Business Debt Restructuring in Iowa: 7 Laws That Change Your Leverage (2026)

The Two Iowa Rules That Pull in Opposite Directions

Iowa still has a judgment by confession on the books, and almost nothing about it resembles what a funder means when it puts a confession clause into a funding agreement. Under Iowa Code §676.3 a statement in writing must be made, signed, and verified by the defendant, and filed with the clerk, and that statement has to recite concisely the facts out of which the indebtedness arose and confirm that the sum confessed is justly due. Only then does §676.4 let the clerk enter judgment for the amount confessed and issue execution. Nothing in the chapter authorizes an attorney chosen by your funder to do any of that on your behalf, which is why the clause in your agreement usually has no vehicle to run on in an Iowa courthouse.

The counterweight sits about a hundred sections away. Iowa Code §535.2(2)(a)(5) lets a person borrowing money or obtaining credit for a business purpose agree in writing to any rate of interest at all, with no dollar threshold anywhere in the paragraph, and it goes on to say that a person who so agrees cannot plead or interpose the claim or defense of usury in any action or proceeding. So the state that will not let a stranger confess judgment for you also declines to tell your funder what it may charge you. Every honest Iowa restructuring conversation starts by holding those two facts next to each other, because the first one buys you time and the second one takes away an argument most owners assume they have.

The remaining five run from the paperwork through the money. What Iowa never enacted about disclosure and what it did enact about the broker who placed your paper, how far back chapter 684 reaches for the equipment you moved last spring, how a garnishment on an operating account keeps working long after the first sweep, which unfair practices statute your entity can actually file under, and what your own exemptions look like once a guaranty puts your name on the judgment. Two more bodies of law sit alongside them and get their own sections below: the mandatory farm mediation chapter, which can stop a creditor cold, and the foreign judgment statute, which is how most out of state judgments actually arrive.

1. The Confession Nobody Can Sign in Advance

Chapter 676 is four sections long and every one of them is aimed at the debtor rather than the creditor. Section 676.1 allows a judgment by confession, without action, to be entered by the clerk of the district court. Section 676.2 confines it to money due or to become due, or to security against contingent liabilities on behalf of the defendant, and requires a specified sum. Section 676.3 supplies the mechanism, and the mechanism is a written statement made, signed, and verified by the defendant, filed with the clerk, stating concisely the facts out of which the indebtedness arose and that the sum confessed is justly due. Section 676.4 then directs the clerk to enter judgment for that amount plus costs and to issue execution as in other cases when the party entitled to it asks.

Read that sequence with a funding agreement in front of you and the gap becomes obvious. A warrant of attorney buried above a signature line delegates the confession to somebody the funder selects, months or years before any sum is due, and chapter 676 asks for the opposite: your verification, at the time, that a stated amount is justly owed right now. The legislature has shown it knows how to legislate about timing on this exact question, because §537.3306 voids an authorization to confess judgment arising out of a consumer credit transaction unless the authorization was executed after default. A commercial advance falls outside that section, but a commercial advance still has to find a procedure inside chapter 676, and the procedure was written around a defendant who shows up and swears.

From a receivables desk the consequence is a scheduling problem rather than a legal one. A funder holding enforceable cognovit paper somewhere else can turn a file into a judgment in days and start on the bank in the week after, and it prices the file accordingly. A funder whose Iowa merchant has to be sued, served under Iowa R. Civ. P. 1.302, and given the twenty days that Rule 1.303(1) allows for a motion or answer is looking at a collection calendar measured in months, with a real chance that the merchant answers and raises recharacterization. That difference is worth money at the settlement table, and it is worth exactly nothing if you never learn it applies to you.

The practical route around all of this is the forum clause, not the confession clause. Paper written in New York for an Iowa merchant is frequently reduced to judgment there and then filed in an Iowa county under the Uniform Enforcement of Foreign Judgments Act at chapter 626A, which is covered in its own section further down this page. When something that looks like a judgment arrives in the mail, the first two questions are where it was entered and on what date it was filed with the Iowa clerk, because the answer to the second question starts a twenty day clock under §626A.3(3) and there is no second one.

