When a person owes a debt to another person, this other person may get a judgment from the court to begin collecting debts. The person who owes the debts is called the “debtor.” The person to whom the debts are owed is called the “creditor.” If the creditor wants to collect the debt, they can ask for something called a Debtor’s Exam. This is a court proceeding where the court, creditor, and debtor will discuss the debtor’s assets and abilities to repay the debt. If a person has cash or jewelry on hand, the creditor could ask the debtor to hand it over to the creditor. If the creditor wishes to get at the debtor’s other property, they would have to ask the court to issue a writ of execution. The writ of execution will allow the creditor access to income from the debtor’s paychecks (through garnishment), other sources of income, or income from the sale of the debtor’s property.
However, some property is exempt, and therefore not subject to the writ of execution. The debtor will be allowed to claim this property as exempt, and should file an “affidavit of property exempt from execution” in your case, detailing all the property you wish to claim as exempt. The debtor should file this affidavit with the court and sheriff.
In Iowa probate cases, if the property of a debtor is left to their spouse, the spouse can also claim these exemptions as if they were in the deceased person’s hands.
This article will discuss many of the kinds of property which are exempt, including:
- What personal belongings are exempt from Iowa debt collection?
- What investment and retirement accounts are exempt from Iowa debt collection?
- What is the homestead exemption?
- What other assets are exempt property from Iowa debt collection?
What personal belongings are exempt from Iowa Debt Collection?
Jewelry
Wedding rings owned or received by the debtor, or their dependents, are exempt from execution. However, if the debtor or dependents received one or more wedding or engagement rings after the date of the marriage, but within two years of the date of the execution or the claim of exemption, the rings are only exempt up to $7,000, minus the amount of any other jewelry. Other jewelry is exempt up to $2,000 in total.
Guns
The debtor can claim as exempt one shotgun, and either one rifle or one musket.
Burial Ground
The debtor can claim an internment space on a private or public burying ground not exceeding one acre.
Household goods
Private libraries, family bibles, portraits, pictures, and paintings are exempt up to $1,000.
The debtor can claim as exempt clothes of the debtor and dependents, musical instruments, household furnishings, household goods (appliances, radios, TVs, satellite dishes, computers and software, etc.) held for personal, family, or household use of the debtor (as opposed to business use), not to exceed in value $7,000 in total. The debtor will likely have to choose which items they want to claim as exempt.
What investment and retirement accounts are exempt from Iowa debt collection?
Benefits
Professionally prescribed health aids for the debtor and dependents are exempt. Benefits, including payments from social security, unemployment compensation, public assistance, veterans, and disability benefits are also exempt.
Support payments
Payments for spousal maintenance (alimony) and separate maintenance, to the extent reasonably necessary for the support of the debtor and their dependents, are exempt. However, the debtor cannot claim an exemption if they are the one responsible for paying child, spousal, or medical support.
Investments and Retirement Accounts
Most payments from pensions, annuities, and similar plans are exempt. Transfers from trusts to retirement accounts may be exempt under certain situations, as are transfers from some retirement accounts to others.
All pensions from the United States government are exempt from execution.
Motor Vehicles
The debtor may claim as exempt one motor vehicle, up to $7,000. This vehicle will not be exempt if there is an order against it for judgment, decree or damages, or other order of the court.
Tenant’s Payments
Security deposits, utility deposits, and rent paid to a landlord in advance of the date it is due is exempt up to $500. However, the debtor will still need to pay the landlord and the utility company under the rental agreement.
Reasonably-Necessary Payments
The debtor’s interest in payments reasonably necessary to support the debtor and dependents, arising from a personal injury settlement to a debtor or dependents or a wrongful death case involving the person they relied on are exempt
Tools of the Trade
The tools of the debtor’s trade are exempt, including the proper implements and professional books, up to $10,000. For farmers, they may claim farming equipment up to $10,000 (this provision includes livestock).
Insurance
Certain insurance interests up to $10,000 if the beneficiary is the person's spouse, child or other dependent.
What is the homestead exemption?
The homestead is the house used as a home by the owner. If someone owns multiple houses, the owner can choose which one is the homestead. The homestead owner includes the surviving spouse of the person. The homestead is exempt in most circumstances, if the debtor or the surviving spouse claims the homestead exemption.
What other assets are exempt property from Iowa debt collection?
Many kinds of retirement accounts, and transfers between retirement accounts, are exempt. It is important to note: Iowa does not have “debtor’s prisons.” A person will not be arrested for failing to pay their debt. However, if the court orders someone to do something, such as to show up for a Debtor’s Exam, and a person fails to do it, the person could be arrested for violating a court order. Therefore it’s important for a person to follow any court orders to the best of their ability.
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