Q. Are attorney fees and costs of collection available in Iowa? Only if the debt is determined to be a consumer debt as defined under the Iowa Consumer Credit Code, then attorney fees and collection costs are not allowable pursuant to Iowa Code Chapter 537.2507.

Q. Am I entitled to interest? Without a written agreement allowing for a specific interest rate, clients, on open accounts, may expect interest at 5 percent following the six-month period of delinquency. In addition, once judgment has been entered, the Court sets forth an interest rate, with said interest rate to be determined on the date the judgment is entered. If a client has a written agreement for a specific interest rate, the Court will enter judgment interest at that specific rate.

Q. Should suit be filed in Small Claims Court or District Court? If the debt is for $5,000 or less, exclusive of interest or costs the suit must be filed in Small Claims Court. Thus, if you have a $4,000 claim, but interest and costs exceed $5,000, you may file it in Small Claims Court.

Q. What is the difference in costs between a Small Claims Filing and a District Court filing? In Small Claims Court, the filing fee is $85, and in District Court, the filing fee is $185. The sheriffs fees are determined on a case-by-case basis and are in direct proportion to the number of attempts and mileage incurred by the sheriffs office.

Q. How are the proceedings different in Small Claims Court than District Court? Small Claims Court differs from District Court in that there is no requirement that a creditor be represented by an attorney in Small Claims Court and the proceedings are much more informal. The formal Rules of Evidence are not applied in Small Claims Court, especially with regards to hearsay evidence.

Usually in Small Claims Court, a judge allows the creditor an opportunity to present the case and the debtor responds with its defense, with little regard to the formal Rules of Evidence. There are no discovery motions in Small Claims Court. In District Court, the cases are presented in a much more formal manner. Formal Rules of Procedure concerning pleadings and evidence apply; the trials are much more formal; and each party is usually represented by an attorney.

Q. If I do obtain a judgment, how long is the judgment good for? Judgments in Iowa are actionable for 20 years. Furthermore, judgments are liens against real estate for 10 years when the judgment is in the county where the debtor owns real estate and/or the county where the judgment has been transcribed. It should also be noted that the 10-year lien can be extended an additional 10 years provided the action to extend the lien has been filed after the expiration of the ninth year but before the end of the tenth year.

Q. What are the Statute of Limitations for the various causes of action a creditor may have against a debtor? Under owa law, all open accounts are subject to a five-year Statute of Limitation. Oral agreements are also subject to a five-year Statute of Limitation. Written agreements are subject to a ten-year Statute of Limitation. It should be noted that there is no Supreme Court or Court of Appeals ruling regarding whether or not the failure to pay a credit card is subject to the five-year or 10-year Statute of Limitations.

Q. What are the procedural aspects in filing a suit in Small Claims and District Court? In Small Claims Court, an Original Notice and Verification is filed with the Court, wherein in District Court a Petition at Law is filed together with an Original Notice, which are delivered to the sheriff's office of that county for service upon the debtor. It should be noted that Small Claims Court does allow delivery of the Original Notice by certified mail.

The sheriff serves the Original Notice and Petition upon the debtor and makes a return of said service to the Court showing that debtor has in fact been served. The debtors are given 20 days from the date of service to respond. In Small Claims Court, a request is made that judgment be entered if debtor fails to make an appearance or answer.

If you are in District Court and the debtor does not respond within 20 days, then a 10-Day Notice of Intent to File Written Application for Default is filed with the Court. If debtor again does not respond to the 1 0- Day Notice of Intent to take a default, a request for default judgment may be filed and judgment entered.

Q. In the event the debtor appears and answers, what procedure is followed? After an answer has been filed in Small Claims Court, the Court Administrator schedules the small claims case immediately for trial. In District Court, the parties would engage in discovery by filing Interrogatories, Request for Production of Documents, Request for Admissions, and, if necessary, depositions. Interrogatories consist of a list of written questions served by one party on the other. Request for Production of Documents merely request that the debtor produce such documents that would substantiate their alleged defense. Request for Admissions are requests to the debtor demanding that the debtor admit or deny the truth of certain statements. (If debtor does not respond to the Request for Admissions within 30 days, the Requests are deemed admitted). Depositions are a formal procedure wherein we would swear in the debtor and/or witnesses to obtain their sworn testimony.

Q. What is a Summary Judgment? When there is no real issue of facts or law, a Motion for Summary Judgment may be filed. The motion states to the Court that there is no legitimate issue of fact or law and that the debtor is unable to furnish affidavits and/or a defense to the contrary.

Q. What is a Consent Judgment? A Consent Judgment is issued by agreement of the parties after suit has been filed. The parties stipulate to the facts necessary to the Court to make its decision and the judgment is entered in the Court records.

