Bankruptcy Issues After A Disaster

I lost everything because of a natural disaster. Will it help me to file bankruptcy?

• It depends on your situation. Bankruptcy is a very helpful tool, but it is important to file at the right time.
• Bankruptcy can help when you have property to protect and income that is in danger of being garnished to pay your debts. If you are a victim of a natural disaster, your creditors may give extra time to people affected by the natural disaster. You can call them to find out. You may be able to work out a repayment agreement.
• You should also look into disaster relief programs that may be available. Click here for more information.
• Try to wait until you have income coming in before filing bankruptcy.
• If you have enough new income, you can take advantage of the fresh start bankruptcy gives you. If you don’t have enough new income, you get out of one hole just to fall into another.
• You may need to file bankruptcy if you have to stop a lawsuit, garnishment, foreclosure eviction or revocation of a driver’s license.
• Chapter 7 bankruptcy is called a “liquidation” bankruptcy, because you put all your debts in and they are all discharged. Other types of bankruptcy, such as Chapter 13, may be better for you if you own a home and need to catch up on your mortgage, or have a more complicated financial situation.

How can I file for bankruptcy?

• You will probably want a lawyer’s help with filing bankruptcy. It can be a complicated and document-heavy process.
• Depending on available resources, Iowa Legal Aid can help clients with filing Chapter 7 bankruptcy when needed. Call Iowa Legal Aid to see if you are eligible for our services. You can also search for a bankruptcy lawyer in your area.

Are there debts that cannot be discharged in bankruptcy?

• Certain debts cannot be discharged in bankruptcy. They include:

1. Child support or alimony (spousal support).
2. You owe debts that someone calls fraud.
3. You owe damages for a wreck due to reckless driving.
4. Most student loans depending on your situation.
5. Tax debt.
6. You have been convicted of certain drug-trafficking crimes.

Iowa Legal Aid has designed a mobile app to help people by providing tools to prepare in advance for a disaster and for people who are experiencing the effects of a disaster. Click here to learn more.