It’s a simple question our clients ask us all the time.
What do I get to keep?
For some, exemptions – properties and assets that cannot be taken away from you when filing bankruptcy – may be the difference between filing for chapter 7, chapter 13, or trying to find an alternative solution altogether. Like many aspects of bankruptcy law and code, what is and isn’t exempt is a complicated process, and one that primarily takes place at a state level. Some states offer the option to choose between their set list of exemptions and the federal list, but Iowa is not one of those states. If you have lived in Iowa for at least two years, you will be required to abide by exemptions set forth in the Iowa Code.
Like all states’ lists (as well as the federal one), the Iowa Code’s list of bankruptcy exemptions doesn’t simply list items that you can and cannot keep. For most physical properties – from large items like cars and appliances to small possessions such as books and clothing – the exemption will be represented by a specific amount of money which acts as a threshold. For instance, any car you own in Iowa is exempt in bankruptcy so long as its current worth is $7,000 or less. If you own a car worth more than $7,000, however, a trustee may seize your car and sell it, giving you $7,000 for the exemption while using the rest to pay off creditors.
Not all Iowa bankruptcy exemptions are defined strictly by a monetary amount, however. Iowa’s homestead exemption, for example, dictates that any apartment or house is exempt if your property is not larger than 40 acres in rural areas or one-half acre in a city/town setting. Value of the home is irrelevant in Iowa. Trustees may also take a portion of your wages in Iowa, determined by increasing intervals depending on how much you make in a year. There are many possessions and categories detailed within the Iowa bankruptcy code that are extremely important for you to review on an item-by-item basis. To learn more about the exemption status of your personal property, retirement plans, health insurance, and much more, read this helpful summary.
If you’re reading this blog post, you’re probably at least considering bankruptcy. You’re also probably concerned about the toll bankruptcy will take on your life if you are forced to rid yourself of certain possessions. We understand – and we’re sympathetic to your hardships. At Marks Law Firm (in Des Moines), we frequently help people with similar situations to yours, and we would love the opportunity to meet with you and discuss your options. We offer free, no-obligation consultation at a time that is convenient to you, so please feel free to call us today. In the meantime, take a look at Iowa’s bankruptcy exemption laws and start making an inventory of your possessions. This first step will get the ball rolling when we meet, and may help you see your bankruptcy solution more clearly.