chapter 13 offers certain advantages with regard to secured assets such as mortgages and car payments. Chapter 13 bankruptcy has the ability to stop foreclosures, cram down car loans and strip liens. Co-debtors are also protected under Chapter 13 bankruptcy but not Chapter 7.

Regardless of these advantages, Chapter 7 bankruptcy may still be a debtor’s most powerful tool. Most debts are discharged, the process takes only a few months, the debtor does not have to pay on debts through a payment plan and the process is less expensive. In most cases, you’ll lose little, if any, of your property or assets. Most of your property is secured or exempt, so little, or sometimes nothing, may be left to pay your creditors.

A chapter 13 bankruptcy can be filed more frequently than once every 8 years, and it can be filed at anytime to manage your debt load even if you are not eligible for a discharge due to a prior filing.