               United States Bankruptcy Appellate Panel
                            FOR THE EIGHTH CIRCUIT

                                     _______________

                                      No. 03-6095NI
                                    ________________

In re:                                       *
                                             *
Samuel Irish and                             *
Stephanie J. Irish                           *
                                             *
         Debtors.                            *
                                             *
                                             *
Wil L. Forker, Trustee                       *
                                             *     Appeal from the United States
         Plaintiff - Appellant,              *     Bankruptcy Court for the Northern
                                             *     District of Iowa
               v.                            *
                                             *
Stephanie J. Irish                           *
                                             *
         Defendant - Appellee.               *

                                           _____

                                  Submitted: April 12, 2004
                                    Filed: May 20, 2004
                                           _____

Before DREHER, MAHONEY, and VENTERS, Bankruptcy Judges.
                             _____

VENTERS, Bankruptcy Judge.
       This is an appeal from an order of the bankruptcy court1 holding that $3,300.00
in accrued and unpaid wages owing to Stephanie Irish are totally exempt from
property of her bankruptcy estate. The singular issue on appeal hinges on whether
the language of Iowa Code § 627.6(9)(c) allows a debtor in bankruptcy to claim a
general exemption of up to $1,000.00 in accrued, unpaid wages that are owing on the
petition date in addition to any amounts the debtor would be able to exempt against
a garnishing creditor. For the reasons stated below, we affirm the order of the
bankruptcy court.

                           I. STANDARD OF REVIEW

      In appeals from the bankruptcy court, legal conclusions are reviewed de novo.
 Blackwell v. Lurie (In re Popkin & Stern), 223 F.3d 764, 765 (8th Cir. 2000); Official
Committee of Unsecured Creditors v. Farmland Industries, Inc., 296 B.R. 188, 192
(B.A.P. 8th Cir. 2003).

                                II. BACKGROUND

       Stephanie Irish (“Stephanie” or “Irish”) works as a school teacher. Under her
employment contract, she is paid on a twelve-month basis, but she does not work a
twelve-month year. For the 2002-2003 school year, her teaching responsibilities
ended on July 2, 2003, and on July 11, 2003, Stephanie and her husband filed a joint
petition under Chapter 7 of the Bankruptcy Code. At the time of filing, Stephanie had
accrued, unpaid, net wages of $3,300.00 for the months of July and August, and her
expected calendar year earnings for 2003 were between $16,000.00 and $24,000.00.
Only consumer debts were listed in the Debtors’ schedules.




      1
         The Honorable William L. Edmonds, United States Bankruptcy Court for
the Northern District of Iowa.
                                          2
      In her bankruptcy schedules, Stephanie claimed the entire amount of her
accrued, unpaid, summer wages as an asset exempt from the bankruptcy estate. The
bankruptcy court approved Stephanie’s entitlement to claim the exemption over the
objection of the Chapter 7 panel trustee, and this appeal followed.

                                III. DISCUSSION

       The Trustee argues that under the language of Iowa Code § 627.6(9)(c), and
the cases interpreting it, Irish impermissibly used both a general wage exemption
statute and an exemption from garnishment statute to keep her accrued, unpaid wages
from the reach of creditors in her bankruptcy case. Irish, on the other hand, contends
that she is entitled to exempt her accrued, unpaid wages under § 627.6(9)(c), which
provides:

       A debtor who is a resident of this state may hold exempt from execution
      the following property
                                           ....
             9. Any combination of the following, not to exceed a value of
             five thousand dollars in the aggregate:
                    a. Musical instruments, not including radios, television
                    sets, or record or tape playing machines, held primarily for
                    the personal, family, or household use of the debtor or a
                    dependent of the debtor.
                    b. One motor vehicle.
                    c. In the event of a bankruptcy proceeding, the debtor's
                    interest in accrued wages and in state and federal tax
                    refunds as of the date of filing of the petition in
                    bankruptcy, not to exceed one thousand dollars in the
                    aggregate. This exemption is in addition to the limitations
                    contained in sections 642.21 and 537.5105.

Iowa Code § 627.6(9)(c).