2. Six and a Half Percent, and Not for You

Iowa Code §535.2(1) sets the rate of interest at five cents on the hundred by the year for money due by express contract, money loaned, and five other listed situations, unless the parties agree in writing for a rate not exceeding what subsection 3 permits. Subsection 3 is the interesting machinery. Under §535.2(3)(a)(1) the maximum lawful rate is two percentage points above the monthly average ten year constant maturity rate on United States government notes and bonds for the calendar month second preceding, rounded to the nearest quarter of one percent, and under §535.2(3)(a)(2) the superintendent of banking fixes and publishes that figure on or before the twentieth of each month for the month following. For August 2026 the published figure is 6.50 percent, the same as July 2026, against 6.00 percent in January 2026.

None of which is likely to touch your advance, because §535.2(2)(a) lists the people who may agree in writing to pay any rate of interest at all. Subparagraph (5) reaches a person borrowing money or obtaining credit for business or agricultural purposes, and it attaches no dollar threshold whatsoever to that route, defining business purpose to include a commercial, service, or industrial enterprise carried on for profit along with an investment activity. Subparagraph (4) separately reaches a domestic or foreign corporation. The paragraph then does two more things that matter: it states that a person who agrees in writing shall not plead or interpose the claim or defense of usury in any action or proceeding, and it provides that the person receiving the interest is not subject to any penalty or forfeiture.

Subparagraph (6) closes the last door by providing that, for any transaction described in that paragraph, the subsection supersedes any interest rate or finance charge limitation contained in the Code, including but not limited to chapter 535 itself and chapters 321, 322, 524, 533, 536A and 537. It is worth knowing what the penalty would have been, since it explains why usury litigation is rare here even where it fits. Section 535.5 works a forfeiture of eight cents on the hundred by the year on the principal remaining unpaid at judgment, the forfeiture is entered in favor of the state and paid to the treasurer of state for the general fund, and the plaintiff takes judgment for the principal sum only. The reduction goes to the borrower and the forfeiture goes to the state, which is a smaller prize than most owners imagine when they hear the word usury.

All of that presupposes a loan, and that is where an Iowa file on a merchant cash advance actually starts. Section 535.2 speaks throughout about borrowing money or obtaining credit, so if your agreement genuinely purchases a specified amount of future receivables, carries real performance risk on the funder, and contains a reconciliation provision that operates in practice, chapter 535 has nothing to say about the price. If the reconciliation clause is decorative and the repayment obligation is absolute in every state of the world, recharacterization is the argument that opens everything else, and the evidence for it is the reconciliation record itself. We work through the denial patterns on challenging an MCA contract that was never reconciled.

3. Iowa Regulates the Broker, Not the Funder

As of August 2026 the Iowa Code contains no commercial financing disclosure statute. Title XIII runs from banks at chapter 524 through credit unions at 533, money and interest at 535, regulated loans at 536, industrial loans at 536A and the consumer credit code at 537 without a chapter that requires a funder to hand your business a page stating the amount financed, the amount disbursed after fees, the total repayment obligation, the finance charge or an estimated annual percentage rate. No Iowa agency licenses or registers small business finance providers. Eleven United States jurisdictions have enacted a commercial financing disclosure or broker statute and Iowa is not among them, so anyone telling you a missing disclosure voids your Iowa advance is describing New York, California or Virginia law without checking whether it travels.

What Iowa did enact, back in 1983, is the Iowa Loan Brokers Act at chapter 535C, and it is aimed squarely at the person who placed your deal rather than the person who funded it. Section 535C.2(4) defines a loan broker as a person who promises to obtain a loan for another from a third person, or to assist in obtaining one, and the exclusion list is short and specific: attorneys, certified public accountants and accounting practitioners, government bodies, federally regulated financial institutions, insurance companies, banks under chapter 524, credit unions under chapter 533, mortgage brokers and bankers under 535B, regulated loan companies under 536, and industrial loan companies under 536A. An independent MCA broker working out of a call center appears nowhere on that list.

