Your Guide to Iowa Bankruptcy Exemptions


Discover the comprehensive guide to Iowa bankruptcy exemptions with Henkels & Baker PC. Protect your assets and navigate the legal process with confidence. Call now.

What Are Iowa Bankruptcy Exemptions?

So, you’ve filed for bankruptcy under Chapter 7. You have passed the means test, and everything is going as planned. However, you are worried about what will happen to your home, car, and other belongings.

In every Chapter 7 bankruptcy case, a trustee is appointed by the bankruptcy court to oversee the case, liquidate the bankruptcy filer’s assets, and repay as much debts as possible. However, only non-exempt property can be liquidated. Certain assets can be protected through Iowa bankruptcy exemptions. 

Claiming as many exemptions as you are legally allowed under the Iowa Code is important. But, in order to do that, you may need help from a qualified bankruptcy lawyer.

Iowa Bankruptcy Exemption Laws

Although bankruptcy is a federal process that follows the U.S. Bankruptcy Code, Iowans must follow the state law regarding the property they can exempt from liquidating.

Iowa bankruptcy exemptions are listed mostly in Chapter 627 of the Iowa Code. However, certain property exemptions are listed in other Iowa statutes.


Can You Use Federal Bankruptcy Exemptions in Iowa?

Iowa bankruptcy filers can’t use the federal bankruptcy exemptions. Certain U.S. states allow their residents to choose between state and federal bankruptcy exemptions. However, Iowa is not among those. Fortunately, in most cases, Iowa exemptions are more generous than federal exemptions.

Note that if you haven’t been a resident of Iowa for at least two years before filing bankruptcy, you may have to use the exemptions of the state where you lived before.

What Property Can You Keep From Creditors in Iowa?

In Chapter 7 bankruptcy, you will be allowed to keep all exempt property up to a specific limit. Married couples filing bankruptcy jointly are entitled to double the exemption limits. In other words, Iowa law allows each spouse to claim a full set of exemptions. However, this doesn’t apply to the homestead exemption.

An exemption limit applies to the equity you may have in the property. The difference between what is owed on the property and its value is equity. Bankruptcy filers can protect some home and vehicle equity, personal belongings, retirement accounts, and more.

The following are the most common bankruptcy exemptions used in Iowa. 

Iowa Homestead Exemption

If you are a homeowner, Iowa allows you to exempt the value of your house or apartment used as a primary residence. That is the case regardless of the value of your real property. However, there are limitations regarding size. You can exempt up to one-half acre of your property if you live in a city or 40 acres if you live elsewhere.

Homes purchased with pension money are also exempted.

Personal Property Exemptions

Before claiming personal property exemptions, making a list of everything you own may be useful. Note that the value of most pieces of personal property is calculated by garage sale pricing. Under Iowa law, the following personal property is exempt:

  • Up to $1,000 in books and paintings
  • Up to $7,000 in household furnishings, clothing, goods, and musical instruments
  • Up to $2,000 for jewelry

Wedding or engagement rings are exempt. However, any other such rings bought after marriage and within two years of filing for the exemption are only exempted up to $7,000. If other jewelry is kept under the $2,000 exemption, the engagement ring exemption limit is lowered by the value of such jewelry.

Tools of Trade

Iowa law exempts $10,000 for the value of tools used in an income-earning activity, including the proper equipment, professional books, or tools of the debtor or a dependent of the debtor. For example, a farmer can exempt livestock, livestock feed, and farm equipment used for regular farming operations.

Motor Vehicle

Iowa lets you exempt up to $7,000 of the equity in a motor vehicle. A married couple filing jointly can claim up to $14,000 of the equity in a shared vehicle.

If your car is secured by a loan and the equity doesn’t exceed the exemption limit, you can ask the Bankruptcy Court to let you keep paying off the car loan.

However, if the equity is above the exemption limit, you can either return the vehicle to the creditor or keep paying off the loan and reimburse your trustee for the non-exempt portion (the amount above the limit) of the car’s value.


Some people worry more about safeguarding spousal support, life insurance proceeds, or Social Security benefits. Fortunately, Iowa law allows individuals to exempt many kinds of benefits, often at their full value, including:

  • Child support
  • Spousal support or alimony
  • Social Security benefits
  • Veterans’ benefits
  • Workers’ compensation
  • Unemployment compensation
  • Up to $15,000 of life insurance proceeds
  • Up to $1,000 of accrued wages and federal tax refunds
  • The higher of 75% of your disposable income or 40 times the federal minimum wage

Although Iowa provides an exemption for most pension and retirement benefits, certain issues must be considered. If contributions made to these accounts within a year of filing exceed the filer’s customary contribution amount, these funds will be considered non-exempt.

Also, life insurance benefits or an inheritance received within 180 days after filing for bankruptcy may have to be paid to your creditors.

Wildcard Exemption

Iowa also allows filers to use a wildcard exemption of $1,000. After claiming all other exemptions available, filers can use this exemption to safeguard property they couldn’t protect any other way. It can be used to exempt cash as well as any other kind of personal property except real estate.

How Can a Bankruptcy Attorney Help?

Filing bankruptcy in Iowa can be complex. Those filing for bankruptcy are already stressed and dealing with the consequences of their financial distress. That is why hiring an experienced bankruptcy lawyer is recommended.

A bankruptcy attorney can help and guide you through the entire bankruptcy process. They can make sure you’ve chosen the right bankruptcy type and that your paperwork is in order.

Moreover, a bankruptcy attorney can make sure you take advantage of all the exemptions you are entitled to and discharge as much debt as possible.

Henkels & Baker, PC, Can Help

If you feel like drowning in debt, we can help. Bankruptcy attorneys at Henkels & Baker, PC, have 50 years of experience helping people regain control over their finances.

So far, none of our clients have lost a piece of property they didn’t want to surrender. In addition, we have successfully eliminated over $40 million in debt.

Understanding what you can keep when you file for bankruptcy is crucial to making informed decisions. Let us help you with that. Reach out to us at Henkels & Baker today for a free consultation!

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