                                          3
       In turn, § 642.21(1)(b) states that “[t]he disposable earnings of an individual
are exempt from garnishment to the extent provided by the Consumer Protection
Act,” 15 U.S.C. §§ 1671-77, and for employees earning between $16,000.00 and
$24,000.00 the maximum amount of earnings that may be garnished by a single
creditor is $800.00 in a calendar year. Under 15 U.S.C. § 1673, the maximum amount
of weekly disposable earnings subject to a creditor’s garnishment is 25%. Like §
1673, Iowa Code § 537.5105 limits the amount of a garnishment arising from a
consumer credit transaction to 25% of the employee’s weekly earnings.2

       Interpreting these statutes, Irish argues: (1) that she is entitled to exempt from
property of the estate 75% of her net disposable earnings pursuant to Iowa Code §
537.5105 and 15 U.S.C. § 1673, thereby exempting $2,475.00 of her $3,300.00 of
accrued, unpaid wages; (2) that only $800.00 of her accrued, unpaid wages are
subject to the claims of the Trustee as a single creditor under Iowa Code §
642.21(1)(b), resulting in a further exemption of $25.00; and (3) that she is entitled
to an exemption of $1,000.00 in the total amount of accrued, unpaid wages subject
to a creditor’s garnishment rights under § 627.6(9)(c).3 Thus, Irish contends, she has
$3,500.00 in total wage exemptions to cover her $3,300.00 in accrued, unpaid wages.
In reaching the merits of this appeal, we must determine that accrued, unpaid wages
are property of the bankruptcy estate, that a debtor is entitled to use Iowa garnishment
protection statutes in bankruptcy, and interpret § 627.6(9)(c) to determine the total
amount of accrued, unpaid wages that a debtor may exempt.




      2
          The Federal garnishment statutes apply unless Iowa law provides for
greater restrictions. 15 U.S.C. § 1677.
      3
          Irish and her husband did not claim any tax refund amounts as exempt.
                                           4
A. Accrued Wages as Property of the Estate

       Wages that are earned pre-petition but that have not yet been paid are property
of the estate. 11 U.S.C. § 541(a)(1) (providing that the bankruptcy estate is
comprised of “all legal or equitable interests of the debtor in property as of the
commencement of the case”); Aveni v. Richman, 458 F.2d 972, 973 (6th Cir. 1972)
(holding that wages that have accrued but are unpaid as of the date of the filing of a
petition are property of the estate), cert. denied, 409 U.S. 877, 93 S. Ct. 129, 34 L. Ed.
2d 131 (1972); Thomas v. Beneficial of Missouri (In re Thomas), 215 B.R. 873, 875
(Bankr. E.D. Mo. 1997) (same). Cf. 11 U.S.C. § 541(a)(6) (excepting earnings from
property of the estate for services performed by an individual debtor after the
commencement of the case); Kokoszka v. Belford, 417 U.S. 642, 648, 94 S. Ct. 2431;
41 L. Ed. 2d 374 (1974) (holding that a debtor’s entitlement to an income tax refund,
accrued and unpaid when the debtor filed the petition, was property of the estate
because it was not an entitlement to future wages). Accrued, unpaid wages are
property of the estate because the debtor has both a legal and an equitable interest in
receiving payment as of the commencement of the case and those accrued wages do
not represent monies earned post-petition.

B. Garnishment Protections as an Iowa Exemption

      Irish argues that under 15 U.S.C. § 1672(c) – specifically incorporated into
Iowa law by Iowa Code § 642.21 – a bankruptcy trustee’s use of her accrued, unpaid
wages constitutes a garnishment within the meaning of the statute inasmuch as
bankruptcy is a “legal or equitable procedure through which the earnings of any
individual are required to be withheld for payment of any debt.” Thus, Irish contends,
she is entitled to use the garnishment protection statutes in her bankruptcy
proceeding.