The obligations are real and the remedies are unusually direct. Section 535C.2A prohibits a loan broker from directly or indirectly soliciting, receiving, or accepting an advance fee, and permits a fee only after successful procurement of a loan. Section 535C.7 requires a written brokerage agreement describing the services and the conditions under which the borrower is obligated to pay, signed by both, with a copy handed over at signing. Section 535C.8 makes any pre agreement waiver void and makes the attempt to obtain one a violation. Section 535C.10(1) then lets a borrower void the agreement on written notice and recover all moneys paid the broker, a penalty of twice the fee sought, other damages, and reasonable attorney fees, and it names the solicitation of an advance fee as a material violation. Section 535C.6 makes a violation a serious misdemeanor.

Two details decide whether any of that reaches your file. The first is helpful: chapter 535C never uses the word consumer, its remedy runs to a borrower, and Iowa Code §4.1(20) defines person to include a corporation and a limited liability company, so your entity is inside the statute rather than outside it. Section 535C.11A also places the burden of proof on anyone claiming to be excluded from the definition of broker. The second cuts the other way: §535C.2(3) defines a loan as an agreement to advance property in return for the promise that payment will be made for the use of the property, and a funder that structured the deal as a purchase of receivables will argue the broker brokered no loan. That is the same recharacterization fight as the rate, which is why the two arguments are worked together rather than in sequence.

4. Chapter 684 Renamed Itself and Kept the Clocks

Iowa Code §684.15 says the chapter was formerly cited as the Uniform Fraudulent Transfer Act and may now be cited as the Iowa Uniform Voidable Transactions Act, and the change came through 2016 Acts, ch. 1040, applying to a transfer made or an obligation incurred on or after July 1, 2016 as §684.6 measures those events. The vocabulary is a quick way to tell whether an adviser has read the right statute for the right year, since a memo about fraudulent transfers under chapter 684 is describing Iowa law as it stood before mid 2016. For anything you moved out of the company in the last four years, the operative words are voidable transaction, and the analysis lives in §§684.4 and 684.5.

Section 684.4(1)(a) reaches a transfer made with actual intent to hinder, delay, or defraud any creditor, whether the creditor’s claim arose before or after, and §684.4(2) lists eleven factors a court may weigh, closing with the pattern this industry sees constantly: a debtor who transferred the essential assets of the business to a lienor that transferred them to an insider. Section 684.4(1)(b) needs no intent, only the absence of reasonably equivalent value plus unreasonably small remaining assets or debts beyond the debtor’s ability to pay. Section 684.5(1) covers the same absence of value while insolvent, and §684.5(2) reaches a transfer to an insider on an antecedent debt where the insider had reasonable cause to believe the debtor was insolvent.

The trap in the Iowa version is §684.2(2), which presumes a debtor insolvent when the debtor is generally not paying debts as they become due other than as the result of a bona fide dispute, and puts the burden of disproving insolvency on the party the presumption runs against. A business four positions deep and behind on two of them is standing inside that presumption on the day it repays a member loan. Section 684.9 then sets three windows: four years for actual intent under §684.4(1)(a), or one year after the transfer could reasonably have been discovered if that is later; four years for the constructive claims under §§684.4(1)(b) and 684.5(1); and one year for the insider transfer under §684.5(2). Section 684.10 fixes governing law by the debtor’s location, which for an organization with more than one place of business is its chief executive office.

Iowa adds a second layer that most state pages never mention, and it operates before any judgment exists. Chapter 639 lets a plaintiff attach non exempt property at the commencement of or during a civil action on a sworn petition stating one of the fifteen grounds in §639.3, and four of those grounds describe asset movement: disposing of property with intent to defraud creditors, being about to do so, being about to remove property from the county with that intent, and being about to convert property into money to place it beyond creditors’ reach. Section 639.11 requires a bond at least double the value of the property sought and in no case less than $250, which is not much of a deterrent. The Iowa transfer question is therefore a live seizure risk during the workout rather than only a lookback after judgment, and that is why every asset move here gets dated, valued and papered by counsel before it happens.

