Filing Chapter 7 Bankruptcy in Iowa (2026)
Reviewed by DocDraft Legal Team · Iowa · Last updated August 18, 2026
Chapter 7 bankruptcy is federal law, but the property you keep is set by Iowa. Iowa is an opt-out state: under Iowa Code 627.10 you must use Iowa's exemptions and cannot elect the federal 11 U.S.C. 522(d) list. Iowa's homestead exemption is unusual because it is unlimited in dollar value but limited by size, half an acre in a town or city or 40 acres of rural land. This page explains Iowa's homestead, vehicle, and wildcard exemptions with their statute cites, the means-test median income, and the two federal bankruptcy courts where Iowans file. Chapter 7 discharges most unsecured debt but not most student loans, recent taxes, or child and spousal support.
Does Iowa use state or federal bankruptcy exemptions?
Iowa is an opt-out state. Under Iowa Code 627.10, a debtor filing bankruptcy in Iowa may not elect to exempt the property specified in the federal 11 U.S.C. 522(d) list. You must use Iowa's own exemptions, found mainly in Iowa Code chapter 627 and the homestead statute in chapter 561.
Can I keep my house if I file Chapter 7 in Iowa?
Often yes. Iowa's homestead exemption under Iowa Code 561.2 and 561.16 is unlimited in dollar value but capped by size: one-half acre within a town or city, or 40 acres of rural land. If your homestead fits the acreage limit, its equity is protected in Chapter 7 regardless of how much it is worth.
Can I keep my car if I file Chapter 7 in Iowa?
Usually yes if your equity is modest. Iowa exempts up to $7,000 of equity in one motor vehicle under Iowa Code 627.6(9). If your car's equity is at or below that figure, the vehicle is protected. Equity above the limit may be reachable by the trustee unless another exemption covers it.
What is the income limit to file Chapter 7 in Iowa?
For cases filed on or after July 15, 2026, the U.S. Trustee median income figures for Iowa are $67,617 for one earner, $88,800 for two, $104,133 for three, and $126,058 for four, adding $11,100 per additional person. At or below your household figure, you pass the first part of the means test.
Iowa's Opt-Out Rule, Its Unlimited Homestead by Acreage, and the Two Iowa Districts
Iowa is a bankruptcy opt-out state. Under Iowa Code 627.10, a debtor to whom Iowa law applies on the filing date cannot elect the federal 11 U.S.C. 522(d) exemptions, so Iowa filers use Iowa's own state exemption set. Iowa's headline protection is its homestead exemption under Iowa Code 561.2 and 561.16, which is unlimited in dollar value but limited by size: a homestead may not exceed one-half acre if located within a town or city plat, or 40 acres if rural. That means a paid-off farm or an expensive in-town home within the acreage cap can be fully protected. Iowa also exempts up to $7,000 of equity in one motor vehicle under Iowa Code 627.6(9), and provides a wildcard-style protection of up to $1,000 in aggregate for accrued wages and tax refunds under Iowa Code 627.6(14). Household goods, tools of the trade, and qualified retirement accounts are protected under other subsections of Iowa Code 627.6. Iowans file in one of two federal bankruptcy courts: the U.S. Bankruptcy Court for the Northern District of Iowa or the Southern District of Iowa, based on where they have lived for most of the prior 180 days.
Relevant Laws
Iowa Homestead Exemption (Iowa Code 561.2 and 561.16)
Defines and protects the Iowa homestead. The exemption is unlimited in dollar value but capped by size: one-half acre within a town or city plat, or 40 acres of rural land. This is the exemption that lets many Iowa homeowners and farmers keep their property in Chapter 7.
Iowa Bankruptcy Exemption Opt-Out (Iowa Code 627.10)
Iowa's opt-out statute. It provides that a debtor to whom Iowa law applies on the bankruptcy filing date is not entitled to elect the federal 11 U.S.C. 522(d) exemptions, so Iowa filers must use Iowa's own state exemptions.
Iowa General Exemptions: Vehicle and Wildcard (Iowa Code 627.6)
Iowa's general personal-property exemptions, including up to $7,000 of equity in one motor vehicle under 627.6(9), household goods, tools of the trade, retirement accounts, and up to $1,000 aggregate in accrued wages and tax refunds under 627.6(14).
Federal Bankruptcy Code Exemptions and Means Test (11 U.S.C. 522, 707)
The federal law behind Chapter 7. Section 522(b)(2) lets a state opt out of the federal 522(d) exemptions, which Iowa has done, and section 707(b) sets the means test measured against state median income.
Regional Variances
Iowa Chapter 7 Exemption Table
Homestead
Iowa Code 561.2 and 561.16: unlimited in dollar value but limited by size. A homestead may not exceed one-half acre within a town or city plat, or 40 acres of rural land. Within those acreage caps, full equity is protected regardless of value.
Motor vehicle
Iowa Code 627.6(9): up to $7,000 of equity in one motor vehicle. Equity above the figure may be reachable by the trustee unless another Iowa exemption applies.
Wildcard (accrued wages and tax refunds)
Iowa Code 627.6(14): a debtor's interest in accrued wages and in state and federal tax refunds is exempt up to $1,000 in the aggregate as of the petition date. This is Iowa's closest equivalent to a cash wildcard and is narrow in scope.