                                            5
        The Supreme Court – dealing with a claimed exemption of a tax refund – held
that the Consumer Credit Protection Act, 15 U.S.C. § 1671-77, was intended to
prevent consumers from entering bankruptcy, and that the Act was never intended to
“alter the delicate balance of a debtor’s protections and obligations during bankruptcy
procedure.” Kokoszka, 417 U.S. at 651-52. Like Irish, the debtor in Kokoszka argued
that the taking of custody by the trustee of a tax refund was a "garnishment." Id. at
649. Significantly, that decision was predicated on the Court's finding that income
tax refunds were not "earnings" of the bankrupt within the meaning of 15 U.S.C. §
1672(c). Id. at 651. Nevertheless, courts have expressly refused to construe the
Consumer Credit Protection Act as providing an additional exemption in bankruptcy.
See In re Brissette, 561 F.2d 779, 784-85 (9th Cir. 1977) (“While the Kokoszka Court
did not directly hold that the [Consumer Credit Protection Act] is not a federal
bankruptcy exemption statute, such a conclusion is compelled by its reasoning and
the legislative history ... there discussed.”); Riendeau v. Canney (In re Riendeau),
293 B.R. 832, 838 (D. Vt. 2002) (“[I]t is clear to this Court that the CCPA's purpose
is to keep debtors out of bankruptcy, and not to expand their protections once they
have filed their bankruptcy petition.”), aff’d, 336 F.3d 78 (2nd Cir. 2003). However,
a state may incorporate its own garnishment protection statute into its own exemption
list – and even adopt the Federal Consumer Credit Protection Act as a state law
exemption. Brissette, 561 F.2d at 786 (stating that while the Consumer Credit
Protection Act is not an exemption statute to which the Bankruptcy Code referred,
through the process of “double adoption” the Consumer Credit Protection Act could
be adopted into California law as an exemption, which is then adopted by the
Bankruptcy Code through 11 U.S.C. § 522(b)(2)(A)).

       Iowa has opted out of the federal exemptions in 11 U.S.C. § 522(d). Iowa
Code § 627.10. Thus, the validity of bankruptcy exemptions in Iowa stems from 11
U.S.C. § 522(b)(2)(A), which provides that a debtor may exempt from property of the
estate any property “that is exempt under Federal law, other than under subsection (d)
of this section, or State or local law.” Thus, even if the Federal Consumer Credit

                                          6
Protection Act is not applicable in bankruptcy – an issue which we need not decide
today – Iowa law may provide the basis for claiming an exemption based on
garnishment protection statutes.

        Two earlier cases from Iowa held that a debtor is not entitled to claim an
exemption in accrued, unpaid wages by utilizing the garnishment exemptions unless
there is actually a garnishing creditor. In re Davis, 136 B.R. 203, 208 (Bankr. S.D.
Iowa 1991) (holding that Iowa’s exemptions in garnishment proceedings do not apply
to the trustee in bankruptcy because pre-petition wages become property of the estate
upon filing and requiring the debtor to turn over property of the estate does not
constitute a garnishment); In re Madia, No. 86-00453S (Bankr. N.D. Iowa Dec. 4,
1987) (same). According to Davis and Madia, in the absence of a garnishing creditor,
the necessary prerequisite for invoking the garnishment exemptions provided in Iowa
Code §§ 537.5105 and 642.21 is simply absent.

       Davis and Madia, however, misread the statutes. We are convinced that Iowa’s
garnishment protection statutes are available for a debtor’s use in bankruptcy for the
simple reason that the Iowa Code expressly makes Iowa’s garnishment protection
statutes applicable in bankruptcy. Iowa Code § 627.6(9)(c) (stating that a portion of
accrued wages is exempt from the bankruptcy estate and that the exemption is in
addition to the limitations contained in Iowa’s garnishment protection statutes).
Moreover, the Iowa General Assembly specifically entitled § 642.21, “Exemptions
from net earnings,” and all state law exemptions are made applicable to bankruptcy
proceedings under 11 U.S.C. § 522(b)(2)(A). Cf. 15 U.S.C. § 1673 (entitled
“Restriction on garnishment”). “Exempt property” means that property in possession
of a debtor which, by law, a creditor cannot attach to satisfy a debt, and the purpose
of an exemption is to prevent a debtor from becoming destitute. Black’s Law
Dictionary 593 (7th ed. 1999). Additionally, a bankruptcy proceeding easily falls
within the ambit of Iowa’s adopted definition of “garnishment,” which is any “legal
or equitable procedure through which the earnings of any individual are required to


                                          7
be withheld for payment of any debt.” 15 U.S.C. § 1672(c); Iowa Code § 642.21
(incorporating 15 U.S.C. § 1672 into Iowa law). The lack of a garnishing creditor in
the traditional sense, as advocated by Davis and Madia, has no bearing on whether
a debtor in bankruptcy can utilize a state law exemption for net wages because the
Iowa General Assembly specifically determined that a debtor could exempt a portion
of his or her net wages from creditors, and the General Assembly made that
exemption applicable to any procedure whereby a worker’s earnings would be used
to satisfy a debt. Bankruptcy is precisely such a procedure. Therefore, even though
the federal garnishment protection statutes may not be available as an exemption in
bankruptcy under Kokoszka and its interpreting cases, as a matter of Iowa law, and
under 11 U.S.C. § 522(b)(2)(A), Iowa’s garnishment protection statutes are applicable
to bankruptcy proceedings.

