You cannot register your car. Your operator, hunting, or professional license has been suspended. The state is garnishing your wages or bank accounts. The state is offsetting benefit payments and tax refunds.These are all signs that you may owe money to the state of Iowa. If you owe the state of Iowa for certain kinds of debts, your license may also be suspended.
There are many kinds of debts that you can owe the state. These include:
- Unpaid taxes
- Unpaid court costs or fines from civil, juvenile or criminal cases
- Overpayments of state benefits like unemployment, FIP, etc.
If you owe money to the state, you will receive a notice. Do not ignore this notice. It is important for you to know how much you owe, why you owe it, and what state agency you will be dealing with.
The state can do things that normal creditors cannot. The most common of these is suspension of licenses or car registration. This includes drivers’ licenses as well as hunting, fishing, and professional licenses. The state can also garnish wages, levy on accounts, and offset some state benefits.
Can the state garnish my wages to pay off the debt?
Yes, but within certain limits. The private collection agency or county attorney can garnish a certain amount of your wages or a bank account to pay off the debt. For taxes, the state can theoretically garnish 100% of your wages. However, they will often accept a reasonable payment plan instead of such an extreme measure, if you request one.
For court debt and other state debt, the state can garnish the following amounts:
| Weekly Disposable Wages | Weekly Maximum Garnishment |
| Less than $217.50 | $0 |
| $217.50 to $290.00 | Your disposable wages minus $217.50 |
| More than $290.00 | 25% of your disposable wages |
Disposable wages” is your pay after any withholdings required by law. Other things may affect how much the State can take, such as whether you have prior garnishments or are paying child support.
Can the State take my federal benefits?
The state cannot take federal payments such as SSI, SSD, Social Security, and several similar federal benefits. The only exception to this is that if you owe state taxes, the State can sometimes offset your federal tax refund. By law, garnishment notices in Iowa say that there are no exemptions for collection of state fines. However, this directly conflicts with a U.S. Supreme Court decision, Bennett v. Arkansas. So, you can still challenge the garnishment of federal benefits even though the notice says that you cannot.
Can the State take my state benefits?
The State may try to “offset” certain state benefits or payments against any State debt you may have. “Offset” means reducing your benefits to pay what you owe. These State payments include FIP, rent reimbursement, DHS payments for child care, or even gambling winnings. Finally, the state has agreed not to offset DHS payments for childcare at this time.
Even if you have a payment plan, the state of Iowa can still take a part of your state tax refund to pay on a state debt.
Unless the debt to the State is for taxes, many of these payments are “exempt income” (that is, the State is not allowed to take them). Before the payments are offset, you will receive a notice. The notice is required by law to tell you how to appeal the offset. In your appeal, you should gather evidence to show that your income is exempt. If you would like advice or other help with such an appeal, you should call Iowa Legal Aid to see if you are eligible for assistance.
How can I get them to let me renew my car registration or my driver’s license?
Court debt related to traffic offenses and criminal convictions bars a registration. In order to get your registration hold lifted, and to stop offsets, levies and garnishments, you will have to enter into a payment plan. Payment plans should be based on your ability to pay, but they do not have to be for registrations suspensions. It is very important pay off this debt before you need to renew your car registration. Otherwise, if you drive on expired tags and get a new expired tags charge this can suspend your license.
Court debt related to traffic offenses and criminal convictions with a vehicular element bars a license. If your driver’s license is suspended, you can enter into a special kind of payment plan with some county attorneys or a private debt collector (see below). It depends on who collects for the county. Remember, your driver’s license may be invalid for other reasons as well, for example, failing to pay child support. Payment plans for license suspensions must be based on your ability to pay. You can identify court debt and driving related reasons for your suspension at https://mymvd.iowadot.gov/Account/Login?ReturnUrl=%2FCompliance
There is no minimum payment required by law; however many collectors will tell you that there is a $50 minimum payment. BE CAREFUL! Do not agree to a payment plan that you cannot afford, especially for driver’s license reinstatement. You only get one driver’s license reinstatement plan per charge, and only five in your lifetime. If you fail, you have to pay off your entire debt before you can get your license back. If your situation changes after you start a plan, you can apply to the county attorney or debt collector within 15 days after your payment was due to modify your payment amount. A payment plan with special standards for disabled persons and wage earners may violate the American with Disabilities Act (“ADA”).
Court debt that comes from a dismissal, acquittal, a juvenile case, or a civil case cannot block your driver’s license nor vehicle registration. Sometimes clerks do not follow this rule. If you have debt like this blocking your registration or driver’s license, please call Iowa Legal Aid for further assistance.
Steps to take when making a payment plan:
- Get all your financial information together, like pay stubs, tax returns, and your bills, so you can prove what you can afford.
- Figure out with what agency you need to make a payment plan.
- Tax debt: If you have tax debt, you will need to set up a payment plan through the Iowa Department of Revenue. You can call the Department of Revenue to set up the payment plan or visit their website to pay:https://paydebt.iowa.gov
- Court debt: If you owe court debt, who you set up a payment plan with will depend on the situation. It may be the judge, the clerk of court, the county attorney, the Department of Corrections, or the Department of Revenue. The rules about who collects these debts are complicated. If you owe court debt for more than one case, more than one of these agencies may be in charge of collecting the different debts.
