Iowa Chapter 7 Bankruptcy - Mistakes to Avoid & Reaffirmation
Common Iowa Bankruptcy Mistakes
1. Preference Payments
If you owe on credit cards or medical debt and instead of paying that you pay past-due debt to family within 1 year of filing bankruptcy, that is a preference payment. The Judge can take that money back from your family and give it to your other creditors. For ordinary (non family) creditors it is within 90 days of filing bankruptcy. So don't pay past due debt just before filing. On-time payments in the ordinary course of business are fine.
2. Transferring Property
Don't transfer titles, sign property away etc. before you file bankruptcy. Don't sell property for less than fair market value. The Judge can reverse these transfers.
3. Loading Up
Once you know you can not repay your debt, it is fraudulent to continue to acquire new debt. So don't do any cash advances or balance transfers. It is best to stop using credit cards entirely once you know you are going to have to file bankruptcy. There is a presumption that charges made within 90 days of filing are fraudulent and those may have to be repaid.
4. Tax Refunds
If you are filing after about October 1st and before you get your tax refunds, be sure to discuss how much you can exempt with Jeff. You have a $1,000/$2,000 joint exemption plus you can use part of your wild card(s) for tax refunds and you also keep all Earned Income Credit, see page 2 of your Federal 1040.
NOTE: Huge tax refunds are not good. This is a no-interest loan you are making to Uncle Sam each year. Far better to claim more dependents and get more $ on each paycheck.
5. Unlisted Debt
Please don't leave creditors off your petition! Jeff will email you a draft petition so you can review it again after we go through everything together in the office.
6. Unlisted Assets
We can't exempt assets that are not listed, so very important to list everything you own of significance. Normally we can deal with it in some way.
7. Lawsuits & Claims against Others
Personal Injury and other claims must be listed. Because your cooperation is needed in order to prosecute your Personal Injury claim, an arrangement can often be made so you can keep part of the proceeds & we may be able to exempt them if you need them for basic living expenses.
If you will be receiving an inheritance or life insurance proceeds within 6 months, do not file bankruptcy. If you do receive these funds the Court can take them to satisfy your debt.
9. Waiting too Long
Lawsuits, wage and bank garnishments and liens and all their associated headaches can be avoided.
10. Missed Hearing
If you forget to attend your hearing your case may be dismissed.
See Jeff's Iowa Divorce & Bankruptcy Lawyer
When you file Chapter 7 you schedule all debt including home and car loans you would like to keep. Some banks request new contracts called Reaffirmation Agreements. Our Judge prefers in most cases that you not reaffirm. She normally tells clients to just keep & pay. That way you can not be sued, garnished etc. if you can't pay in the future for some reason. Since banks are inconsistent on credit reporting, you may want to pull your Equifax credit report occasionally and see if they are reporting your payments. if not, you can request a payment history from the lender once a year and forward that to the credit bureaus with a request they update your credit history. Also see Northern District of Iowa Bankruptcy Court on Reaffirmation Agreements. Jeff's Facebook and Twitter. More on Common Chapter 7 Bankruptcy Mistakes.
Video on Reaffirmation Agreements in Iowa Chapter 7
Serving all of Iowa from Des Moines - Jeff Mathias Law Office,
4800 Mills Civic Parkway, Suite 218, West Des Moines, Iowa 50265.