5. The Garnishment That Keeps Watching Your Account

Iowa garnishment starts with a writ and a notice rather than a separate proceeding. Under Iowa R. Civ. P. 1.304 the officer serving a writ of attachment or execution garnishes whichever supposed debtors or holders of property the plaintiff directs, and the notice forbids the garnishee from paying any debt owing the defendant, due or to become due, and requires the garnishee to retain possession of all property of the defendant in its hands or under its control. Under Iowa Code §642.5(2) the garnishee submits answers within twenty one days of service, and §642.5(4) gives the sheriff seven business days to file them. Your operating account, your processor reserve, and money your customers owe you are all reachable through that single instrument.

The provision worth reading twice is §642.22. A notice of garnishment served on a garnishee stays effective, without any second service, until the earliest of the annual maximum under §642.21 being withheld, the writ of execution expiring, the judgment being satisfied, or the sheriff releasing it at the plaintiff’s request. Section 642.21 is written around the disposable earnings of an individual, so for a business defendant three of those four stopping points are what remain. Subsection 642.22(2) then requires a supervised financial organization garnished for an account of a defendant, after paying the sheriff whatever was in the account, to monitor the account for additional amounts at least monthly while the notice remains effective. Every deposit that lands after the first sweep is therefore exposed to the same instrument, which is why an Iowa merchant who assumes the freeze ended when the first payment cleared keeps funding it.

The outer edge is the execution itself. Under §626.16 the officer who receives an execution must make sufficient return, together with the money collected, on or before the one hundred twentieth day from issuance, and §626.3 permits only one execution to be in existence at a time. That is the real measure of how long a single garnishment can sit on your deposits. Notice is the other asymmetry, and it is easy to misread. Section 642.14A applies where the garnishment is to property other than earnings an employer owes, and by its terms it requires the judgment creditor to serve the exemption notice on a debtor who is a natural person within seven business days after the sheriff files the answers. An entity defendant sits outside that sentence. We cover the mechanics of a frozen account on what to do when a UCC lien freezes your bank account.

Two clocks decide how long the exposure lasts after that. Under §624.23(1) a judgment of an Iowa district or appellate court, or of a federal court sitting in the state, is a lien on real estate the defendant owned at rendition and on everything acquired afterward, for ten years from the date of the judgment, and §624.24 attaches that lien on entry in the county of rendition or on the filing of an attested copy in any other county where land lies. Under §614.1(6) an action founded on a judgment of a court of record runs twenty years, and §626.2 lets executions issue at any time before the judgment is barred by the statute of limitations. That is ten years of lien and twenty years of enforceability, with nothing the creditor has to file in between to keep either one alive.

6. The Word Consumer Closes the Courthouse

Iowa split its consumer fraud law into an enforcement statute and a private remedy, and your company is shut out of both by definition rather than by any exemption someone has to plead. Chapter 714H, enacted in 2009 and titled the Private Right of Action for Consumer Frauds Act, defines consumer at §714H.2(3) as a natural person or the person’s legal representative, and defines consumer merchandise at §714H.2(4) as merchandise offered or sold primarily for personal, family, or household purposes. Section 714H.5(1) then opens the courthouse door to a consumer who suffers an ascertainable loss of money or property. An LLC that took an advance to cover payroll fails both tests, and the failure happens before anyone reaches the merits.

It is worth knowing what is on the other side of that door, because the asymmetry explains why funder side counsel is comfortable. Section 714H.5(2) makes costs and reasonable attorney fees mandatory once a consumer is awarded actual damages. Section 714H.5(4) permits statutory damages up to three times actual damages where the finder of fact finds willful and wanton disregard by a preponderance of clear, convincing, and satisfactory evidence. Section 714H.5(5) runs two years from the last event giving rise to the claim or from discovery, whichever is later. Section 714H.4 then removes several categories entirely, including insurance companies, licensed Iowa attorneys, and financial institutions along with their affiliates and subsidiaries.

Section 714.16, the Iowa consumer fraud statute itself, belongs to the attorney general. Its definition of person at §714.16(1)(f) does include corporations, partnerships and business entities, but that sentence describes who may be sued rather than who may sue. Subsection 714.16(7) puts the action in equity, allows restoration of money or property acquired by an unlawful practice, permits appointment of a receiver in cases of substantial and willful violation, and authorizes a civil penalty up to $40,000 per violation plus $5,000 for each day of intentional violation of an injunction, all payable to the treasurer of state. Subsection 714.16(11) awards the attorney general costs and fees. None of that money is routed to a business that was misled about the cost of an advance.

