Iowa Bankruptcy Exemptions — What You Keep

Exemptions are the legal rules that determine what property you can keep when you file for bankruptcy. In Iowa, exemptions are critically important because they define the line between protected and at-risk assets §561.2.

Iowa requires use of state exemptions only — federal bankruptcy exemptions under §11 U.S.C. § 522(d) are not available. This means the specific Iowa exemption amounts below control what you can protect.

Homestead §561.2

unlimited value (but limited to 1/2 acre in city or 40 acres outside). Iowa's homestead exemption is unlimited in dollar value but limited by acreage. This protects equity in your primary residence — if your home equity is within this limit, you keep the house in bankruptcy.

Personal property §627.6(5)

$7,000 aggregate in household goods, furnishings, and personal items. This covers household goods, furnishings, clothing, and everyday personal items.

Vehicle §627.6(9)

$7,000 in equity. This protects equity in your car — meaning the value of the vehicle minus what you owe on it.

Wages §642.21

75% of disposable earnings exempt per federal CCPA; annual garnishment cap of $250 per judgment creditor (higher caps for higher income brackets). This applies to wages already earned but not yet paid at the time of filing.

Wildcard §627.6(15)

$1,000 (any property). A wildcard exemption can be applied to any property not fully covered by other exemptions.

Retirement accounts §627.6(8)(f); §97B.39

Contributions and assets in ERISA-covered 401(a)/501(a) plans, IRAs, and Roth IRAs are exempt under 627.6(8)(f), but exempt contributions to SEP, Keogh, IRA, SIMPLE, SARSEP, and Roth accounts are capped at the deductible/allowable contribution for each tax year, with earnings exempt only in proportion; pension and annuity payments are exempt under 627.6(8)(e) unless they stem from above-normal contributions made within one year before filing; IPERS rights and money are exempt under 97B.39 except for child, spousal, or medical support obligations, marital property orders, and medical assistance recovery. Retirement accounts receive strong protection in bankruptcy — both under state law and federal law §29 U.S.C. § 1056 (ERISA).

Tools of trade §627.6(11), (12)

$10,000 in farming implements (non-farmers: $10,000 in tools and instruments of profession or trade). This protects the equipment you need to earn a living.

• In Chapter 7, non-exempt property can be liquidated by the trustee. High exemptions mean you keep more.
• In Chapter 13, the "best interests of creditors" test means your plan must pay unsecured creditors at least what they would have received if non-exempt assets were liquidated in Chapter 7. Higher exemptions can reduce your required plan payment.

• Is your home equity within the homestead limit, or does it exceed the cap?
• Do you have a vehicle loan that reduces your equity below the exemption?
• Are there assets that could be reclassified or converted to exempt form before filing?
• Would waiting to file change the exemption calculation (e.g., recent large deposit, bonus, tax refund)?