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Should I file Chapter 7 or Chapter 13 bankruptcy?

If you are preparing to file for bankruptcy in Iowa, you likely have a lot of questions. One of the most common concerns is which type of bankruptcy is the best to file for. The answer to this question will depend on your circumstances and financial situation. The American Bar Association lists the differences between these two types of bankruptcy so you can be prepared to apply for the best option for you.


A Chapter 7 filing is also known as a straight bankruptcy liquidation.  This option is for those who have incomes that fall below the state’s median income level. If you choose this type, you will need to surrender all your non-exempt assets and the money from this liquidation will be split among your creditors. Your home and vehicle might be exempt if they meet certain requirements, otherwise they will be taken as part of the liquidation.


A Chapter 13 bankruptcy is for those who have a regular income and are able to complete a payment plan. In order to qualify, you must have a secured debt of less than $922,975 and unsecured debt of less than $307,675. Under this option, you will be required to make payments toward the debt for three to five years. The amount will be determined by what is left over after you have paid your living necessities each month.


Both options require that you obtain credit counseling within 180 days before you file. This information is intended for your education and should not be taken for legal advice.

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