If you file for Chapter 7 bankruptcy in Iowa, you can protect some or all of your property with Iowa’s bankruptcy exemptions. The bankruptcy exemptions in Iowa also play a role in Chapter 13 bankruptcy. Read on to learn about what property is covered by Iowa’s bankruptcy exemptions.
For a general overview of bankruptcy exemptions, visit the Bankruptcy Exemption topic page.
Iowa Requires Debtors to Use State Exemptions
Iowa has enacted legislation “opting out” of the federal bankruptcy exemptions. This means that bankruptcy filers in Iowa are only permitted to exempt property using the state laws.
Common Iowa Exemptions
Here are some of the most common exemptions available under Iowa law:
Alimony, Support and Separate Maintenance
Alimony, support and maintenance are exempt to the extent they are necessary for support. Iowa Code Ann. § 627.6.
Bank deposits are exempt up to $100. Iowa Code Ann. § 627.6.
Cemeteries and Burial Property
Burial lots and cemeteries are exempt up to one acre. Iowa Code Ann. § 627.6.
Franchise, Permit and License Interests
Liquor licenses are 100% exempt. Iowa Code Ann. § 123.38.
Fraternal Benefit Society Benefits
Fraternal benefit society benefits are 100% exempt. Iowa Code Ann. § 512B.18.
Homestead or Residential Property
Homeowners may exempt an unlimited amount of value in their home or other property covered by the homestead exemption.
Property cannot exceed one-half acre if located within a city or town, or forty acres if located elsewhere. If there is more than one dwelling house located on the property, you may only protect one house, but you are permitted to select which house you want to protect. You can protect one or more adjoining lots of land as long as they are used as part of the same homestead. If a shop or other building used in your business is located on the homestead property, you may protect up to $300 of its value. Iowa Code Ann. §§ 561.2, 561.3, 561.16, 561.20, 561.21, 499A.18 and 627.5.
For more details about how the homestead exemption works in Iowa, see The Iowa Homestead Exemption.
Public employee’s group insurance benefits are 100% exempt. A debtor’s interest in a life insurance policy is exempt when the debtor’s spouse, child, or dependent is the beneficiary. The insurance exemption shall not exceed $10,000 of any interest in insurance acquired within two years of claiming the exemptions. All benefits from accident, health, or disability policies are exempt from the insured’s debts. Iowa Code Ann. §§ 509.12, 509A.9, 511.37 and 627.6.
A debtor may exempt up to $7,000 in any motor vehicle. Iowa Code Ann. § 627.6.
To learn more, see The Iowa Motor Vehicle Exemption in Bankruptcy.
Pension and Retirement Benefits
Benefits from employee pension systems are 100% exempt. Social security and other pensions are exempt to the extent necessary for support. Iowa Code Ann. §§ 97A.12, 97B.39, 294.10B, 410.11, 411.13, 627.6, 627.8.
A debtor may exempt the following personal property:
- up to $7,000 in household goods
- professionally prescribed health aids
- up to $1,000 in cash (if a debtor does not use a bank deposit exemption)
- up to $1,000 in clothing and storage trunks
- up to $2,.000 in jewelry
- an engagement or wedding ring; if the rings were purchased after marriage and within the last two years, then the exemption is capped at $7,000, minus any amounts already used under the general jewelry exemption
- up to $1,000 in private libraries, bibles, and paintings
- one shotgun and either a musket or rifle, and
- up to $1,000 in accrued wages and tax refunds.
Iowa Code Ann. § 627.6.
Wages earned during imprisonment are 100% exempt. Iowa Code Ann. § 356.29.
Public assistance is 100% exempt. Iowa Code Ann. §§ 239B.6, 627.6, and 627.19.
A debtor may exempt up to $10,000 of trade implements. Iowa Code Ann. § 627.6.
Unemployment compensation is 100% exempt. Iowa Code Ann. §§ 96.15 and 627.6.
Veterans’ benefits are 100% exempt. Iowa Code Ann. § 627.6.
the Iowa exemptions also apply to nonbankruptcy situations where creditors try to take the debtor's property, such as wage garnishment. Under Iowa law, wage garnishment is based on a debtor’s salary:
- if a debtor’s annual earnings are $12,000 or lower, a creditor may garnish up to $250 per year
- if a debtor’s annual earnings are $12,000–$16,000, a creditor may garnish up to $400 per year
- if a debtor’s annual earnings are $16,000–$24,000, a creditor may garnish up to $800 per year
- if a debtor’s annual earnings are $24,000–$35,000, a creditor may garnish up to $1,500 per year
- if a debtor’s annual earnings are $35,000–$50,000, a creditor may garnish up to $2,000 per year, and
- if a debtor’s annual earnings exceed $50,000, a creditor may garnish up to 10% of the debtor’s expected earnings per year
(In re Irish, 311 BR 63 (18th Cir. B.A.P. 2004).)
Wages are not exempt from child spousal or child support. Iowa Code Ann. §§ 627.6, 627.11, 627.12, and 642.21.
Workers’ Compensation Benefits
Workers’ compensation is 100% exempt. Iowa Code Ann. § 627.13.
Confirming the Status of Iowa Bankruptcy Exemptions
Iowa’s exemption amounts are adjusted periodically. To make sure you have the most recent figures, be sure to check for any updates at the Iowa Legislature website: www.legis.iowa.gov/index.aspx.
For a list of other common exemptions in Iowa, see Iowa Bankruptcy Exemptions.