What remains for an Iowa company is narrower and more specific. Section 535C.10(1) gives a borrower a private remedy against a loan broker without using the word consumer once, and §535C.10(2) makes a chapter 535C violation a violation of §714.16, which is how the attorney general’s authority becomes relevant to a commercial file at all. Beyond that the live claims are contractual and common law: fraud in the inducement where the pitch is documented, breach where the funder ignored its own default and acceleration terms, and recharacterization. One procedural note that matters if anyone does plead a chapter 714H count anyway: §714H.6 requires a copy of the pleading to go to the attorney general within seven days of filing, and §714H.7 bars a class action under the chapter without the attorney general’s approval.

7. An Unlimited Homestead Measured in Acres

Iowa protects the homestead by size rather than by price, which is unusual enough that guarantors routinely get the answer backward in both directions. Under Iowa Code §561.2 a homestead within a city plat must not exceed one half acre in extent, and outside a plat it must not contain more than forty acres in the aggregate, with a floor that lets a homestead worth less than $500 be enlarged until it reaches that amount. There is no dollar ceiling anywhere in the chapter. Section 561.16 exempts the homestead of every person from judicial sale where there is no special declaration of statute to the contrary, and limits a household unit to one homestead in the aggregate. Section 561.1 requires the house actually used as a home, together with contiguous lots habitually and in good faith used as part of the same homestead.

Section 624.23(2)(a) carries that protection into judgment enforcement by providing that judgment liens do not attach to real estate occupied as a homestead under chapter 561, except as §561.21 provides or where the claimed homestead exceeds the limits in §§561.1 through 561.3. Section 561.21 is therefore the section a guarantor lives or dies on. It exposes the homestead to debts contracted before its acquisition, and then only for a deficiency remaining after exhausting other property liable to execution, and to debts created by written contract by persons having the power to convey and expressly stipulating that the homestead shall be liable, again only for a deficiency after exhausting the other property pledged by the same contract. Mechanic’s liens and improvement debts round out the list.

That word expressly is doing enormous work, and it is the first thing to check on a guaranty. Section 561.22 adds a boldface warning requirement in at least ten point type for a homestead exemption waiver, but by its own terms it applies to a written contract affecting agricultural land as defined in §9H.1 or the dwellings and buildings on that land, and §561.22(2) removes contracts affecting agricultural land of less than forty acres. Section 624.23(2)(b) supplies a tool most owners never hear about: a claim of lien against real estate claimed as a homestead is barred unless execution is levied within thirty days after written demand is served on the judgment owner, and §624.23(2)(c) lets you clear the claimed lien immediately by posting a cash bond of at least one hundred twenty five percent of the outstanding balance. We take the guaranty apart in more detail on fighting a personal guarantee on an MCA.

Everything standing beside the homestead is thin, and the wage rule is where Iowa turns genuinely protective. Section 627.6(14) exempts only $1,000 in cash on hand, bank deposits, credit union share drafts or other deposits wherever situated, or any other personal property. Section 627.6(9) protects one motor vehicle to $7,000, §627.6(11) protects implements, professional books and tools of the trade to $10,000 for a non farming occupation, §627.6(12) protects farm implements, equipment, livestock and feed to $10,000, and §627.6(5) covers household goods to $7,000. Section 627.10 opts Iowa out of the federal exemptions in 11 U.S.C. §522(d), so an Iowa filer uses these figures rather than the federal homestead. Earnings are capped annually rather than per paycheck under §642.21, which is set out in the box below.

The Forty-Two Day Wall in Front of a Farm-Adjacent File

Iowa keeps a mandatory mediation regime for farmer creditor disputes at chapter 654A, and it is far more than a settlement courtesy. Section 654A.4 applies the chapter to all creditors of a covered borrower holding a secured debt against that borrower of $20,000 or more, and defines the covered borrower as a natural person operating a farm or any corporation, trust, or limited partnership as defined in §9H.1. Section 654A.1(1) defines agricultural property to include not only farm real estate but personal property used as security to finance a farm operation or used as part of one, naming equipment, crops, livestock and proceeds. Section 654A.1(3) defines creditor to include a person with a lien or security interest in agricultural property and a judgment creditor with a judgment against a debtor who has it.

