Chapter 7 Bankruptcy | Iowa Bankruptcy Attorney

New Small Business Reorganization Act

Posted by: Kevin Ahrenholz

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.

Posted on Saturday, January 25th, 2020 and filed under Bankruptcy | Comments Off on New Small Business Reorganization Act .
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Bankruptcy and Medical Debt

Posted by: Kevin Ahrenholz

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.

Unemployment Compensation is Factored into the Bankruptcy Means Test

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If you are receiving unemployment, it is considered in a bankruptcy means test.

For those considering filing for personal bankruptcy, and receiving unemployment, you must provide this information to your Iowa bankruptcy lawyer. This includes all pay stubs from the past year and anything that demonstrates ownership and the value of property you own. This information is used to fill out bankruptcy forms, and that includes Form B22A, referred to as the “means test.” Overall, the Iowa bankruptcy lawyer uses your income, plus unemployment, to perform a means test.

If your income is just above the state median income parameters, you will be told whether you are eligible to file for Chapter 7 bankruptcy, after the means test results are determined. Your means test must include records of any and all income within the past six months, aside from your regular job. The means test process starts by figuring out your current monthly income and what income types are present.

For instance, there are a wide variety of income types that may include:

Real property income
Retirement income
Business income
Contributions to the household income

Note: Social security benefits are not included in the means test.


What happens next is the Iowa bankruptcy lawyer adds up all of your income and divides by six, representing your average monthly income for the six months prior to filing for bankruptcy.  This average monthly income figure is then multiplied by 12 to show your yearly income.  This is compared to the median family income across the state for a household of your size.  If the figure is above the state median, you will initially appear to be ineligible for Chapter 7 Bankruptcy, but the lawyer will take additional steps to figure out your disposable income in order to see if you could get back into a Chapter 7 category.  Disposable income figures are calculated by deducting allowable expenses from your monthly income.

The final step is to determine if the presumption of abuse may rear its head should you file for Chapter 7. In short, if your monthly disposable income is under $6,000, there is no presumption of abuse. If it is more than $10,000, abuse is presumed and you would not be eligible to file for Chapter 7 bankruptcy protection.

Each state is different when it comes to the means test, but in general, your income is figured out along those lines no matter where you live. Always discuss your situation with a skilled bankruptcy lawyer, and avoid the very real possibility that should you attempt to file on your own, you may run afoul of the hundreds of rules and regulations governing bankruptcy.

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

Posted on Thursday, April 11th, 2013 and filed under News and Press | Comments Off on Unemployment Compensation is Factored into the Bankruptcy Means Test .
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Understanding the Difference Between Chapters 13 and 7

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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.

Posted on Tuesday, November 9th, 2010 and filed under Bankruptcy | Comments Off on Understanding the Difference Between Chapters 13 and 7 .
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