C. Interpretation of Iowa Code § 627.6(9)(c).

       The crux of this matter concerns the statutory interpretation of § 627.6(9)(c)
of the Iowa Code.

       Under Iowa law, when the express terms of a statute provide a plain meaning,
a court should not look beyond those express terms. Benjegerdes v. Reindl (In re
Reindl), 671 N.W.2d 466, 469 (Iowa 2003). In interpreting a statute, courts attempt
to give effect to the general assembly's intent in enacting the law, which is generally
gleaned from the language of the statute. Griffin Pipe Products Co. v. Guarino, 663
N.W.2d 862, 864-65 (Iowa 2003). “The court is not at liberty to read into the statute
provisions which the legislature did not see fit to incorporate, nor may it enlarge the
scope of its provisions by an unwarranted interpretation of the language used.”
Moulton v. Iowa Employment Sec. Comm'n, 34 N.W.2d 211, 216 (1948), superceded
by statute on other grounds, Iowa Code § 96.5(1)(d). Only when a statute is
ambiguous does a court examine the legislative history to ascertain legislative intent.
Midwest Auto. III, L.L.C. v. Iowa DOT, 646 N.W.2d 417, 425 (Iowa 2002).

                                          8
Ambiguity in a statute arises if reasonable persons can disagree as to its application.
State ex rel. Miller v. Midwest Pork, L.C., 625 N.W.2d 694, 700 (Iowa 2001).

       Both Davis and Madia, supra, interpret the language of the statute –
specifically the part reading, “This exemption is in addition to the limitations
contained in sections 642.21 and 537.5105" – as being limited by the $1,000.00
aggregate cap for accrued wages and tax refunds. That is, “§ 627.6(9)(c) should be
read to mean a debtor may claim up to $1000 in accrued wages and income tax
refunds as exempt and that exemption is not limited by [any lesser amounts that the
debtor could exempt under] § 642.21 and 537.5105.” Davis, 136 B.R. at 208. Davis
and Madia argue that reading the statute as only allowing the trustee to attach 25%
of any garnishment recovery exceeding $1,000.00 – subject to the maximum dollar
amounts as stated in § 537.5105 – would render the first sentence of § 627.6(9)(c)
meaningless inasmuch as the combined aggregate could exceed the $1,000.00 limit.
In short, under the dictates of Davis and Madia, a debtor could never claim more than
an exemption of $1,000.00 in accrued, unpaid wages regardless of the amount a
debtor could exempt under the garnishment statutes.

       Irish, however, argues that Davis and Madia rewrite the statute, to ostensibly
comport with the intent of the General Assembly, so that the statute reads that a
debtor may exempt up to $1,000.00 in accrued wages – not in addition to amounts
retained under the garnishment protections – but as a limitation on any amounts in
excess of $1,000.00 that a debtor could otherwise protect under Iowa non-bankruptcy
law. Unlike Davis and Madia, Irish interprets the “in addition to” language of §
627.6(9)(c) according to its common meaning – that is, something added that
increases the value of the general exemption.

       Because the statute is ambiguous, inasmuch as reasonable persons could
disagree on the total amount of wages a debtor is able to exempt from property of the
estate, the amount of that exemption depends on the intent of the legislature. When

                                          9
a statute is ambiguous, the Iowa General Assembly specifically details factors for a
court to consider:

      If a statute is ambiguous, the court, in determining the intention of the
      legislature, may consider among other matters:
              1. The object sought to be attained.
              2. The circumstances under which the statute was enacted.
              3. The legislative history.
              4. The common law or former statutory provisions, including
              laws upon the same or similar subjects.
              5. The consequences of a particular construction.
              6. The administrative construction of the statute.
              7. The preamble or statement of policy.

Iowa Code § 4.6.

