Exemptions from Garnishment, Attachment, Execution in Iowa
(Iowa Code Chapter 627)
Garnishment is a process which permits a creditor to enforce the payment of property or money of the debtor held by another. Garnishment of wages is covered under Iowa Code sections, 642.21 and 537.5105.
General Exemptions (but not if a purchase money issued for the exempt property). The following property is exempt from garnishment, attachment, execution or bankruptcy according to Iowa Code.
1. Jewelry:
a. wedding or engagement ring, except rings owned or received after date of marriage and within 2 years of the execution. Not to exceed $7000 in aggregate minus other jewelry claimed in b. Iowa Code section 627.6(1)(a).
b. Jewelry not to exceed $2000 in aggregate. Iowa Code section 627.6(10(b).
2. One shotgun, and either one rifle or musket. Iowa Code section 627.6(2).
3. Private libraries, family bibles, portraits, pictures and paintings not to exceed $1000 in aggregate.Iowa Code section 627.6(3).
4. Interment space or interest in burying ground not to exceed one acre. Iowa Code section 627.6(4).
5. Wearing apparel of debtor and dependents for actual use and trunks or receptacles for wearing apparel, musical instruments, household furnishings, and household goods including appliances, radios, television sets, record or tape players, compact disc players, satellite dishes, cable TV equipment, computers, software, printers, digital video disc players, video players, and cameras primarily for personal, family, or household use not to exceed $7000 in aggregate. Iowa Code sections 627.6(5).
6. Life insurance interest if beneficiary is spouse, child or dependent, not to exceed $10,000 in aggregate if acquired within 2 years of execution. Health or disability insurance to $15,000. Iowa Code section 627.6(6).
7. Professionally prescribed health aids. iowa Code section 627.6(7).
8. Debtor’s rights in: social security, unemployment, public assistance, veteran’s benefit, disability or illness benefit, alimony, support, or maintenance to extent reasonably necessary for support, payment under pension, annuity on account of illness, disability, death, age, or length of service unless resulting from contributions within 1 year prior to filing bankruptcy, contributions and assets in plans and contracts from trust forming part of 401(a) and covered by ERISA, or eligible retirement plan, pension plan, retirement account, IRA. All money received as pension from government. Homestead purchased with pension funds. Worker’s Compensation is exempt except for enforcing support obligations. Adopted child assistance is exempt. Iowa Code section 627.6(8), 627.8, 97A.12, 411.13, 410.11
Retirement System Pensions for Police Officers and Fire Fighters set up under Iowa Code Chapter 411 are exempt from execution (but not from alimony and child support) per Iowa Code section 411.13, 97A.12
Pensions established under ERISA (29 USC 1056(d)(1)) have anti-alienation provisions with exceptions for dissolutions. In re Marriage of Branstetter, 508 NW 2nd 638 (Iowa 1993), Iowa Code sections 410.11, 97A.12, 411.13
Social Security disability is exempted per 42 USC section 407 and Iowa Code section 627.6(8), 627.6A.
9. One motor vehicle not to exceed $7000. But not if result of damages by use of vehicle on public highway of state. See #5 above for aggregate amount for bankruptcy. Iowa Code section 627.6(9).
10. Accrued wages and state and federal tax refunds as of date of filing in bankruptcy, not to exceed $1000 in aggregate in bankruptcy. (In addition to limitations in 642.21 (garnishment restrictions) and 537.5105. (Limitations on garnishments) Iowa Code section 627.6(10).
11. Implements, professional books or tools of trade if engaged in profession or occupation other than farming, not to exceed $10,000. Iowa Code section 627.6(11).
12. Implements and equipment reasonably related to farming, livestock and feed for livestock if engaged in farming and not exercising delay of enforceability of deficiency judgment or general execution under 654.6 Not to exceed $10,000 in aggregate. Iowa Code section 627.6(12).
13. Agricultural land if engaged in farming land, but earnings paid are not exempt. Disposable earnings of farmer are exempt under bankruptcy. Iowa Code section 627.6(13).
