If you file for bankruptcy, Iowa's very generous homestead exemption protects the entire value of your home, with some acreage limits. Read on to learn more about the Iowa homestead exemption.
For information about how the homestead exemption works in both Chapter 7 and Chapter 13 bankruptcy, see The Homestead Exemption in Bankruptcy. For more articles on exemptions, see our Bankruptcy Exemptions area.
Under the Iowa exemption system, 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 more than one dwelling house is 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.
Some states allow married couples filing for bankruptcy jointly to double the homestead exemption, but in Iowa, you cannot double.
(There may be other advantages to filing a joint bankruptcy. To learn more , see Nolo's section on Bankruptcy Options for Married Couples.)
In Iowa, the homestead exemption applies to real property, including your home, or apartment. You must use the property as your home in order to protect it under the homestead exemption.
Here are some other rules that apply to the Iowa homestead exemption:
Security deposits. The homestead exemption also applies to security deposits being held by your landlord or utility companies (gas, water, electric, telephone), plus any interest accrued if the deposit is required to be held in an interest bearing account. You may also protect any advance rent you have paid to your landlord under an unexpired lease.
Homes bought with pension money are protected. If you purchased your homestead with money from a pension, it is protected under Iowa law.
No protection from home improvement creditors. The Iowa homestead exemption will not protect your home from debt you incurred to improve the property.
Some states allow bankruptcy filers to use the federal bankruptcy exemptions instead of the state exemptions. Iowa is not one of those states. If you reside in Iowa, you must use the state exemptions (although federal nonbankruptcy exemptions may be available to Iowa debtors, such as exemptions for wages, Social Security, and veterans’ benefits).
(To learn more about which state exemptions apply to you, see Which Exemptions Can You Use in Bankruptcy?)
In Iowa, the homestead exemption is automatic – you don’t have to file a homestead declaration in order to claim the homestead exemption in bankruptcy. However, you may file a homestead declaration if you wish and if you have not yet filed bankruptcy, you may be required to file one in order to protect your home from creditors.
Iowa has a wildcard exemption that allows you to protect up to $1,000 of any personal property. While it does not apply to real property (generally, property that you cannot move, such as a house), you can use this exemption to protect a mobile home.
Iowa’s homestead exemption is found in the Iowa state statutes at Iowa Code Sections 561.2, 561.16, and 499A.18. To learn how to find state statutes, check out Nolo’s Laws and Legal Research area.
You can view the Iowa homestead exemption on the Iowa Legislature website located at www.legis.iowa.gov.