What Assets Can I Keep if I File Bankruptcy?

If the property’s equity is more than the exemption amount allowed, the bankruptcy trustee can sell it. However, the trustee will be required to give you part of the sale proceeds equal to the exempt amount. For instance, the Iowa vehicle exemption limit is $7,000. If you have only $6,000 of equity in your car, it is exempt from liquidation. However, if you have $10,000 of equity in your car, the trustee can sell it, give you $7,000 from the proceeds, and use the difference to pay creditors.

For married couples considering bankruptcy, Iowa law offers unique provisions. When filing jointly, spouses can double the exemption amounts for many assets, providing enhanced protection for shared property.

Exempt Assets Under Iowa State Law

Homestead Exemption

Your primary residence is an exempt property under Iowa’s bankruptcy provisions, regardless of its value. This makes it one of the most generous homestead exemption provisions in the U.S. However, there are limitations. Exempt homesteads may not exceed one-half acre in a city or town or 40 acres elsewhere (Iowa Code § 561.1).

Vehicle Exemption

You can protect up to $7,000 of equity in a motor vehicle (Iowa Code § 627.6(9)).

Personal Property

You can protect up to $7,000 in clothing, furniture, musical instruments, and other household goods; $2,000 in jewelry; $1,000 in private libraries, family bibles, portraits, and paintings; $1,000 in cash on hand, bank deposits, and other deposits (Iowa Code §§ 627.6(3) & (5)).

Retirement Accounts

The law allows you to protect tax-exempt retirement accounts like 401(k)s, 403(b)s, profit-sharing, and money purchase plans (Iowa Code § 627.6(7)).

Wages

You can protect up to $1,000 in accrued wages and state and federal tax refunds up to the date you filed for bankruptcy (Iowa Code § 627.6(10)).

Health and Disability Insurance

Any benefit paid to you under an accident, health, or disability insurance policy is exempt from bankruptcy. In the event of an insured debtor’s death, up to $15,000 of insurance benefits are exempt for the benefit of a spouse, child, or dependent (Iowa Code § 627.6(6)).

Public Assistance

Any earned public assistance is 100% exempt. This includes Social Security benefits, disability benefits, unemployment compensation, or other public assistance benefits. It also includes income and child tax credits (Iowa Code § 627.6(8)).

Iowa Wildcard Exemptions

Iowa’s wildcard exemptions allow you to protect up to $1,000 in any personal property (including cash), whether otherwise exempt or nonexempt property under the law (Iowa Code § 627.6(14)).

A comprehensive list of bankruptcy exemptions can be found in the Iowa code. Consulting an attorney for clarification of the exemption rules can help you better understand how the law affects you. An experienced bankruptcy attorney not only understands bankruptcy law and what qualifies as exempt or nonexempt assets but also how those exemptions apply to your bankruptcy case.