Iowa Garnishment Laws: Can Your Checking Account Be Garnished?

Creditors may use a variety of strategies to collect from Iowa debtors who've fallen behind on payments. In most cases, if you haven't made your debt payments as agreed, your creditor will attempt to collect by phoning your residence or workplace, or by sending collection letters to your home address. If you don't respond or can't bring your account current, Iowa law permits more aggressive strategies, including garnishment of your bank accounts.

Authorization

A creditor cannot garnish a bank account belonging to an Iowa debtor without legal authorization. The creditor must file a civil suit against you in the municipal court in your county. The court will give you an opportunity to demonstrate that the suit is invalid by showing that you've already paid the debt, or by showing that the suit was filed improperly. If you cannot provide a valid defense, the court will award a judgment against you, which allows the creditor to file for authorization to garnish your bank accounts.

Process

After winning a judgment against you, the judgment creditor may file for a writ of garnishment, which allows the creditor to order your bank to freeze your accounts. After receiving a writ of garnishment, the creditor will contact your bank. The bank will freeze your accounts, typically within three days, and forward any non-exempt funds in the accounts to the court for payment against your debt. If the non-exempt funds in your accounts aren't sufficient to satisfy the judgment, the bank will continue sending deposited funds to the court until the debt is paid in full. During bank garnishment, you cannot access your account to withdraw non-exempt funds.

Exemptions

Iowa law permits an exemption of $1,000 to keep a judgment creditor from taking all of your assets. The $1,000 may be in the form of cash, investments or funds in your bank accounts. If a judgment creditor garnishes your bank accounts, you can apply to the court to deem $1,000 in your account exempt.

Debtor Examination

If you've made check or automated clearinghouse payments to your creditor, it may use this information to identify your bank accounts. However, if you've never used a bank account to pay the creditor, it may be difficult for a judgment creditor to locate your account to execute a bank garnishment. Iowa permits a judgment creditor to require a debtor examination hearing, which requires you to divulge information about your assets, including your bank accounts. It can then use information you provide during the debtor examination to contact your bank and garnish your funds.