If you owe money under a court judgment, you may be ordered to go to the court for a debtor's exam. Do not ignore this court order. The person or company trying to collect on the judgment is called the judgment creditor.
What is a debtor's exam?
A debtor's exam is a way for the judgment creditor to find out what property or assets you have that can be used to pay on your judgment. Before asking the court for a debtor's exam, the creditor must have tried without success to collect on the judgment debt. At a debtor's exam both the debtor and the creditor (or their attorney) will have to appear in court. The creditor or their attorney may question you under oath about your property and assets. The judgment creditor may only seek payment for what you owe under the judgment.
What do I have to do at the debtor's exam?
Most importantly, if you get an order from the court setting up a debtor's exam, you need to show up. If you do not show up you risk having a warrant issued for your arrest. Once at the exam, the creditor asks you questions about your income and assets. Sometimes the creditor asks the questions outside of the court room or has you fill out a financial form without you ever seeing a judge. If the creditor does not think you are cooperating or does not believe your answers are truthful, you will go into the courtroom and give your answers under oath. You must give honest information about your property and assets. Not telling the truth under oath is a crime.
What should I bring to the debtor's exam?
The creditor may ask you to bring documents that show proof of your income such as: bank statements, tax documents, and pay stubs. It is important that you bring all of the requested information that is available to you. If you bring money or valuable jewelry to the debtor's exam, the judge may order you to give it to the creditor to pay on your judgment. If this happens you can object to this. You can claim that it is protected as part of the $1,000 cash on hand exemption. See the section below on "Can the creditor take all of my property".
Can the creditor collect from me at the debtor's exam?
The creditor can only ask the judge for the property you have with you at court. You can object to this. You can claim it is part of one of the exemptions set out in the next section. To collect from any of your other property, the creditor must get a document from the court. This document is called a Writ of Execution and it gives the sheriff the right to collect from your property and income. This collection can be by garnishment or taking property to sell for payment on your judgment debt.
Can the creditor take all of my property?
Much of your property and income is protected against collection. Iowa law puts limits on what property may be taken to pay for a debt. These limits are called exemptions. If the property or asset is exempt it cannot be taken by a creditor. Exempt property includes: 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.
NOTE: If you have protected property being garnished or taken, call Iowa Legal Aid. You need to file an objection with the court right away.
There are no debtor's prisons in the United States and you will not be arrested at the debtor's exam. However, you can be arrested for ignoring the court order about the debtor's exam. Also, if the creditor believes that you are planning to leave the state or that you are hiding to avoid getting the notice of a debtor's exam, the judge may issue an arrest warrant to bring you to the court for the examination.
How can I prevent having to go to a debtor's examination?
Call Iowa Legal Aid for help and to review your options. Options include:
- Contact the creditor and provide the requested information about your property and assets before the debtor's exam. If your property is all protected this can stop collection efforts. Iowa Legal Aid may be able to help you with this.
- Set up an affordable payment plan with the creditor. Keep a record of payments by paying with check or money order.
- If all of your property and assets (including income) are under protected limits, you can file a document with the court, and with the Sheriff showing that it is protected from collection. The legal name for the document is an "Affidavit of Property Exempt From Execution." Call Iowa Legal Aid for more information about this.
- Iowa Code Chapter 630 is the section of Iowa law that covers the examination of a debtor.
This is a general summary about the debtor's exam. There are other rules about creditors collecting on judgments and what property is protected against collection. For more information call your local Iowa Legal Aid office. If you are 60 or over, you can also contact the Legal Hotline for Older Iowans.
Iowa Legal Aid assists people with debt collection issues, including questions about debtor's exams. If you cannot afford a lawyer and have a legal problem in Iowa, call 1-800-532-1275. Persons 60 or over may be able to get free legal advice from the Legal Hotline for Older Iowans at 1-800-992-8161.