Most bankruptcies are “no-asset cases”. This means that there are no assets that are taken from the debtor by the court or bankruptcy trustee to be used to pay your creditors. That is, in most cases, all assets owned by the bankruptcy filers are exempt and protected from being taken by the bankruptcy court.
The property exemptions to which a bankruptcy filer is entitled are governed by the laws of the State of Iowa. Iowa has a long list of property that is exempt. For most bankruptcy filers this includes the normal and necessary personal property that you own.
In most cases, any equity you have in your homestead is exempt from creditors and you get to keep it through bankruptcy as long as you continue to make the mortgage payments on the home. However, there are several very important exceptions to this and you need to consult with your bankruptcy attorney to make sure that any equity in your homestead is exempt.
Other real estate, whether rental properties, farmland or otherwise, is generally going to be non-exempt and not protected and if that property has any value over and above the mortgage, it can be taken by the trustee in a bankruptcy to be used to pay your creditors.
Any person can exempt or protect an automobile up to the value of $7,000. If your automobile is secured to a bank, credit union or loan company you need to continue to make those loan payments if you wish to keep your vehicle through the bankruptcy.
Almost all pension plans are exempt under Iowa law as long as they are properly established by the employer as ERISA qualified plans. IRA’s are also exempt. Other investments, which you might think are retirement accounts, like simple annuities, may not be exempt. You need to consult with your bankruptcy attorney to make sure that any such investments you might have can be protected.
State law provides an exemption of $10,000 for the value of tools used in your income-earning activity. For example, a mechanic can exempt and protect mechanic tools up to a value of $10,000. The same would be true for a carpenter, construction worker, hairstylist, etc. This exemption applies to farm equipment as well.
Iowa law provides a fairly liberal exemption for household goods, furniture and furnishing as well as wedding rings, clothing, and other personal effects. In most cases, all personal property is exempt and protected.
This brief description of Iowa exemption law is by no means meant to be exhaustive nor can you conclude from reading this list whether or not in your particular case any property you might own is exempt or protected. The question of what property you get to keep is obviously one of the most import issues in any bankruptcy and you should consult with your bankruptcy attorney to review with him or her a complete list of all of your property so that you can reach a determination of what property may be exempt and protected if you choose to file bankruptcy.
If you still have questions about assets and bankruptcy, give us a call!
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