• May 30, 2021

Chapter 13 Bankruptcy: Who Should File?

I recently attended a luncheon to discuss issues affecting Iowa consumers filing for bankruptcy. Judge Lee M. Jackwig and Judge Anita Shodeen of the Iowa Bankruptcy Court for the Southern District of Iowa attended the luncheon, as did bankruptcy trustees and local bankruptcy attorneys. Judge Shodeen asked me to discuss the status of Chapter 13 bankruptcy in Iowa.

For those of you who don’t know the difference between filing for Chapter 7 bankruptcy and filing for Chapter 13 bankruptcy, here’s my rule of thumb: If a debtor has the ability to pay off some or all of their debts, chances are. is to do it. you need to apply for protection under Chapter 13 of the bankruptcy code. If the debtor does not have the ability to pay his debts, he will most likely file for bankruptcy under Chapter 7 of the bankruptcy code.

Judge Shodeen primarily wanted to know if he had seen an increase in people filing Chapter 13 and, if so, what he would attribute the increase to. I did not know that I would be asked to present an opinion at this lunch, so I had not researched the topic or prepared any specific comments. All I could do was comment on my instincts and my personal observations of the daily routine at the office.

I said I felt like I was seeing more people who probably qualified for Chapter 13 bankruptcy than in the past. Jim Snyder, Deputy United States Trustee, spoke and agreed, citing the fact that nationwide Chapter 13 filings were up 35% from this time last year.

Many lunch members felt that it was probably because people wanted to use Chapter 13 to save their home. My observation was that the increase was primarily due to the fact that the people who come into my office and qualify for Chapter 13 are higher-income people and simply can’t manage their debt load anymore.

We continued the discussion and by the end of lunch a consensus emerged that we are seeing more people who have been struggling to pay off their debts now overwhelmed by the high interest rates from the credit card industry.

These individuals did everything they were supposed to do, but the credit card industry simply excluded them from the game. We agreed that many people in this position are satisfied with what a Chapter 13 bankruptcy can offer and are happy to get some relief.

When considering filing for Chapter 13 bankruptcy, you should consult with an attorney. When looking for an attorney to help you with Chapter 13, you should consider the attorney’s experience. Chapter 13 cases require a great deal of finesse that comes with experience.

A Chapter 13 can help a debtor in many ways. Likewise, there are ways a Chapter 13 can be a miserable experience. If you are considering bankruptcy, you should contact a bankruptcy attorney immediately to discuss which option is best for your circumstances.

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