Property That Is Protected from Creditors
by: Iowa Legal Aid
Health problems, car accidents, gambling, and credit cards are just a few of the things that can make you unable to pay your bills. Soon, the debt collectors begin to write and call, threatening to take much of your income and property until they are paid. You should know that certain property is protected by law from being taken by most of your creditors.
As long as specific property has not been mortgaged or pledged as collateral for a specific debt, creditors cannot take any of your property without first filing a lawsuit and getting a judgment against you. After a creditor gets a judgment, Iowa's exemption laws allow you to keep certain items of exempt property that cannot be taken from you, even in a bankruptcy. Up to specific maximum values, exempt property generally includes your home, household furnishings, wearing apparel, wedding and engagement rings, burial plots, certain interests in insurance policies and benefits, professionally prescribed health aids, one motor vehicle, tools of a trade, rental and utility deposits, retirement plans and IRA's, and cash on hand up to $1,000.00.
Certain types of income are also exempt from collection by most creditors. These generally include social security benefits, unemployment compensation, public assistance benefits, veteran's benefits, disability or illness benefits, alimony or support payments that are needed for support, and pensions.
Creditors are also limited in the amount they can take or "garnish" from your wages. There are two limitations on how much of your wages can be garnished for a debt other than child support or income taxes. One limits the amount that can be garnished each year. This amount varies depending on your income. If your income is less than $12,000 in a calendar year, the maximum amount of earnings that can be garnished by each creditor with a judgment is $250. The second limitation limits the amount of earnings that can be garnished each pay period. The amount protected by this limitation depends upon whether your debt is a consumer (for personal or family purposes ) or a non-consumer debt. For a consumer debt, a debtor can keep 40 times the Minimum Wage of $7.25 which is $290 for people paid every week and $580 for people paid every two weeks. For a non-consumer debt, a debtor can keep 30 times the minimum wage of $7.25 which is $217.50 for people paid every week and $435 for people paid every two weeks.
There are also limits on the amount of money in a bank account that can be garnished. First, only the amount that could originally be garnished before it was deposited into the bank account can be garnished after it is deposited, if at all. For example, only a percentage of wages deposited into an account can be taken and social security benefits cannot be taken at all. Generally, these funds are protected for at least ninety days after they are deposited. In addition, you are allowed to keep $1,000.00 in cash or bank deposits.
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