Question of the Week 

I dusted this question off from a few years ago as we still get calls on it from our members.

Q. We are wondering if you can help us clear up a question. What exactly can the courts take from you if you are liable? My dad said they can’t take your house or your car. We are not attorneys and I don’t know if Iowa law has changed? 

A. Good question. The answer is found generally in Iowa Code 627.6 with a couple of caveats. Understand that there are really three ways that a person can collect on a judgment. 

1. Wage/Bank Garnishment. Basically, once the court enters an order for garnishment, the creditor can then just send it to the bank or employer and they will let the court know if they have money belonging to the defendant-debtor that can be garnished, that is, money that's not "exempt" or protected from garnishment. If the bank has money that may be garnished, it will send it to the court. The employer will withhold part of the defendant-debtor's weekly pay, but usually no more than 25% of his weekly net pay, and pay it to the court. 

1. Writ of Execution. This is when you levy some of the debtor's property or assets to pay for the judgment. In order to do so, the creditor has to arrange for it to be delivered to or "served on" the defendant, which usually must be done by the sheriff of the county where the property is located. After it's been served, the sheriff may take the items that have been identified. Unless the defendant files a "claim of exemption" (meaning that the property or asset can't be taken because it's protected by law), the sheriff will sell the property and arrange for the sale proceeds to be paid to the creditor.  The exemptions stated in the code include: your home, household goods and clothes worth up to $7,000, burial plot, one motor vehicle up to $7,000 value, wedding or engagement rings, pension and retirement accounts, and $1,000 cash on hand. Protected income includes: social security benefits, veterans benefits, unemployment benefits and workers compensation, public assistance, and employment income under protected limits. This protected income also has protection in your bank account for at least up to 90 days.

1. Placing a lien on all real property of the debtor. This keeps a defendant-debtor from selling his real property, including his home, without having to pay the judgment. In Iowa, once a person has a judgment against a defendant, they automatically have a lien against all of the defendant’s real estate that's located in the county where the suit was decided. If the defendant has land in other counties, the creditor can get a lien against that property by filing or "recording" a copy of the judgment in the County Recorder's office for the county where the land is located. In short, while they may not be able to “take” your house, you likely aren’t going to be able to sell it without paying the judgment. 

So for example: 

Home (No – but you can’t sell it without paying judgment)

Vehicle (Maybe depending on how many cars you own and its value)

Investments (Yes, unless in retirement account)

Retirement Accounts (No)

Savings & Checking Accounts (Yes, anything over $1,000)

Future Income (Yes, up to 25% of income)