The Iowa motor vehicle exemption allows you to protect $7,000 of car equity. This can help you keep your car, truck, van, or other vehicle if you file for Chapter 7 bankruptcy. Here you’ll find information about the Iowa car exemption: how much it is, what types of vehicles it covers, how it works for married couples, how to find the applicable statute, and more.
(For more information about exemptions, including how they work and which ones you can use, see our Bankruptcy Exemptions area. For information specific to the motor vehicle exemption, see our Motor Vehicle Exemption in Bankruptcy area.)
The Iowa Motor Vehicle Exemption and Your Car
Iowa’s motor vehicle exemption plays a large role in determining whether or not the bankruptcy trustee can take your vehicle to repay your unsecured creditors. If the equity in your car is less than Iowa’s car exemption, then the trustee cannot sell it. If the equity in your car is significantly more than the applicable exemption amount, the trustee is likely to sell your car to repay your unsecured creditors. For details, see The Motor Vehicle Exemption: Can You Keep Your Car in Chapter 7 Bankruptcy?
Keep in mind that even if your car is safe from the bankruptcy trustee, the lender may be able to repossess your car during or after bankruptcy. To learn more, see Your Car in Chapter 7 Bankruptcy and If You Are Behind on Your Car Payments, Can Chapter 7 Help?
The Amount of Iowa’s Motor Vehicle Exemption
In Iowa, you can exempt up to $7,000 in equity in your car or other vehicle. Here are the details on how it works.
The Federal Motor Vehicle Exemption
Some states allow bankruptcy filers to use the federal bankruptcy exemptions instead of state exemptions, but Iowa is not one of these states.
Using Iowa's Wildcard Exemption to Protect Your Car
If the equity in your car is more than $7,000, you may be able to cover the extra equity by using a wildcard exemption. The Iowa wildcard exemption can be used to cover up to $1,000 in cash and any other property not covered by other exemptions.
Can Married Couples Double Iowa's Motor Vehicle Exemption?
Some states allow married couples filing a joint bankruptcy petition to double the listed exemption amounts. Iowa allows married couples who file joint bankruptcy to each protect $7,000 in one motor vehicle. However, you can use your exemption only on property that is your legal property; you cannot use your exemption to cover property your spouse owns individually, and vice versa.
(To learn about the advantages and disadvantages of joint bankruptcy filings, see Nolo's section on Bankruptcy Options for Married Couples).
What Vehicles and Insurance Are Covered by the Motor Vehicle Exemption?
The exemption covers any motor vehicle. The wildcard exemption covers any personal property, which would include insurance proceeds or sale proceeds.
Checking Iowa's Exemption Laws
You can find Iowa’s motor vehicle exemption at Iowa Code 627.6.
Amounts Are Updated
The exemption laws in Iowa change periodically. To find updated amounts, view the statute, or go to the Iowa General Assembly homepage to view amendments at http://www.legis.state.ia.us/IowaLaw.html.