Many people in Iowa are facing significant debt that is almost impossible to overcome. They may be faced with potential lawsuits and judgments and deal with collection calls throughout the day. For these people, personal bankruptcy may provide an important option to seek a new financial future. In a Chapter 7 bankruptcy, the person’s assets are liquidated, aside from their exempt personal property, to satisfy a portion of what creditors are owed. In some cases, people who file for bankruptcy may have almost no assets of value at all, while in other cases, people may have relatively substantial assets that are still much less than their debts.
The individual filing for bankruptcy is not responsible for selling off these assets. Instead, they are assessed and managed by a bankruptcy trustee, appointed by the court. The trustee then determines how much each creditor will receive, often far less than the original amount of the debt in question. In order to establish the priority of different creditors and allocate funds, the trustee will rely on Proof of Claim forms submitted by the creditors.
These forms include the name of the creditor and that of the person filing for bankruptcy, the case number, contact information and the amount of the debt involved. Creditors can also indicate whether a particular debt was secured by collateral such as a house or car or whether they are entitled to be prioritized. For example, child and spousal support, tax debts and wages owed to employees are given priority before regular consumer debt.
For some people with more extensive assets and a regular source of income, Chapter 13 bankruptcy may be an option. Here, assets are not sold off, and the person completes a payment plan that lasts for up to five years. A bankruptcy attorney may provide guidance in obtaining debt relief through the courts.