14. Debtor’s interest in cash on hand, bank deposits, credit union share drafts, or other personal property not provided for in chapter, not to exceed $1000 in aggregate, $100 in bankruptcy. Iowa Code sections 627.6(14),
15. Debtor’s interest in residential rental deposit, utility deposit, advance rent, not to exceed $500. Iowa Code section 627.6(15).
16. Payments reasonably necessary for support of debtor and debtor’s dependents including structured settlements from personal injury or wrongful death. Iowa Code section 627.6(15).
17. Alimony, child support, or separate maintenance.
18. National guard and state guard equipment.
19. Public property necessary for carrying out purpose of public corporations. Iowa Code section 627.18.
20. Assistance for adopted, hard-to-place homeless children. Iowa Code section 627.19.
21. 75% of disposable earnings. Iowa Code section 642.21.
22. Homestead: Up to 1/2 acre in town, otherwise to 40 acres unless property was acquired within previous 1215 days, and then homestead exemption is limited to $125,000 (value changes over time and is current $136,875) in home equity under federal law. Any homestead bought with pension benefits or proceeds of sale is exempt. Iowa Code sections 561.16,499A.18
23. General Exemption. Effective July 1, 2010, an additional exemption is allowed in bankruptcy for a resident of Iowa, allowing an additional exemption of up to $1000 for any personal property. The old law limited the exemption to property not otherwise specifically exempted under Code section 627.
24. No exemptions for child, spousal, or medical support purposes for payments from pension, annuity, IRA, profit-sharing plan, life insurance policy or similar paln due to illness, disability, death, age, or length of service. Iowa Code section 627.6A.
It is important due to recent court rulings that in bankruptcy, the maximum value of the exemption is claimed, not just the estimated value of the property. Then if the trustee argues that the property is worth more, the debtor is protected up to the maximum value of the exemption. One special problem is with no limit exemptions, such as homestead. The debtor should claim "100% of the value" rather than a dollar amount to protect the exemption if the trustee disagrees on the value.
Garnishment of Wages: (Iowa Code sections 642.21 and 537.5105)
Garnishment of wages works in tandem with the Consumer Protection Act which sets a ceiling on the amount of earnings that may be garnished, preempting state laws on earnings but not other property. Iowa has adopted the federal restrictions but also grants additional protections to wage earners.
The Consumer Protection Act restricts the amount of earnings in a pay period which may be garnished, but generally the maximum amount of aggregate disposable earnings of an individual for any workweek subject to garnishment may not exceed 25% of the disposable earnings for that week (15 U.S.C. 1673(a)), but does not apply in 3 situations, involving cases involving an order for the support of a person (including alimony or child support, and then up to 65% of an individual’s disposable earnings may be garnished where the individual is not already supporting a spouse or dependent child (15 U.S.C. 1673(b)(2)).
Iowa Code 642.21 Exemption from Net Earnings
The disposable earnings of an individual are exempt from garnishment to the extent provided by the Consumer Credit Protection Act (15 U.S.C. 1671-1677). Iowa adopts the federal pay period restrictions, but also adopts maximum amounts which may be garnished in each calendar year.
Under Iowa law, the maximum amount of employee’s earnings that may be garnished during one calendar year is $250 for each judgment creditor (regardless of the number of judgments) except as provided in 252D and 598.22, 598.23, and 627.12 (involve collecting delinquent court-ordered support, which are not subject to annual restrictions), or if earnings are greater than $12,000 for the calendar year, or if the garnishment is for a tax lien:
$12,000-$15,999: $400 garnished
$16,000-$23,999: $800
$24,000-$34,999: $1500
$35,000-$49,999: $2000
$50,000 or more: Not more than 10% of earnings
Under MidAmerica SavBank v. Miehe, 438 N.W.2d 837 (Iowa, 1989), “personal earnings exempt from garnishment under section 642.21, which can be traced to checking account or savings account in a financial institution, continue to be exempt from creditors’ levies. This holding applies to both pay period limitation and the calendar year limitation contained in section 642.21. Because the purpose of allowing wages to retain their exempt character is to facilitate payment of ordinary living expenses, the continuation of exempt status is conditioned upon tracing the deposits from wages received within a ninety-day period preceding the levy.”
