When thinking about bankruptcy, the chapter people most commonly think of is Chapter 7. Even though this is the case, many people still do not understand how the bankruptcy process works.
In the Bankruptcy Code, the term Liquidation appears in the description of Chapter 7. Liquidation can be scary because the first thought that comes to most people’s minds is turning all of your assets into cash. So, this would mean you would lose everything and must start anew. Chapter 7 Bankruptcy is often associated with the phrase “fresh start,” but there is more to it than meets the eye.
Liquidation is the sale of a debtor’s nonexempt property and the distribution of proceeds to creditors.
Many of your debts are dischargeable. In the process, you will likely lose some personal items. But there will also be many items you get to keep. Two of the most common questions when inquiring about filing bankruptcy are: 1) Will I be able to keep my house; and 2) Will I be able to keep my vehicle? Thankfully, the most common answer is that you will be able to keep them both.
IF I FILE FOR BANKRUPTCY, WILL I LOSE MY HOME?
Iowa has one of the most favorable homestead exemptions of any state. The homestead exemption in Iowa is not a designated amount. Instead, it exempts a singular house no matter its value. Therefore, no matter the value of your home, it will be exempt from bankruptcy.
IF I FILE FOR BANKRUPTCY, WILL I LOSE MY VEHICLE?
Now, when it comes to your vehicle, there is an exception as well. However, the vehicle exemption is not quite so generous. Iowa allows up to $7,000 of equity to be exempt from the bankruptcy proceedings. For example, if you have a loan on a vehicle worth $10,000 and the car is valued at $17,000, you have $7,000 in equity and be entirely exempt. Therefore, you would be able to reaffirm the loan with the bank and keep your vehicle.
We have covered the two most common exceptions regarding your homestead and vehicle, but there are many more one can take advantage of. Here is a non-exhaustive list of some of the other exemptions, which can be used to your advantage when filing for Chapter 7 bankruptcy:
Farm equipment or tools of the trade not greater in value than $10,000
Retirement accounts and pensions
Household goods, furniture, and clothing not greater in value than $7,000
Jewelry not greater in value than $2,000 (plus another exemption for wedding and engagement rings)
A personal injury or wrongful death award
Whole life insurance cash value of not greater than $10,000
Cash and bank deposits not greater than $1,000
Bankruptcy is a powerful tool, which allows you to take back control of your life. There are plenty of misconceptions out there about bankruptcy. Therefore, if you ever feel like you are drowning in financial turmoil, reach out to our bankruptcy attorneys. We can help you decide whether bankruptcy is right for you.
WHERE CAN I FIND THE BEST ATTORNEY TO HELP ME WITH MY LEGAL MATTERS?
As always, the lawyers at Tigges, Bottaro & Lessmann, LLP Law Firm are centered on providing exceptional legal services to the people of Siouxland and the surrounding area. The attorneys pride themselves on being first-rate advocates, ensuring their client’s rights and interests are protected and each voice is always heard. Using their knowledge, expertise, and over 240 years collective experience, they aim to deliver the best results possible for their clients.
THEY ARE SIOUX CITY LAWYERS YOU CAN DEPEND ON…
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