Personal property
Iowa Code 627.6 exempts household furnishings, appliances, and personal effects, along with items such as wearing apparel and stored fuel, up to the statutory value caps in that section. Tools of the trade used in the debtor's occupation are exempt under a separate subsection of 627.6.
Wages
Iowa Code 642.21 limits how much of a debtor's disposable earnings can be garnished, with an annual cap tied to the debtor's income bracket. In bankruptcy, accrued but unpaid wages are also protected within the $1,000 aggregate allowance under Iowa Code 627.6(14).
Retirement and tools of the trade
Iowa Code 627.6(8) exempts qualified retirement accounts and pension interests, including many tax-qualified plans and IRAs to the extent provided by statute. Tools, implements, and professional books used in the debtor's trade or occupation are exempt under 627.6 up to the statutory value limit.
Suggested Compliance Checklist
Confirm the current Iowa means-test median income
Before you file days after startingCheck your household size against the U.S. Trustee Iowa median income figures in effect on your filing date, since these update periodically. For cases filed on or after July 15, 2026 the figures are $67,617 for one, $88,800 for two, $104,133 for three, and $126,058 for four, adding $11,100 per additional person.
Complete the pre-filing credit counseling course
Within 180 days before filing days after startingTake an approved credit counseling course from a provider authorized for your Iowa district and keep the certificate. You must file it with your petition. Skipping this can get your case dismissed before your debts are addressed.
Apply Iowa's exemptions and value your assets
Before preparing your schedules days after startingBecause Iowa is opt-out, match each asset to an Iowa exemption: the Iowa Code 561 homestead within its acreage cap, the $7,000 vehicle exemption under 627.6(9), and the $1,000 accrued-wages and tax-refund allowance under 627.6(14). Value your home, vehicle, and personal property so nothing is left unprotected by accident.
Prepare and file your petition and schedules
Filing day days after startingFile your petition, schedules, and exemption claims in the correct court: the U.S. Bankruptcy Court for the Northern District of Iowa or the Southern District of Iowa, based on where you have lived for most of the prior 180 days. Filing triggers the automatic stay that pauses collection and garnishment.
Attend the 341 meeting and finish the debtor education course
Before discharge days after startingAttend the 341 meeting of creditors and answer the trustee's questions under oath, then complete the required post-filing financial management course and file the certificate. Both are required before the court will grant your discharge. An attorney can help with contested exemptions.
| Task | Description | Document | Days after starting |
|---|---|---|---|
| Confirm the current Iowa means-test median income | Check your household size against the U.S. Trustee Iowa median income figures in effect on your filing date, since these update periodically. For cases filed on or after July 15, 2026 the figures are $67,617 for one, $88,800 for two, $104,133 for three, and $126,058 for four, adding $11,100 per additional person. | - | Before you file |
| Complete the pre-filing credit counseling course | Take an approved credit counseling course from a provider authorized for your Iowa district and keep the certificate. You must file it with your petition. Skipping this can get your case dismissed before your debts are addressed. | - | Within 180 days before filing |
| Apply Iowa's exemptions and value your assets | Because Iowa is opt-out, match each asset to an Iowa exemption: the Iowa Code 561 homestead within its acreage cap, the $7,000 vehicle exemption under 627.6(9), and the $1,000 accrued-wages and tax-refund allowance under 627.6(14). Value your home, vehicle, and personal property so nothing is left unprotected by accident. | - | Before preparing your schedules |
| Prepare and file your petition and schedules | File your petition, schedules, and exemption claims in the correct court: the U.S. Bankruptcy Court for the Northern District of Iowa or the Southern District of Iowa, based on where you have lived for most of the prior 180 days. Filing triggers the automatic stay that pauses collection and garnishment. | - | Filing day |
| Attend the 341 meeting and finish the debtor education course | Attend the 341 meeting of creditors and answer the trustee's questions under oath, then complete the required post-filing financial management course and file the certificate. Both are required before the court will grant your discharge. An attorney can help with contested exemptions. | - | Before discharge |
Frequently Asked Questions
Iowa's homestead exemption under Iowa Code 561.2 and 561.16 is unlimited in dollar value but limited by size. A homestead may not exceed one-half acre if within a town or city plat, or 40 acres if rural. Within those acreage limits, the full equity in your Iowa homestead is protected in Chapter 7.
Under Iowa Code 627.6(9), an Iowa debtor may exempt up to $7,000 of equity in one motor vehicle. If your car's equity is at or below that amount, the vehicle is protected in Chapter 7. If the equity is higher, the trustee may be able to reach the excess unless another Iowa exemption applies.
Iowa provides a limited wildcard-style protection. Under Iowa Code 627.6(14), a debtor's interest in accrued wages and in state and federal tax refunds is exempt up to $1,000 in the aggregate as of the petition date. Cash or refunds above that combined limit are generally not protected unless another exemption covers them.
No. Chapter 7 discharges most unsecured debt like credit cards and medical bills, but it does not erase most student loans, recent income taxes, child support, or spousal support, and it will not discharge debts from fraud. Secured debts like a car loan remain unless you surrender the collateral or reaffirm the loan.
You file in the federal bankruptcy court for your area: the U.S. Bankruptcy Court for the Northern District of Iowa or the Southern District of Iowa. You file where you have lived for most of the prior 180 days. The clerk assigns your case, and you attend the 341 meeting within that district.
Other Iowa guides
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