Q. What is a Confession of Judgment? A Confession of Judgment incurs when the debtor files with the Clerk of Court confessing that he/she/it are indebted to the creditor for a sum of money stating the precise facts under which the debt arose, and that the amount is just, due and not disputed. The clerk will then enter a judgment and that judgment has the same validity as a judgment that was obtained through a more extensive litigation.

Q. Once I have the judgment, how do I collect it? The Statute governing collection of judgments can be found in Chapter 626 and in the Iowa Rules of Civil Procedure. An execution is a judicial writ by which an officer is empowered to carry a judgment into effect. In Iowa, prior to obtaining an execution, a praecipe must be issued to the Clerk of Court instructing the clerk to issue the execution to the sheriff. The execution then serves as the sheriffs official authority to act. The sheriff's instructions are prepared on the sheriff's order to levy, and after the order to levy is delivered to the sheriff, the sheriff will attempt to levy upon non-exempt assets of the judgment debtor.

Q. How long are executions good for? Under Iowa law, the execution remains in effect for 70 days after its issuance to the sheriff. A typical levy might include a levy upon cash register receipts, automobiles or other tangible personal property.

Q. What is the difference between a garnishment and a levy? Garnishments differ from levies in that, under a levy, the sheriff proceeds against property in the possession of the judgment debtor, while under a garnishment, the sheriff proceeds against the property in the possession of a third party. Often the third party is an employer or a bank. It should be noted that under Iowa law, as a creditor pursuing a debtor via garnishment, a Notice of Garnishment must be served on the debtor.

A Notice of Garnishment contains the full text as set out in Iowa Code Chapter 630.3(a) of the Iowa Code. Only after the Notice of Garnishment has been served upon the debtor and 10 days has expired from the date of service can the monies or property held by the garnishee be condemned or applied against the judgment.

Q. How much money can be taken from a debtor pursuant to a garnishment on his or her wages? Under Iowa Code Chapter 642.21, the amount of wages that may be garnished is computed according to a sliding scale that increases as the amount of debtor's wages increases.

Q. What if the execution does not prove fruitful? Under Iowa Code Chapter 630, if the execution has been returned unsatisfied in whole or in part by the sheriff, the creditor may request what is known as a judgment debtor's exam. A judgment debtor's exam is a court proceeding wherein the debtor appears before a Court, is sworn in and is examined as to the extent of his or her assets and/or liabilities. It should be noted for all creditors that the starting spot for most collections emanate from credit applications and personal information provided therein by the debtor.

Q. What assets of the debtor are exempt under Iowa law? Listed below are the general exemptions allowable in Iowa:
  • Homestead
  • Wearing apparel of debtor and dependents and receptacles containing same, up to $1,000 aggregate
  • 1 Shotgun and either 1 musket or 1 rifle
  • Libraries, family Bibles, portraits, pictures, musical instruments, and paintings not kept for sale, up to $1,000 aggregate
  • Burying ground or interment space up to 1 acre
  • Household furnishings, goods and appliances held for personal, family or household use of debtor or dependents, up to $2,000 aggregate
  • Un-mature life insurance policy owned by debtor, other than credit lift insurance contract
  • Professionally-prescribed health aids
  • Debtor's rights in Social Security, unemployment compensation, local public assistance benefits, veterans benefits, or disability or illness benefits
  • Debtor's right to alimony, support, or separate maintenance
  • Debtor's right to payments under pension, annuity, or similar plan or contract on account of illness, death, age or length of service
  • Personal musical instruments of debtor or dependents; one motor vehicle; and the debtor's interest in accrued wages and state and federal tax refunds up to $5,000 aggregate.
  • Implements, professional books, or tools of trade of non-farmer debtor and dependents up to $10,000 aggregate
  • Disposable earnings from other Specific partnership property
  • United States Government pension benefits
  • Worker' s Compensation benefits
  • Assistance for adopted children
  • Disposable earnings (75% or 40 times the federal minimum hourly wage per week WHICHEVER IS GREATER
  • Aid to dependent children
  • Group insurance benefits
  • Benefits or proceeds of accident, health, disability or endowment insurance policy
  • Policy of life insurance
  • Avails of life, accident, health or disability insurance policies payable to surviving widow up to $15,000
  • Fraternal insurance benefits
  • National Guard and State Guard equipment owned by members
  • Pension benefits of policemen and firemen
  • Public employees retirement benefits
  • Unemployment Compensation benefits
  • Liquor licenses

Bertroche Law Office is a debt collection law firm that serves all collection agencies, credit companies, grantors of credit, businesses small and large as well as corporations in litigation against debtors in Iowa. We cover all claims including those in Cedar Rapids, Waterloo, Davenport, Des Moines, West Des Moines, Cedar Falls, Muscatine, Fort Madison, Sioux City, Council Bluffs, Mason City, Marion. We cover all counties in Iowa.