Will Filing Bankruptcy Stop My Foreclosure?
Steady foreclosure rates and complicated bankruptcy laws in Iowa leave many struggling homeowners wondering if a filing bankruptcy claim will really save their homes from foreclosure. Under the right circumstances, an Iowa resident can apply for bankruptcy and become eligible for benefits that are more advantageous than not. For example, in cases where your family’s median income is less than the median income for your city or county and you are facing foreclosure or repossession, filing for bankruptcy will give you a “fresh start” at paying off your delinquent mortgage or loan. However, if your family earns the median income for your city or county, you could still qualify for bankruptcy in other circumstances.
Fortunately, not everyone applies for bankruptcy under the same law. Bankruptcy status in Iowa is generally classified under two categories: Chapter 7 or Chapter 13. Chapter 7-bankruptcy law in Iowa is for individuals who seek to consolidate their debt into one large lump sum, and liquidate all of their assets in an effort to eliminate the debt. Typically, this is known as a “fresh start.” Although anyone can file a Chapter 7 bankruptcy claim, many times there are instances where certain assets cannot be liquidated or where you do not have enough assets to cover the debt—thus forfeiting bankruptcy eligibility. In complex cases such as these, it is best to consult with a bankruptcy lawyer.
Unlike Chapter 7, Chapter 13 is for individuals to wish to clear part or all of their debt using a debt repayment plan. Among other qualifications, the most important prerequisite to becoming eligible for Chapter 13 bankruptcy is to have a regular source of disposable income to pay your debt.
The Benefits of Chapter 7 versus Chapter 13
Determining whether you are a candidate for either Chapter 7 bankruptcy or Chapter 13 is best left to the advice of an experienced bankruptcy lawyer. Although, reviewing the benefits of each claim will help you understand how your finances will be affected going forward.
- Chapter 7 – The benefits of filing for bankruptcy under Chapter 7 includes a “fresh start,” immediate protection against creditors and collection agencies, all wages earned after your debt is clear belongs to you, and cases are typically settled in a significantly less amount of time.
- Chapter 13 – Filing Chapter 13 will allow you to keep all your assets, discharge more debt, seizes foreclosure on your home, and give you more time to pay your debt.
Filing a Bankruptcy Claim
In each case, Chapter 7 and Chapter 13 are viable options for clearing your overwhelming debt. In addition, a bankruptcy claim can do more than save your home from foreclosure. If you are found eligible, you could file bankruptcy for other reasons:
- To seize property settlements ordered in a divorce decree;
- To repay student loan; and
- To restructure the rate delinquent child support.
Consult with a Lawyer
Filing for bankruptcy is a risky and permanent financial decision. Not to mention, filing costs can become high if multiple claims need to be resubmitted. Determining your eligibility for a bankruptcy claim, and which chapter best fits your situation, should be decided by an experienced bankruptcy lawyer. In several cases, a bankruptcy claim can be denied by the Court for many reasons. If you are facing foreclosure on your home, or experiencing overwhelming debt, contact the bankruptcy lawyers at Noyes Law Office, P.C., located in Fairfield, at 641-472-3236. We will help you get back on the road to financial freedom!