Personal Bankruptcy Vs. Business Bankruptcy In Iowa

When filing bankruptcy in Iowa, a combination of exemptions and the type of bankruptcy filing can help to protect an individual's assets. The decision to file either a personal bankruptcy or a business bankruptcy is a significant one and often requires a good deal of organization and clarification. Each situation is unique which is why it is critical for the individual to use an attorney while filing bankruptcy in Iowa. Also, keep in mind that the best option for you may not be Chapter 7 bankruptcy.

What Type of Bankruptcy to File

Under Iowa bankruptcy laws, there are specific limitations on what type of property can be kept during the bankruptcy. Specifically, individuals need to look at the type of business they own and the available options for filing bankruptcy.

If you own a legally recognized business, including a corporation or an LLC, there is a division of property between both business and personal assets and debts. Creditors in business debts cannot come after the borrower's personal assets. Creditors in personal debts cannot go after the business. However, this must be a legally recognized entity to qualify for this protection. If you own this type of business, you can file either personal or business bankruptcy, depending on which type of creditors you wish to handle.

On the other hand, Iowa law does not recognize the same standards for sole proprietorships and partnerships, which require no legal separation. This means that in many situations, the business and the personal property is intermingled and difficult to separate. In this situation, it is critical to take steps to protect assets.

Those wishing to protect business assets through personal bankruptcy can do so by applying the Tools of the Trade exemption Iowa offers. This is up to $10,000 in livestock and feed or up to $10,000 word of non-farming equipment. Business vehicles are not included in this type of exemption.
In situations of business partnerships, the property of that business partnership is exempt under personal bankruptcy in the state of Iowa.
A wild card exemption exists, but is only for a minimal $100 worth of value.

In all of these situations, it is critical to understand that unless your business and personal property is separate, or protected by exemptions, the bankruptcy trustee can rule that business assets can be liquidated for personal expenses and the other way around.

Hiring an Attorney

When filing bankruptcy in Iowa, use the services of an attorney. The attorney will help guide your decisions and ensure as much of your property is protected as possible.

Think Bankruptcy Might Be for You?