Written by Attorney Karra Kingston.
Updated July 28, 2019
If you are burdened with debt you may want to consider filing a Chapter 7 bankruptcy. To file a Chapter 7, you need to pass the Chapter 7 Means Test. The Means Test was enacted in 2005 when Congress enacted a law to stop people from seeking Chapter 7 relief when they could afford to pay back their debts. The bankruptcy Means Test in Iowa ensures that only people who are under a certain income limit and truly need the relief of a Chapter 7 are able to file their Iowa bankruptcy as a Chapter 7. To pass the Chapter 7 Means Test , you must fall under the median income for a household of similar size in Iowa. If your monthly income, based on an average from the last 6 months, is less than the median income for your family size in Iowa, then you pass the Chapter 7 Means Test. If you fall above the median income, you can still qualify by going through the second part of the Chapter 7 Means Test analysis. The second part of the bankruptcy Means Test in Iowa looks at your income and your expenses to determine if you qualify. If that calculation shows that after considering your reasonable monthly expenses you have little or no disposable income left to pay your debts, you qualify for Chapter 7 relief.
Iowa Median Income Levels
Iowa Median Income Standards for Means Test for Cases Filed On or After May 1, 2020
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Discharge in Bankruptcy for Iowa
A discharge is your ultimate goal when filing an Iowa bankruptcy. A discharge means that you are able to walk away from most of your unsecured debts and start over debt-free! Once a discharge is entered, creditors must stop all collection efforts. It’s important to keep in mind that there are some debts which are non-dischargeable and survive a bankruptcy, such as child support, tax debt, and alimony. If you owe a non-dischargeable debt, then you are still on the hook and must pay these debts back even after you receive your Iowa bankruptcy discharge. In order to get your discharge, it’s important that you file the correct paperwork and attend your Meeting of Creditors. A bankruptcy discharge can be denied if you don’t go to your creditor’s meeting or are dishonest in your bankruptcy forms so, it’s important that you follow each step carefully. If your discharge is denied, you will have to continue paying your creditors. Upsolve is a nonprofit that can help you obtain your Iowa bankruptcy discharge free of charge. Upsolve can help guide you through the steps so that you can file a bankruptcy without hiring an attorney.
Iowa Means Test Calculator
In order to qualify for a Chapter 7 bankruptcy, you must pass the Chapter 7 Means Test. To determine if you qualify under the Means Test, you will need to have all income sources and monthly expenses on hand. There are many online calculators that can be used to help you. It’s important to keep in mind that the Means Test numbers change occasionally. That’s why it’s very important to use an up-to-date Iowa Means Test calculator. Unfortunately, many Chapter 7 Means Test calculators that are available online are outdated and it can be difficult to figure out which calculators have been kept current. Luckily, Upsolve’s Iowa Means Test calculator is always kept up-to-date, so you know your calculations are accurate. Using a calculator that is kept current is extremely important as it could make the difference between passing the Chapter 7 means test or not. If you are eligible, Upsolve can help guide you through the other parts of your Iowa bankruptcy.
What Happens if I Fail The Means Test for Iowa?
If you fail the bankruptcy Means Test in Iowa, it’s worth taking a second look at your calculations to make sure that you didn’t leave anything out. It is easy to forget some of your monthly expenses. It’s also important to remember that even an annual expense should be included, even though you may not perceive it as a “regular” expense. Sometimes people forget to include their medical expenses, charitable contributions, or expenses incurred taking care of an elderly family member. If you still do not qualify, you may want to wait to file. The Means Test looks at your last six months of gross income and then takes the average. If your income will go down in the future, your average monthly income for the Chapter 7 Means Test will be less, and you may qualify then. Sometimes, even a new addition to your family, like a new baby, can help you pass the Chapter 7 Means Test because it will increase both your family size and the total allowed expenses. If you still do not qualify, you may want to explore a Chapter 13 bankruptcy as an alternative form of Iowa bankruptcy relief. A local bankruptcy lawyer can also help you. Many lawyers give free consultations which you should take advantage of. Sometimes lawyers can review your finances and expenses to make sure that you didn’t inadvertently miss anything in your Chapter 7 Means Test calculation.