Section 654A.6(1)(a) is the operative sentence. A creditor subject to the chapter that wants to foreclose farm real estate under chapter 654, forfeit a contract under chapter 656, enforce a secured interest under chapter 554, or otherwise garnish, levy on, execute on, seize, or attach agricultural property must first file a request for mediation with the farm mediation service, and may not begin the proceeding until it holds a mediation release or the court finds after notice and hearing that the delay would cause the creditor irreparable harm. Section 654A.6(1)(b) then calls those requirements jurisdictional prerequisites to filing the civil action. Section 654A.8(2) stops the clock on time periods affecting those procedures until a release issues.

The calendar runs like this: the borrower files a creditor list or applies for an extension within twenty one days under §654A.6(3), the service sends a mediation meeting notice within twenty one days under §654A.8(1) and the initial meeting is held within twenty one days of that notice, the mediation period under §654A.10 runs up to forty two days from the service’s receipt of the request, and §654A.12 allows a good cause extension of up to thirty more. Section 654A.7 refers the borrower to a financial analyst with the Iowa State University extension ASSIST program and requires notice that legal assistance may be available without charge under chapter 13. There are honest limits worth stating: the entity forms listed in §654A.4(2) do not expressly name a limited liability company, whether a funder’s blanket filing is a secured debt of $20,000 or more against a covered borrower is a question for Iowa counsel on your actual documents, and under §654A.11(3)(b) the mediator issues a release anyway if the borrower waives mediation or fails to attend and participate.

How a Judgment From Another State Actually Lands Here

Because Iowa gives a funder no realistic confession route, most out of state judgments against Iowa merchants arrive under chapter 626A, the Uniform Enforcement of Foreign Judgments Act. Section 626A.2(1) lets a creditor file an authenticated copy of the judgment with the clerk of the district court in a county that would have had venue over the original action, directs the clerk to treat it the same as a judgment of the Iowa district court, and provides that the filed judgment has the same effect and is subject to the same procedures, defenses and proceedings for reopening, vacating, or staying as an Iowa judgment. That last clause is the one worth remembering, because it means the fight over an out of state judgment happens in Iowa, on an Iowa docket, on an Iowa timetable.

The timetable is short and it starts without you. Under §626A.3(1) the creditor or its lawyer files an affidavit giving the debtor’s last known post office address, and under §626A.3(2) the clerk promptly mails notice of the filing to that address and notes the mailing in the docket. Under §626A.3(3) no execution or other enforcement process may issue until twenty days after the date the judgment was filed, and under §626A.3(4) the filing creates no lien on real estate until the time for challenging the conclusiveness of the foreign judgment has run, consistent with §624.24. Section 626A.4 allows a stay where an appeal is pending or will be taken, or where grounds exist that would stay an Iowa judgment, in each case on the security the relevant state requires.

The practical failure is almost never legal. It is that the notice under §626A.3(2) goes to whatever address the creditor put in the affidavit, which is frequently the address on a funding agreement signed three years and one office move ago, and by the time it forwards the twenty days are gone and the sheriff has a writ. If you know a suit was filed anywhere against your company, the cheap protective step is to check the docket in the Iowa county where the business banks or owns property, on a schedule, rather than waiting for mail. Section 626A.6 also preserves the creditor’s right to sue on the judgment in Iowa instead of filing it, so the absence of a chapter 626A filing does not mean nothing is coming. Of the three companies listed on this page, Delancey Street is the one that works a business debt file from the first missed debit through a signed payoff, as a settlement company using attorneys in its network for anything that has to be filed in an Iowa courtroom, while the other two cover broader consumer debt categories.

Who Should You Call? Our Top-Rated Business Debt Firms

One firm on this list works the entire lifecycle of a business debt file, from stopping the daily debits through attorney-led negotiation, UCC lien removal, and a signed release. The other two cover broader debt categories that often sit alongside the advances. Choose accordingly.