Some common bankruptcy myths, often used by creditors to delay you from filing as long as possible, so that they can continue to charge you interest, penalties and late fees.  Trying to delay you from filing as long as possible is a very common creditor collection technique to maximize the amount of money they can collect from you before you finally make the decision to file.  

*  You can't file for bankruptcy anymore.  Congress changed the law.  FALSE!  This is what your creditors want you to believe and too many people do, but it isn't true.  I hear this from more clients than any other bankruptcy myth.  Sometimes I even hear it from other lawyers who don't practice bankruptcy law.  Congress did make a number of changes to the Bankruptcy Code in 2005, but you can still file under either Chapter 7 or Chapter 13.  There are income limits that in some cases may require you to file under Chapter 13 instead of Chapter 7.  This is called "means testing", but both chapters can offer you a great deal of help.  There are some additional items I will need to prepare your filing and you will need to take a pre-filing counseling course, but YOU CAN STILL FILE!

* You will lose your job if you file.  FALSE!  Federal law protects you from any such action by your employer.  If a debt collector tells you this, they are lying and just trying to scare you out of filing.

* It is illegal to file for bankruptcy.  FALSE!  Bankruptcy is a legal process and is your right under federal law.  Don't let your creditors steal your rights away from you.

* You will still owe the creditor even if you file for bankruptcy.  This is almost always false, and they know it.  This is only true if their debt is found to be non-dischargeable by the bankruptcy court.  Almost all debts owed to credit card companies will be discharged in bankruptcy under Chapter 7.  If you owe a creditor a secured debt, such as a car or furniture loan, the lien on the property may survive the filing, but that only applies to secured debts.

* You will loose your home, your car or other possessions if you file for bankruptcy.  This is generally false.  The Bankruptcy Code is designed to give you a "fresh start" after your discharge free of most if not all of your debts, and also to keep most if not all of your personal possessions after the bankruptcy.  There are important exemptions that allow you to keep equity in your home or car, home furnishings, wages and tax refunds, pensions, clothing, wedding rings and jewelry, tools and other equipment.  Some of these exemptions are unlimited, and others are not.  Some exemptions are limited by how long you have lived in Iowa, or when you acquired the asset or property.  Assets that are non-exempt may have to be turned over to the chapter trustee or bought from the bankruptcy estate, often at a reduced amount.  I will carefully review your situation and provide you with information about the exemptions available to you, and advise you about your options for any non-exempt assets.  Use the links below to review the general exemptions and homestead exemption available to most Iowa debtors. 

General Exemptions

Homestead Exemption

* You won't ever be able to get credit again if I file for bankruptcy.  It is true that filing for bankruptcy will be a black mark on your credit report that can stay there for up to ten years.  However, if you are considering bankruptcy, your credit rating is probably already severely damaged and hurting it shouldn't be your biggest concern.  Getting your life back in your hands not your creditors should be your biggest concern.  You will be able to rebuild your credit after bankruptcy, by paying your on-going debts on-time, such as home and car loans, utility accounts, furniture loans or other obligations post-filing.  Many clients receive offers for credit cards shortly after filing from lenders who specialize in offering credit to people post-bankruptcy.  But what got you to this point isn't a lack of credit, it is too much easy credit.  If you are missing payment on credit cards, falling behind on your mortgage, or having wages garnished or vehicles repossessed you will almost certainly never rebuild your credit until you get yourself out from the mountain of debts you are now under. 

* Only deadbeats file for bankruptcy.  This is completely untrue and so unfair to the vast majority of hardworking people who find themselves buried under a mountain of debt, and what seems like no way out.  I understand how difficult it is to even consider filing for bankruptcy.  Often I see people in tears when they explain everything they have done to try avoid filing, but it just isn't working.  Unfortunately many people believe that only wild spenders need to file for bankruptcy, but in my experience this just isn't true.  There are many factors, most of them outside your control, which cause people to need to consider bankruptcy. Rising prices for gas, rent or mortgage payments, utilities, food and medical care can take every last penny from your budget each week.  Being just a day late with a credit card payment can cause the interest rate to skyrocket.  Often the cause of my client's problems started with the loss of a job or other medical problems and months if not years later they find there is no other way out of the financial problems they are in.  If you are you having trouble making even the minimum payments on your credit cards debts with late fees, penalties and sudden interest rate changes then it is time to speak to someone.  If you are you living week to week, paycheck to paycheck, juggling one bill against another, falling further and further behind, with little or no chance to ever catch up it is time to get relief.  Constant harassing collection calls, garnishments, repossessions, and even foreclosures can put a great deal of stress not only on you, but on your entire family as well.