Bankruptcy Exemptions in Iowa

The process in which an individual petitions the court for a discharge of outstanding debt is referred to as chapter 7 bankruptcy.  Secured debt and unsecured debt are handled differently and therefore some property may be claimed as exempt from the bankruptcy process.  Individuals that reside in the United States, own property, or have a place of business can file for bankruptcy in a federal court through Chapter 7.  This process may not be used by those who have had bankruptcy cases dismissed within the past 6 months.

In many cases, real estate mortgages and secured loans are exempt.  State laws determine the value of property that may be exempt. Some types of unsecured debt may be legally discharged, however this generally does not include child support, spousal support, income taxes, property taxes, student loans and fines and restitution imposed by a court.

All states allow for some state bankruptcy exemptions and some states allow for federal bankruptcy exemptions, however federal exemptions are not available in the state of Iowa.

How to Keep Your Car

It may be possible to keep your car beyond the bankruptcy process.  The Iowa exemption amount for an automobile is $7000 equity per vehicle per debtor.

• For example, if a vehicle is valued at $16,000 and the outstanding loan balance is $9000, there is $7000 in equity, so the vehicle would be exempt
• A husband and wife can exempt two vehicles or combine their exemptions for a total exemption of $14,000

How to Keep Your Home

The home exemption relates to the amount of equity in the home and whether or not it falls within the exemption amount.  In order to claim your home in Iowa exempt, it must meet the following criteria:

• Real property is unlimited in value, but can not exceed a ½ acre in a city or town, or 40 acres elsewhere
• If you have the ability to pay the difference between the equity and the total exemption amount from sources other than the bankruptcy estate, there may be a chance you can keep your home
• Homestead declaration may be recorded

Filing Schedule C of a Bankruptcy Petition

A Schedule C listing the property you are claiming to be exempt is required when you file bankruptcy.  This form must include the following:

• Property being claimed exempt and the applicable laws regarding such property
• The value being claimed exempt before and after the allowable state’s deduction

Get Legal Advice Before Filing

If you or someone you know is considering proceeding with the bankruptcy process, it is important to discuss your situation with a bankruptcy attorney.  There are several types of bankruptcy and the state and federal laws vary regarding exemptions.  An Iowa bankruptcy attorney is familiar with these bankruptcy laws and will assist you through the decision and filing process.