Iowa Debt Collection Laws: Garnishment Limits, the Right to Cure, and Debt Deadlines

No creditor in Iowa can start taking money out of your paycheck simply because a bill is unpaid. Outside of support orders, tax debts, and federally administered student loan garnishment, a creditor must first sue you, win a judgment, and then get a garnishment order from the court. Most garnishments follow a default judgment entered because the person being sued never answered the lawsuit, which makes answering the summons the single most valuable step available to an Iowa debtor. Iowa also stands out for a genuine, rarely-seen protection: for financed purchases, a creditor generally has to warn you and give you a chance to catch up before repossessing anything.

How Wage Garnishment Works in Iowa

Iowa runs two garnishment limits at the same time, and both were confirmed directly against the current statute text. Iowa Code 642.21 starts from the federal Consumer Credit Protection Act baseline and layers an Iowa-specific annual dollar cap on top of it, set per judgment creditor per calendar year based on the debtor's expected annual earnings: $250 for earnings under $12,000; $400 for $12,000 to $15,999; $800 for $16,000 to $23,999; $1,500 for $24,000 to $34,999; $2,000 for $35,000 to $49,999; and 10% of expected earnings at $50,000 or more. Expected earnings are determined from the answers taken by the sheriff or court when the garnishment is served. Support obligations under chapter 252D and sections 598.22, 598.23, and 627.12 are excepted from this annual cap.

A second statute adds a stricter weekly floor for consumer credit transactions specifically. Iowa Code 537.5105 caps garnishment on a consumer-credit judgment at the lesser of 25% of disposable earnings for the week, or the amount by which disposable earnings exceed 40 times the federal minimum hourly wage, which works out to a $290-a-week protected floor at the current $7.25 federal rate, stricter than the $217.50 floor the standard federal 30x multiple would produce. The statute also gives a hardship route: after judgment on a consumer credit transaction, a debtor can file a verified application asking the court to exempt a greater portion, or all, of their earnings, and the court must set a hearing within 5 to 10 days, applying a standard of what is necessary for the maintenance of the debtor or a family supported by those earnings.

Iowa has no head-of-household wage exemption as such. A related but different provision, Iowa Code 539.4, voids a wage assignment (a voluntary instrument, not a court garnishment) by the head of a family unless it is a written instrument, signed and jointly acknowledged by both spouses if married, and accepted in writing by the employer.

Firing protection in Iowa goes beyond the federal floor. Iowa Code 642.21(2)(c) bars an employer from discharging an employee because the employee's earnings were subject to garnishment for indebtedness, without limiting that protection to a single debt the way federal law does. Iowa's Department of Revenue wage-levy percentage for state tax debt was not confirmed this session, so no figure is stated here.

Bank Accounts and Exempt Property

Iowa Code 627.6(14) protects $1,000, aggregated across cash on hand, bank deposits, credit union share drafts, or other deposits, and other personal property, as a general wildcard exemption available outside bankruptcy. That is a separate figure from 627.6(10), which adds another $1,000 in accrued wages and tax refunds, but only inside a bankruptcy proceeding; the two should not be confused. Iowa Code 627.6(8) exempts Social Security, unemployment, public assistance, veteran's, and disability benefits outright, and 627.6(9) exempts one motor vehicle up to $7,000 in value.

How Long Can You Be Sued: Iowa's Statute of Limitations

Iowa Code 614.1 sets Iowa's core debt deadlines: 10 years for actions founded on written contracts, under 614.1(5)(a), and 5 years for actions founded on unwritten contracts, under 614.1(4). An open account carries the 5-year unwritten period, with accrual measured from the date of the last item in the account under Iowa Code 614.5, rather than a fixed date at account opening. Whether Iowa courts treat credit card debt as a written contract or an unwritten account was not verified against Iowa case law this session, so no single period should be assumed for a card debt without checking further.

Iowa made the same non-uniform choice on promissory notes that a few other states have made: Iowa Code 554.3118, Iowa's version of the Uniform Commercial Code negotiable-instruments accrual section, sets only accrual rules, not a separate limitations period, so Iowa did not enact the UCC's usual 6-year note deadline. Ordinary promissory notes instead fall under the general 10-year written-contract period in 614.1(5), using 554.3118 only to determine when the clock starts.

Iowa sits on the strict end of the revival spectrum. Under Iowa Code 614.11, a cause of action founded on contract is revived by a written admission, signed by the party to be charged, that the debt remains unpaid, or by an equivalent new promise to pay. A bare partial payment, without a signed writing, is not listed as reviving the debt on its own, which puts Iowa on the same writing-only track as Florida rather than the payment-alone track some neighboring states use. Court judgments carry a 20-year deadline under 614.1(6), and there is no time limit on enforcing child or spousal support judgments. For deadlines on other kinds of Iowa claims, see the Iowa statute of limitations guide.

Rules Debt Collectors Must Follow

Third-party collectors working Iowa debts are bound by the federal Fair Debt Collection Practices Act: no harassment, no false statements about what they can legally do, no contact at unreasonable hours, and validation information on first contact. Under Regulation F, 12 CFR 1006.26, a debt collector must not sue or threaten to sue on a time-barred debt, though asking for voluntary payment remains legal. Because a signed writing, not a bare payment, is what revives an old Iowa debt, be careful about what you sign, not just what you pay.

A Real Right to Cure Before Repossession

Iowa follows the standard UCC self-help rule for repossession at Iowa Code 554.9609: after default, a secured party may take possession without judicial process as long as it proceeds without breach of the peace. What makes Iowa distinctive is what comes before that. Under the Iowa Consumer Credit Code, sections 537.5110 and 537.5111, a creditor in a consumer credit transaction must send a notice of the right to cure before commencing a lawsuit and before repossessing collateral, other than a voluntary surrender. The creditor may not accelerate the debt or take possession until 20 days after proper notice, and curing means tendering all unpaid installments due, without acceleration, plus any delinquency or deferral charges. A proper cure restores the consumer's rights as though the default never happened, with one exception: curing does not reinstate a closed credit-card account.

That cure right is not unlimited. It does not apply again within 365 days of a prior default for which a proper cure notice was already given on the same obligation, and it does not apply if the consumer voluntarily surrendered the collateral and the creditor accepted it in full satisfaction of the debt. If a creditor sues without giving the required notice, the suit is subject to dismissal without prejudice.

If You Are Being Garnished or Sued in Iowa

Start with the paperwork. If you were served with a lawsuit, answer it before the deadline even with a simple denial, because a default judgment forfeits every defense, including an expired statute of limitations. If a garnishment has already started on a consumer debt, check both the annual dollar cap under 642.21 and the weekly 25%/40x floor under 537.5105, and consider filing the hardship application if either figure leaves you unable to cover necessities. If a car loan is behind, ask whether you received the 537.5111 notice of right to cure before assuming repossession is imminent; you may have 20 days to catch up. If the debt is old, do not sign anything without checking the dates first, since only a signed writing revives an expired Iowa debt. When judgments and garnishments have stacked up faster than a budget can absorb, bankruptcy's automatic stay stops wage garnishment immediately, and a structured guide to stopping wage garnishment walks through the options in order.

Information last verified on 2026-08-12. This article has not yet been reviewed by a licensed lawyer.

Related Resources

• Debt Collection Laws by State
• Statute of Limitations on Debt
• How to Stop Wage Garnishment
• Car Repossession Laws
• Iowa Statute of Limitations
• Iowa Bankruptcy Laws

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Last updated: 2026-08-12.