Iowa Debt Relief: The Tools You Need to Escape the Debt Trap

At the last census, the population of Iowa was 3,200,517. On average, Iowa residents earn a personal income of $51,140 and owe $43,120 in consumer debt (excluding mortgages). The state is ranked 20th in terms of overall poverty rate with 11.2% of the population living under the federal poverty guidelines.

Whether you live in Iowa or are considering moving to the state, it’s good to know what the typical resident faces when it comes to finances and debt. It’s also important to understand your rights as a consumer, as well as your hardship and debt relief options in Iowa.

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Iowa debt statistics

These recent statistics provide an overview of what the average Iowan’s debt and credit score look like:

  • Average household debt (debt per capita): $43,120
  • Average student loan debt: $30,848
  • Average credit score: 729 (2022)
  • Median mortgage payment: $1,234
  • Personal bankruptcies in 2021: 489
  • Personal income/Annual mean wage: $51,140
  • Child poverty: 12.6% (ranked 14th)
  • Unemployment: 3.1%

Debt collection laws in Iowa

Like the rest of the United States, Iowa adheres to the Fair Debt Collection Practices Act (FDCPA). This federal law regulates debt collection and prohibits third-party debt collectors from engaging in unfair, deceptive, or threatening tactics to collect money.

The state also has the Iowa Debt Collection Practices Act, or the Chapter 537 Consumer Credit Code. Article 7 of this code talks about debt collection practices and what is allowed vs. what is prohibited. Many of the prohibited practices are similar to those found in the FDCPA.

For example, debt collectors cannot:

  • Intentionally mislead someone (such as by using a different name or claiming to be an official government representative) to collect a debt
  • Use coercion, manipulation, or threats to try to collect money
  • Harass, oppress, or verbally abuse a person in connection to a debt
  • Engage in deception or accuse the debtor of fraud
  • Claim that not paying the debt will result in jail time or a warrant for arrest

This law applies to debt collectors attempting to collect consumer debts, such as installment loans or auto loans. To be a consumer debt, it must be for personal or family use and come with a finance charge or interest fees. It must also be $66,400 or less.

Further, Iowan law requires debt collectors to register with the state before they can operate. They must also pay a yearly fee of $50. For more information on debt collection in the state, refer to section “537.7103 Prohibited Practices” under Article 7.

Debt relief options for Iowa residents

The most common Iowa debt relief options include:

  • Debt settlement: Debt settlement involves negotiating with your creditors — either alone or through a debt settlement company — to reduce how much you owe on a debt.
  • DIY plans: With a DIY plan, you work with your creditors (without a company to represent you) to reduce monthly payments, waive late fees, lower interest charges, and more.
  • Debt management plan (DMP): Some credit counseling companies offer DMPS. These are three- to five-year plans designed to help you manage and pay off large amounts of unsecured debts. With a DMP, you could lower interest rates and create a personalized repayment plan.
  • Debt consolidation: Debt consolidation loans let you combine multiple high-interest debts into one loan. The new loan has a fixed monthly payment and interest rate. If you have good credit, you could save hundreds or thousands of dollars in interest charges. Having only one monthly payment can also make it easier to keep up with your debts and avoid late fees.
  • Personal bankruptcy: If all else fails and you’re drowning in debt, bankruptcy may be the solution. The most common types of personal bankruptcy are Chapter 7 and Chapter 13, but you may only qualify for one. Speak with a bankruptcy attorney before filing.

Are you eligible for Chapter 7 bankruptcy in Iowa? Check out this video to learn more:

Debt settlement in Iowa

If you’re drowning in debt or regularly use expensive forms of credit (ex. payday loans or credit cards) for everyday purchases, debt settlement could help. Many people choose this option when the other alternative is bankruptcy.

Typically, debt settlement takes a few years to complete. It’s also most often done through an agency.

When you go through an agency, a professional will work with your creditors to try to renegotiate or settle your debts for less. They may also work to change the repayment terms or interest rates on your debts.

While they do this, you may need to make monthly payments into a secured account. If a creditor agrees to settle a debt, the agency will usually pay them in a lump sum using that account.

During the debt settlement process, the agency may suggest that you quit making payments on any enrolled debts. This can increase your chances of success, but it may also result in late payments or damaged credit.

Keep in mind that creditors do not have to settle your debts — in other words, there are no guarantees of success. When successful, however, you could save 50% or more on your settled debts. This is after taking out any agency fees (which you only pay after the debt is reduced).