Federal Bankruptcy Exemptions (11 U.S.C. 522(d)). Under Iowa Code 627.10, an Iowa debtor is not entitled to elect as exempt property specified under 11 U.S.C. 522(d). Residents of other states (but not Iowa) may be able to elect either their state exemptions or the federal exemptions under this section. However, there are some federal exemptions that Iowa filers may be able to use (see Federal Nonbankruptcy Exemptions). Note exemption amounts subject to change.
1. Debtor’s aggregate interest in real property or personal property used as residence, or burial plot, not to exceed $20,200 in value ($21,625 after April 1, 2010). Homestead exemption under sections 522(p)(1) and 522(q)(1) is $136,875 ($146,450 after April 1, 2010).
2. One motor vehicle not to exceed $3225 in value ($3450 after April 1, 2010).
3. Household furnishings , household goods, wearing apparel, appliances, books, animals, crops, or musical instruments primarily for personal, family or household use, not to exceed $525 in value for one item ($550 after April 1, 2010) or $10,775 in aggregate ($11,525 after April 1, 2010).
4. Jewelry primarily for personal, family, or household use not to exceed $1350 in value ($1450 after April 1, 2010).
5. Property not to exceed $1075 ($1150 after April 1, 2010) plus up to $10,125 of any unused amount under (1) ($10,825 after April 1, 2010).
6. Implements, professional books or tools of trade not to exceed $2025 aggregate ($2175 after April 1, 2010).
7. Unmatured life insurance contract owned by debtor other than credit life insurance contract
8. Property transferred under 542(d) accrued dividend or interest or loan value of unmatured life insurance in which insured is debtor or dependent not to exceed $10,775 ($11,525 after April 1, 2010).
9. Professionally prescribed health aids
10. Debtor’s right to receive: social security benefit, unemployment compensation or public assistance benefit, veteran’s benefit, disability/illness or unemployment benefit, alimony, support or separate maintenance to extent reasonably necessary for support
11. Debtor’s right to receive or property traceable to: award under crime victim reparation law, wrongful death payment (not to exceed $20,200, $21,625 after April 1, 2010), insurance contract reasonably necessary for support, compensation for loss of future earnings.
12. Retirement funds exempt under various IRS code sections. Under section 522(n) the maximum aggregate value of assets in individual retirement accounts that is exempted is $1,095,000 ($1,171,650 after April 1, 2010).
_________________________________________
Disclaimers: Information on this web site can not be construed as legal advice, and you are advised to seek legal counsel and not rely on this or any other website. Use of this web site does not create an attorney/client relationship and should not be viewed as creating such a relationship.
The determination of the need for legal services and the choice of a lawyer are extremely important decisions and should not be based solely upon advertisements or self-proclaimed expertise.
A description or indication of limitation of practice does not mean that any agency or board has certified such lawyer as a specialist or expert in an indicated field of law practice nor does it mean that such lawyer is necessarily any more expert or competent than any other lawyer. All potential clients are urged to make their own independent investigation and evaluation of any lawyer being considered.
"We are a Debt Relief Agency. We Help People File for Bankruptcy Under the Bankruptcy Code."
Contingent fee rates are subject to rule 32:1.5(c) and (d). Percentages are computed after deduction of costs and the public is advised that, in the event of an adverse verdict or decision, the contingent fee litigant could be liable for court costs, expenses of investigation, expenses of medical examinations, and costs of obtaining and presenting evidence. Contingent fee agreements are not available for criminal law cases and most family law cases.
In the event a lawyer’s communication seeks to advise the client of litigation, the client is advised that the filing of a claim or suit solely to coerce a settlement or to harass another could be illegal and could render the person so filing liable for malicious prosecution or abuse of process.
IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the U.S. Internal Revenue Service, we inform you that any tax advice contained on this website is not intended or written to be used, and cannot be used, for the purpose of (1) avoiding tax-related or other penalties under the U.S. Internal Revenue Code, or (2) promoting, marketing or recommending to another party any tax-related matter addressed herein.