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  1. What are Iowa’s bankruptcy exemptions?

Known most across the nation for the Iowa caucuses that launch the presidential nominating process every four years, the world-renowned Iowa State Fair, and being the future birthplace of Captain James T. Kirk, Iowa’s robust economy often comes as a surprise to people.

Unsurprisingly, Iowa is number one in the nation in producing eggs, corn, and pork. But its largest industry is actually finance, insurance, real estate, rental, and leasing. In fact, according to the Iowa Economic Development Authority, more than 6,400 finance and insurance companies call Iowa home. Other major Iowa industries include advanced manufacturing and bioscience.

But Iowa’s robust economy hasn’t led to financial success for everyone who lives there. Each year, thousands of Iowans find themselves turning to bankruptcy to help them manage insurmountable debt. Among those who do so, the most popular form of bankruptcy is under Chapter 7 of the U.S. Bankruptcy Code.

This post provides a basic overview of Chapter 7 bankruptcy in Iowa, including what exemptions are available for Iowans who seek bankruptcy relief. However, it cannot provide a detailed analysis of how the bankruptcy rules would apply to your situation. If you are considering bankruptcy in Iowa, you should consult an experienced Iowa bankruptcy attorney before filing.

What are Iowa’s bankruptcy exemptions?

As mentioned earlier, Iowa has opted out of the federal bankruptcy exemptions defined in the U.S. Bankruptcy Code. Consequently, when Iowa’s law applies in a bankruptcy case, debtors can only use Iowa’s state-law exemptions. They cannot choose to apply the federal exemptions.

Some of the most common bankruptcy exemptions in Iowa are summarized below. Importantly, many of Iowa’s exemptions include a limit on value. Those limits actually refer to a debtor’s equity in exempt property, not the property’s market value. Equity means the difference between property’s market value and any debts secured by the property.

Example: Margot owns a car worth $10,000, but she owes $4,000 on it. Because her equity in the car is $6,000, she can exempt it from liquidation in a Chapter 7 bankruptcy in Iowa.

When a debtor’s equity in property is greater than the exemption limit for that property, the case trustee can sell it. However, the debtor will be entitled to a portion of the proceeds from that sale equal to the exemption limit.

Example: Consider Margot again, but this time, she owns her car outright. Because her equity in the car ($10,000 – $0 = $10,000) is greater than the exemption limit of $7,000, her car can be sold to pay off her unsecured debts. However, she will be entitled to receive $7,000 from that sale.

Married couples who jointly file for bankruptcy can usually double their exemptions. That is, each spouse can claim the full amount of exemptions allowed under Iowa law. This ability is subject to some limitations, however, as noted below.

Iowa Bankruptcy Exemptions

The top 5 exemptions under Iowa state law.
Type of exemptionIowa law
HomesteadExempt regardless of value, but only up to a half acre in the city or 40 acres otherwise
Personal property$7,000 in clothing, furniture, and household goods; $2,000 in jewelry (plus wedding and engagement rings); $1,000 in books and paintings, $1,000 in cash and bank deposits
Vehicle$7,000 for one vehicle
WagesAccrued up to $1,000, plus 75% of disposable earnings and state/federal income tax refunds
Pension/retirementContributions made within one year of filing for bankruptcy are not exempt if they exceed the normal/customary amount


Iowa law exempts a debtor’s homestead, regardless of value. A homestead is the debtor’s house or cooperative apartment used as a home. However, this exemption is only available for a home of up to a half acre if located in a city, and up to 40 acres otherwise.

A married couple filing jointly can only claim the homestead exemption for one home.


Under Iowa Code § 627.6(9), a debtor can exempt one motor vehicle up to a value of $7,000.

Other Personal Property

Iowa provides an exemption for various items of personal property. Included among the personal property exempted from liquidation are:

  • Wedding or engagement rings. If the ring was acquired after marriage, and within two years of filing for bankruptcy, its value cannot exceed $7,000 minus the amount claimed for other jewelry.
  • Other jewelry, to a value of $2,000.
  • One shotgun, plus one rifle or musket.
  • Private libraries, family Bibles, portraits, pictures, and paintings, up to a combined value of $1,000.
  • Clothing, musical instruments, household furnishings, and household goods (including entertainment devices), up to an aggregate value of $7,000.
  • The implements, professional books, or tools of the trade used in an occupation other than farming, to a total value of $10,000.
  • For farmers, the implements and equipment, livestock, and livestock feed reasonably related to a normal farming operation, to a total value of $10,000.
  • Any other personal property, including cash on hand and bank deposits, to a limit of $1,000.


A debtor’s accrued wages are exempt up to $1,000. This exemption can also be used to exempt state or federal tax refunds as of the date when the debtor files for bankruptcy. A separate exemption can be used for at least 75% of a debtor’s disposable earnings.

Pensions/Retirement Accounts

Pensions and retirement accounts are exempt under Iowa law. However, contributions made within one year of filing for bankruptcy are not exempt if they exceed the normal and customary amount of contributions.

Federal law also protects retirement accounts, even in states that opt out of the federal bankruptcy exemptions. However, under federal law, IRAs and Roth IRAs are exempt only to a value of $1,283,025.

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