A debt settlement plan can help with many types of consumer debts, including:

  • Department store cards
  • Credit cards
  • Personal loans
  • Personal lines of credit
  • Student loans in default
  • Old judgments
  • Other unsecured debts

Iowa debt settlement companies

If you’re interested in debt settlement or debt relief in Iowa but don’t want to do it alone, here are some options:

  • InCharge Debt Solutions: 5750 Major Blvd, Suite 300 Orlando, FL 32819; (866) 721-3925
  • Xpert Credit Repair: This company offers an initial free consultation and specializes in credit repair services. However, it also refers those seeking debt settlement or lawsuit help to a qualified Consumer Credit Attorney. The main address is 1409 Botham Jean Blvd. Ste 239, Dallas, TX 75215.
  • New Era Debt Solutions: With 4.92 out of 5 stars on BBB and an A+ rating, this company offers debt settlement in Texas. Their headquarters are located at 330 Wood Rd., Suite B Camarillo, CA 93010.

Debt settlement attorneys

Debt settlement may not be right for everyone. It can also be risky. Before going this route, consult a debt settlement or debt relief attorney:

  • Marks Law Firm: 4225 University Avenue Des Moines, lA 50311; (515) 276-7211
  • Zisman Law: 2094 185th St Suite 15 Fairfield, IA 52556; (641) 472-5141

Debt resources for Iowa residents facing hardship

Iowa has many state and federal hardship programs to help residents in need. These include rent and utility payment assistance, reduced-cost healthcare, and childcare assistance.

In the state, approximately one in 14 people face hunger — or 229,500 total residents. This includes one in nine children — or 80,160. If you or someone you know needs help finding free, nutritious food, there are multiple food banks and pantries in the state. Here are a few:

Income and employment in Iowa

Iowa ranks 34th in terms of job creation with 339,000 new jobs in a year. The state’s current unemployment rate is 3.10%. This is lower than the national unemployment rate of 3.4%. It’s also a significant improvement from April 2020 when it was 10.50%.

The Hawkeye State has right-to-work and employment-at-will laws. Although not always the case, these laws can lead to lower wages and reduced job security.

  • Right-to-work: A resident may join a labor union, but they are not required to do so in order to get a job. On average, employees in right-to-work states earn $1,500 less annually than in other states.
  • Employment-at-will: An employer can terminate an employee with or without cause or notice. The exception to this is if there’s a current job contract in place stating otherwise.

How to apply for unemployment benefits in Iowa

Start by heading to the Iowa Workforce Development website. This site gives detailed instructions on how to apply, eligibility requirements, and other resources you may need. To qualify for benefits, you must:

  • Have worked in the past 15 to 18 months and earned a minimum amount of money that’s covered by unemployment insurance
  • Still be capable of holding a job
  • Be fully or partially unemployed
  • Have lost your job through no fault of your own
  • Be able to verify your identity either online or by submitting the necessary documents
  • Be registered for work and actively looking for work (unless the work search requirement is waived)

To apply, you will need some information, such as:

  • Your SSN
  • Both your contact information and your last employer/s
  • The beginning and end dates of your previous employment
  • Any other information about your recent job/s
  • Forms proving you served in the military (if applicable)
  • Green card or visa information (for non-US citizens)

You can apply either online or at a local IowaWORKS Center. Online, simply click “Apply Online Now” and you’ll be taken to the online application system. From there, register for a new user account or sign in to an existing account. You’ll also need to register to work on the IowaWORKS website or at a local office.

After registering and submitting your initial claim, you’ll receive instructions on how to file future claims and continue receiving benefits.

Banking and taxes in Iowa

Effective from 2023 to 2026, the individual income tax rate is as follows:

  • $0 to $6,000 individual tax rate: 4.40%
  • $6,001 to $30,000 individual tax rate: 4.82%
  • $30,001 to $75,000 individual tax rate: 5.70% (4.82% in 2025)
  • $75,001+ individual tax rate: 6.00% (5.70% in 2024, 4.82% in 2025)

The income limits double for married taxpayers filing a joint tax return. Also, starting in 2026, Iowa’s individual income tax rate will drop to 3.9% (regardless of income amount).

In Iowa, 3% of residents were unbanked as of 2021. This means they do not have a checking or savings account.

Iowa housing market

An estimated 71.6% of Iowans are homeowners. The average home value in the state is $193,341 — up 9.1% over one year. In comparison, the average US home value is $328,745.

Iowa residents have a median mortgage payment of $1,328. The average rent payment in the capital, Des Moines, is $992 for a 755-square-foot apartment.

For homeowners struggling to keep up with mortgage payments, the Iowa Homeowners Assistance Fund may be able to help. Established as part of the American Rescue Plan Act of 2021, this program is designed to help homeowners experiencing financial hardship due to COVID-19. Eligible homeowners may receive funds to help prevent foreclosure, mortgage delinquency, displacement, or loss of utility services.

