Iowa residents face many choices when faced with both divorce and bankruptcy, and one of the most significant is usually which action to pursue first. There are benefits of each choice, and the final choice typically depends on the individual circumstances of the couple in question.
FindLaw has a good introduction to the subject, covering most of the concerns of someone who intends to declare bankruptcy around the same time he or she intends to file for divorce. One interesting point the article makes is that couples with high individual salaries may be eligible for chapter 7 after a divorce, even if their combined income as a couple is too high to qualify for a joint filing. This is because chapter 7 requirements are based on the joint earnings of families and the individual incomes of unmarried people.
Of course, eligibility is not the only concern when it comes to choosing when to declare bankruptcy. There is also the issue, especially with chapter 7 liquidation, of what property a debtor might retain. One must refer to the individual rules of each state for some of the finer points of the decision. Iowa lawmakers have not adopted every aspect of federal bankruptcy law. The Iowa Code does, however, list several notable exemptions, including the following:
- Some firearms
- Up to $1,000 in clothing at resale value
- Prescribed medical devices
- Many types of long-term or retirement investments
- Burial plots or interests therein
The Iowa Code lists many exemptions. Debtors are often surprised at the type of property that they are able to retain. Additionally, those who declare bankruptcy and find they are not eligible for Iowa exemptions may be able to take advantage of the leniency offered at the federal level.