When preparing for bankruptcy in Council Bluffs or elsewhere in Iowa, it makes sense to wonder, “Can I keep my house and car if I file for bankruptcy?”
Unfortunately, there is a lot of confusion surrounding what property a debtor can keep after filing for Chapter 7 or Chapter 12 bankruptcy, especially if their property is necessary to run their business.
A Council Bluffs asset protection attorney from Telpner Peterson Law Firm, LLP, can answer all your questions regarding filing for bankruptcy in Iowa and explain Iowa’s debt collection laws.
Despite bankruptcy filings continuing to decline, filing for bankruptcy is still a great – and, for some, the only – way to reduce or eliminate their debts.
Can You Lose Your House or Car in Bankruptcy Filing?
Contrary to popular belief, bankruptcy is not about leaving a debtor with nothing. Since filing for bankruptcy is supposed to give a debtor a clean start, it would not make sense if they lost their home, car, or other properties and assets in the process.
Generally, debtors are able to keep their home and motor vehicle after filing for bankruptcy thanks to federal and state exemptions. When a certain type of property is exempt, it means that you do not lose it in the bankruptcy process.
Your exempt property remains yours and cannot be seized by creditors or the trustee. However, if your house or car is not exempt, you may be required to turn it over to a bankruptcy trustee appointed by the court.
Retirement accounts, including 401(k) plans and pensions, also are protected from being taken away from you during bankruptcy, according to The Washington Post.
Exempting a Homestead in Iowa
If you are filing for bankruptcy in Council Bluffs or elsewhere in Iowa and fear that you could lose your house, you should be aware of Iowa’s homestead exemption.
Iowa law allows most debtors to exempt a homestead – a home where he or she lives – regardless of how much the house costs and whether selling it could help them pay off their debt.
One restriction to the exemption is the amount of land that can be exempt. If you live in a city, you cannot exempt more than one-half of an acre. If you live anywhere else in Iowa, you can exempt up to 40 acres.
Exempting a Car and Personal Property
When filing for bankruptcy, Iowa law allows you to exempt up to $7,000 of equity in a single motor vehicle. In other words, if the market value of your car is less than $7,000, you can keep it.
Other types of personal property and assets are also exempt up to a specific dollar limit. For example, art collections are exempt if their worth is less than $1,000. Apparel and household goods can cost up to $7,000 to be exempt, while jewelry worth up to $2,000 is exempt from the bankruptcy process in Iowa.
If you are still worried that you could lose your house or car in the bankruptcy filing, talk to our Council Bluffs asset protection attorney at Telpner Peterson Law Firm, LLP. Schedule a free consultation by calling at 712-309-3738 if you have additional questions.