- Department of Corrections: If you are on probation, the Department of Corrections will often set up a court debt payment plan as part of your probation.
- Clerk of Court: Court debt stays with the clerk of court for the first 30 days. You cannot get a payment plan with the clerk for a debt that is less than $100. If you already have a payment plan with the clerk that you are current on, you may be able to add a new court debt of less than $100 to that plan. After 30 days of nonpayment of debt or missed installment, the debt will be collected by a designated County Attorney or Iowa Department Revenue if no County Attorney designation.
- County Attorney: The county attorney may collect delinquent debt 30 days after it becomes delinquent. If the county attorney is designated , they have different courses of action. One remedy is a judicial garnishment; just like civil creditors, but federal exemptions only apply to unpaid fines and surcharges. Another remedy is contempt of court for unpaid fines and surcharges. County attorneys may also revoke supervised release (probation, parole, and work release) if there is unpaid court debt. However, ability to pay is an absolute defense for contempt of court and revocation. Lastly, a county attorney may put a hold on your car registration for unpaid conviction debt or suspend your driver’s license for unpaid vehicular conviction debt, but this is subject to a license reinstatement plan. The county attorney collects a fee from diverting a percentage of what is collected. County attorneys under no limitations as to how low monthly payments may be, and there is no minimum total to qualify for a payment plan. Many county attorneys have developed their own programs which have different rules. You should contact the county attorney in the county where your debt is.
- Iowa Department of Revenue: If no county attorney is designated, the Iowa Department of Revenue (“IDR”) may collect delinquent debt 30 days after it become delinquent. Like county attorneys, IDR may put a hold on your car registration for unpaid conviction debt or suspend your driver’s license for unpaid vehicular conviction debt, but this is subject to a license reinstatement plan. They can do an administrative garnishment and levy. Lastly, they can do an administrative offset, but debtor’s exemptions apply. IDR collects an additional 15% fee on top of the debt.
- Other debt: If you owe other debt, you should first contact the agency you owe. You may be able to work out a payment plan with them. Their contact information should be on the initial notice that you receive.
- Sometimes people have problems getting a payment plan that they can afford. They are told that a large down payment is required, or that the entire debt needs to be paid off within two years. Payment plans should be based on ability to pay. If you have problems securing an affordable payment plan, call Iowa Legal Aid or apply online anytime to find out if free legal help is available.
Some Debt Can be Modified in a Remission Hearing
If you are under supervision, meaning you are currently on probation, parole, work release, or are incarcerated, you can approach the court to modify your plan of restitution based on financial circumstances. This is called a 910.7 Remission hearing. You will need to make ability to pay argument. Judge have discretion to modify your plan or not modify your plan. You are most likely to be successful for modifying amounts that are not victim restitution. There is no right to counsel unless this hearing is taken up right after your conviction. If you qualify for a 910.7 remission hearing, call Iowa Legal Aid or apply only anytime to find out if free legal help is available.
Some Debt May Be Eliminated by Statute of Limitations
It may be possible to eliminate date that is twenty (20) years or older. However, the it is still unclear whether the 20-year statute of limitations for collection on a judgement applies to court debt. The argument is stronger for this for any 20 year or older debt that is due to court-appointed attorney debt or jail fees, or any debt at all assessed before July 1, 1989.
Some State Debt Is Dischargeable In Bankruptcy
Filing for bankruptcy may be way for some to get a fresh start. Not all court debt is discharable in bankruptcy. “Dischargeable” means wiping out a legal obligation to pay a creditor money. In other words, when we say a bankruptcy discharges debt, we mean you no longer have any legal obligation to pay.
Debt that is usually dischargeable in bankruptcy are reimbursement for court appointed attorney fees in criminal and juvenile cases, court appointed attorney fees and costs in criminal cases where the defendant is acquitted or dismissed of all charges, non-punitive civil debt, non-punitive juvenile debt, juvenile debt assessed to parents for acts of the child, collection fees, civil restitution for consumer fraud, costs imposed in a matter between private parties, incarceration fees, and jail fees.
Debt that is possibly dischargeable in bankruptcy court costs, forfeited bond, probation/supervision fees, and lien filing fees.
Debt that is generally not dischargeable in bankruptcy are child support, criminal fines, victim restitution, surcharges, costs imposed in attorney discipline proceedings, civil penalties imposed, and pretrial diverse fees for bad checks.
While a bankruptcy has the potential to give you a fresh start, you should know that isn’t a decision you should take lightly because there are negative effects of a bankruptcy. If you are considering filing for bankruptcy, you can call Iowa Legal Aid or apply online anytime to find out if free legal help is available.
How should I prioritize debt that cannot be eliminated?
1. Higher priority debts:
• Fines
• Victim restitution
• Debts that are blocking a driver’s license
• Debts that are blocking expungement or discharge from probation
• Debts where garnishment or incarceration are currently being threatened
2. Lower priority debts:
• Civil and juvenile
• Debts not blocking expungement