Retirement in Iowa

The average Iowan has $465,127 saved for retirement. But the average resident needs closer to $583,851 to live comfortably in retirement.

Average Iowa insurance premiums

A standard full-coverage auto insurance policy in Iowa is $1,260 annually. This breaks down to about $105 a month. It’s also about $500 lower than the national average.

For homeowners, the average homeowner insurance premium is $1,502 a year. This is for $250,000 dwelling coverage, so expect a higher premium for more expensive homes.

Payday lending status in Iowa: Legal

Payday loans are not legal in all states, but they are allowed in Iowa. Here’s what the typical payday loan looks like in the state:

  • Maximum loan amount: $500
  • Maximum Interest Rate (APR): 433%
  • Minimum loan term: N/A
  • Maximum loan term: 31 days

Statute of limitations on debt in Iowa

The statute of limitations on debt in Iowa depends on the debt type. It ranges from one to 10 years on most debts.

  • Medical debt: 5 years
  • Credit card: 5 years
  • Auto loan debt: 5 years
  • State tax debt: 10 years
  • Judgments: 20 years

State hardship programs

Need further financial assistance in Iowa (besides debt relief)? Here are some state and federal programs to check out:

  • Iowa Housing: The U.S. Department of Housing and Urban Development site includes resources on subsidized housing in Iowa, as well as public housing contact information.
  • Single Family Housing Repair and Grants Program: The Section 504 Home Repair program is geared toward very low-income homeowners who need money to repair or modernize their homes. The program also offers a loan to remove unsafe hazards and items from the property.
  • Low Income Home Energy Assistance Program: LIHEAP is a federal program that helps low-income households with their heating costs through a one-time payment.
  • Children’s Health Insurance Program: Also known as Healthy and Well Kids in Iowa, CHIP provides affordable health coverage to those who make too much to qualify for Medicaid but can’t afford private insurance.
  • Supplemental Nutrition Assistance Program: Previously known as “food stamps,” SNAP offers a monthly stipend for purchasing nutritious food.
  • Combined Application Project: This project streamlines some of the application processes for various hardship programs, such as SNAP and SSI.
  • Iowa Women, Infants, and Children: WIC helps low-income pregnant women, breastfeeding women, and women with young children with food costs. It also offers food and nutrition education.
  • For Women: This resource connects women in Iowa to various organizations throughout the state. These organizations include childcare centers, domestic violence shelters, and family resources.
  • Organization for Refugees and Immigrants: As part of the Iowa Department of Human Services, this organization helps refugees settle in the state. It provides various resources and services, including job training, employment services, and transportation aid.

Help for Veterans

As of 2022, Iowa was home to 185,671 veterans. Iowa’s Department of Veteran Affairs has several resources to help veterans who are facing homelessness, unemployment, and other hardships. The department also makes it easy to find local veterans services offices.

Facilities in Iowa 

Need a VA facility in Iowa? Here are a few of the main ones:

Employment resources for Veterans

Iowa also offers resources for veterans who are transitioning into a civilian career and want to use their military-earned skills. These resources can also help through training and schooling options.

Along with these, here are some national resources for veterans and their families:

  • CareerOneStop is a comprehensive resource for vets seeking job advice and opportunities.
  • is a massive website that helps connect veterans with companies and recruiters in their desired fields.
  • offers online job fairs for military spouses and vets.
  • Helmets to Hardhats works with veterans and current military members to help them transition into a civilian career in the construction industry.
  • Hiring Our Heroes offers education, networking, fellowship programs, and other job-related opportunities to vets and their families.
  • My Next Move also helps ex-military members find civilian jobs that use their military skills.
  • Warriors to Work connects vets with companies, as well as helps them prepare for their next career move.

The bottom line

Iowa offers many debt relief programs and hardship resources to residents who need them. This includes things like debt settlement plans, debt management programs, and debt consolidation loans. But it also includes state-specific and federally funded resources that can help mitigate the cost of living in the state.


How long can a debt be collected in Iowa?

It depends on the type of debt. Open accounts can be collected for five years, while written contracts may last up to 10 years.

When does the statute of limitations begin in Iowa?

For open accounts, the statute of limitations typically starts on the date of the last payment or charge.

Am I responsible for my spouse’s debt if I get divorced in Iowa?

Iowa is an equitable distribution state, meaning that a court will usually split debts and assets fairly (not necessarily 50/50) based on each spouse’s financial situation. Because of this, you could end up being responsible for your ex-spouse’s debt.

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