        Under the rules of statutory interpretation, we think Davis and Madia have
tortured the plain language and the intent of § 627.6(9)(c). Before 1981, no general
exemption existed in Iowa for accrued and unpaid wages, but a debtor could exempt
from property of the estate monies received from pensions and workers’
compensation benefits. §§ 627.8 (1979); 627.13 (1979). In 1981 the Iowa General
Assembly passed an act “relating to the properties that are exempt from judicial
process,” adding new provisions to the general exemption statutes. 81 Acts, ch. 182,
§§ 2-3. The new provisions were added specifically so that Iowa could opt out of the
federal exemptions in 11 U.S.C. § 522(d), and the new general exemption statutes
were enacted for the purpose of complying with § 522(b)(1) of the Bankruptcy Code.
After the 1981 changes, a debtor in Iowa could specifically exempt social security
benefits, unemployment compensation, local public assistance benefits, veterans
benefits, disability or illness benefits, and payments under a pension plan. Iowa Code
§ 627.6(9)(a-e) (1985). In addition, a debtor could exempt up to $5,000.00 in musical
instruments, one motor vehicle, professional tools of the trade, a wagon team, and
significantly, “in the event of a bankruptcy proceeding, the debtor’s interest in

                                         10
accrued wages and in state and federal tax refunds as of the date of filing of the
petition in bankruptcy, not exceeding one thousand dollars in the aggregate.” §
627.10(a-e) (1985). Like its modern counterpart, § 627.10(e) specifically stated that
the wage exemption “is in addition to the limitations contained in sections 642.21 and
537.5105.” Section 642.21 is specifically entitled “Exemption from net earnings,”
and it is entirely consistent that the general exemption statute of § 627.6(9)(c) would
incorporate the more specialized exemption statute of § 642.21 as one of several
alternative methods for reaching a $5,000.00 aggregate cap on the amount a debtor
may exempt from property of the estate.

       Additionally, Irish argues that the construction given to the general exemption
statute by Davis and Madia contravenes the overall purpose of the general exemption
statute because under that construction she would be afforded lesser rights in
bankruptcy than if she had never filed bankruptcy. For example, a person having
$4,000.00 in accrued, unpaid wages outside of bankruptcy could exempt at least
$3,000.00 from a garnishment action – if not more – whereas if that same person were
in bankruptcy the amount of the exemption would only be $1,000.00 – resulting in
a $2,000.00 penalty for filing bankruptcy. This construction is contrary to the
mandate that Iowa’s general exemptions are to be liberally construed to effectuate the
purpose of “support[ing] and protect[ing] the family, the spouse and children, and to
educate and train the young.” In re Grilk's Will, 231 N.W. 327, 328 (Iowa 1930).

      The Trustee argues that, as a practical matter, Irish’s construction of the statute
makes no sense. In essence, adding the $1,000.00 exemption with a garnishment
exemption of 75% of aggregate disposable weekly earnings would mean that a debtor
would have to accrue more than $4,000.00 in unpaid wages before a trustee could
garnish anything – and that is not even accounting for the maximum garnishment




                                           11
limits for a single creditor.4 Pursuant to the Trustee’s argument, Irish’s interpretation
of the statute goes too far in protecting a debtor at the expense of the creditors of the
estate. We are, however, not convinced by this argument. Iowa Code § 627.6(9)
specifically limits the aggregate cap for the amount of total exemptions claimed under
subsections (a-c) to $5,000.00. A creditor claiming a $4,000.00 wage exemption
would only be able to exempt an additional $1,000.00 in a single automobile and in
musical instruments, which would potentially free up additional funds for creditors.
Furthermore, the Trustee’s interpretation is not consonant with the liberalizing nature
of the 1981 amendments to Iowa’s general exemption statute, which were specifically
enacted for the purpose of exempting property from judicial process – not for the
purpose of restricting the amount and nature of a debtor’s exemptions.

       In summary, the Court holds that Irish may exempt from property of the estate
her accrued, unpaid wages of $3,300.00 by utilizing both the $1,000.00 exemption
for wages and tax refunds of § 627.6(9)(c) in addition to any amount Irish could
protect from creditors under the garnishment protections statutes of §§ 642.21 and
527.5105. The total amount of Irish’s exemptions under all subsections of § 627.6(9)
is limited to $5,000.00.

      The order of the bankruptcy court is affirmed.



      4
          The Trustee argues that a debtor would have to earn more than
$24,000.00 per year before a single creditor could garnish up to $1,000.00. Iowa
Code § 642.21(1)(c) (stating that the maximum amount subject to garnishment for
each judgment creditor is $800.00 if an employee earns between $16,000.00 and
$24,000.00 per year and $1,500.00 if an employee earns between $24,000.00 and
$35,000.00 per year). These limits are for single creditors. If more than one
creditor exists, then the maximum amount subject to garnishment – from the
debtor’s perspective – multiplies, but in no event may multiple creditors garnish
more than 25% of an individual’s aggregate disposable earnings. § 537.5105 and
15 U.S.C. § 1673.
                                           12
