- Chapter 7 bankruptcy is a type of consumer bankruptcy under the United States Bankruptcy Code wherein a debtor or joint debtors file to have their estate liquidated. An assigned neutral Chapter 7 trustee sells off the assets of the estate to pay off creditors as much as possible. Once the estate liquidation has completed (usually within six months time), the debtor or debtors are done and able to start anew with all of the remaining debt discharged.
- Chapter 13 bankruptcy is the second type of consumer bankruptcy under the United States Bankruptcy Code. A single or joint debtors may file for this type of bankruptcy. Once the petition has been filed, the debtor must create a repayment plan that will last from three to five years. The debtor must make bi-weekly payments to a Chapter 13 Trustee for that time period and the Trustee will then make payments to creditors. After all plan payments have been completed, all remaining debt is discharged.
- Chapter 11 bankruptcy is a type of "business bankruptcy" under the United States Bankruptcy Code. Only corporations may file for this type of bankruptcy. Once filed, the corporation comes under the control of an assigned neutral trustee who then makes decisions on behalf of the corporation to pay off creditors. This may include business reorganization or closing the business and selling off remaining assets.
- To qualify for a Chapter 7 bankruptcy in Iowa, a debtor or joint debtors must be below the median state income for the preceding year ($39,851.00 for 2009 for one earner). If an individual or joint debtors earn above that amount, they are not eligible for a Chapter 7 bankruptcy and must file for a Chapter 13 bankruptcy if they want relief under the United States Bankruptcy Code. To qualify for a Chapter 11 business bankruptcy, a business must be incorporated, making it a separate legal entity.
- The first step to filing for any type of bankruptcy in Iowa is to gather the necessary documents. Individuals will need recent pay stubs, their last five years of tax returns, Social Security card, mortgage information, bank account information and all creditor's names and addresses. Businesses will need similar information on their business, such as accounting records and profit and loss statements. Once you have gathered all this information, meet with an experienced Iowa bankruptcy attorney, who can tell you which type of bankruptcy you may be eligible for and can help you file a bankruptcy petition.