There are many contributing factors that are associated with financial troubles. Some common reasons include unmanageable debt, divorce, serious illness, foreclosure, or loss of a job.
In fact, the average credit card debt in Idaho is a whopping $4,410 per person. In addition, foreclosure rates are also as staggering, one out of every 3,738 ID homes is currently in foreclosure.
If you find yourself struggling with similar situations, then you are more than likely dealing with other personal problems that come with dealing with debt. The fear of losing your car, home or your money can drain a person emotionally. You may have even considered Declaring Bankruptcy .
If you are thinking “Should I File Bankruptcy?” you are certainly not alone. Just under a million people file bankruptcy each year in America. Bankruptcy is a means created by the US Government to help struggling Americans find relief from massive debt. You may want to consider bankruptcy if it’s best for you.
What Is Bankruptcy?
Bankruptcy gives people the freedom to resolve their debt while still working with lenders in a legal capacity. It is initiated by a person filing a Petition with their nearest bankruptcy court. The Petition can be filed by a person or by spouses jointly. When the bankruptcy is finished, the filer will ‘exit’ with a fresh new start.
Throughout the bankruptcy, a trustee is appointed to oversee the particulars of the case. His or her duties will vary and depend on whether the person has filed for Chapter 13 or Chapter 7 bankruptcy.
Did you know that Idaho ranks #23 in the nation for bankruptcy filings. In 2017 the number of personal bankruptcies was approximately 299 out of every 100,000 residents.
What Is The Difference Between Chapter 7 And Chapter 13?
Individuals or couples in Idaho, who claim bankruptcy, will elect to file under Chapter 13 or Chapter 7 of the U.S. Bankruptcy Code. Want to know the difference? Take a look at the descriptions below for more information:
In exchange for dissolving all past due debts, the trustee of the bankruptcy will liquidate the assets, such as cars, homes, and other property of value in a Chapter 7 Bankruptcy proceeding.
The proceeds collected during liquidation will be used to repay debtors that were listed on the bankruptcy filing.
If you have the means to pay some of your debts, a chapter 13 bankruptcy plan may work for you. You will be allowed to keep your valuable assets over a 3- to 5-year period.
In order to decide which chapter a person will file, he or she will have to determine their ability to repay using the Bankruptcy Means Test.
What Is A Bankruptcy Means Test?
The ultimate goal of the Bankruptcy Means Test is to determine who is eligible to apply for debt forgiveness through a Chapter 7 Bankruptcy. It considers your:
- income and expenses
- household size and composition
- debt-to-income ratio
For those who do not qualify for a Chapter 7 filing, he or she will be able to file for Chapter 13, as described above.
What Are Bankruptcy Exemptions?
The federal bankruptcy exemptions are a list of exclusions by Congress that are available to filers in specific states. These exemptions will determine what you are able to retain throughout and after Chapter 7. In a Chapter 13 situation, the exemptions will determine what amount you will have to pay certain financial institutions in your repayment plan.
- Real property or mobile home up to $100,000. Sale proceeds are exempt for 6 months. If the property is not yet occupied, the debtor must file homestead declaration.
- Health aids; burial plot.
- Personal injury and wrongful death recoveries needed for support. College savings program account.
- Motor vehicle up to $7,000; jewelry up to $1,000; clothing, pets; 1 firearm to $750, appliances, furnishings, books, musical instruments, family portraits, and sentimental heirlooms up to $750 per item and $7,500 total; crops cultivated by the debtor on up to 50 acres (including water rights up to 160 inches); provisions for 1 year.
- Proceeds for damaged exempt property, for up to 3 months after received.
- Building materials.
- Either a minimum of 75% of earned but unpaid wages or 30 times the federal hourly minimum wage (whichever is greater) but not more than $1,500 in a calendar year. A judge can approve more for low-income debtors.
- Tax exempt retirement accounts (including 401(k)s, 403(b)s, profit-sharing and money purchase plans, SEP and SIMPLE IRAs, and defined benefit plans).
- IRAS and Roth IRAs to $1,171,150.
- Retirement plans, government and private pensions, IRAs, Roth IRAs, Keoghs, etc.
- Police officers.
- ERISA-qualified benefits.
- Public employees.
- Unemployment compensation, Social Security, veterans’ benefits, and federal, state, and local public assistance, including earned income tax credit (but not child tax credit)
- General assistance, and aid to blind, aged, and disabled.
- Workers’ compensation.
Tools of Trade
- Tools, books and implements of trade up to $1,500; arms, uniforms, and accoutrements required to be kept by peace officer, National Guard or military personnel.
Alimony and Child Support
- Alimony and child support needed for support.
- Medical or hospital care benefits and amount in medical savings account
- insurance proceeds for beneficiaries other than the insured.
- Unmatured life insurance contract, other than credit life insurance contract; unmatured life insurance contract under which the insured is the debtor or the debtor’s dependent, up to $5,000.
- Death and disability benefits.
- Life insurance proceeds, dividends, interest, loan, cash or surrender value if the insured is not the beneficiary.
- Group life insurance benefits.
- Annuity contract proceeds up to $1,250 per month; if not yet receiving payments from the annuity, then “cash surrender” value to amount of premiums paid during six months before bankruptcy petition.
- Life insurance proceeds if policy prohibits use to pay creditors.
- Fraternal benefit society benefits.
- Up to the amount of the homestead exemption, homeowner’s insurance proceeds.
- Liquor licenses.
- Any tangible personal property up to $800.
Want to know if you can include Student Loans in Bankruptcy or Medical Bills in Bankruptcy? Check out our Bankruptcy FAQ’s section.
Filing Bankruptcy Alone vs. Filing With An Attorney
You are not required by law to hire a lawyer to declare relief. People are allowed to represent him or herself as a pro se debtor. You will simply contact the local bankruptcy court and obtain all forms and requirements directly through them. Going it alone is not an easy task.
Filing Bankruptcy without an Attorney
A basic Chapter 7 proceeding that doesn’t have a lot of debtors or assets may be easy to manage on your own.
A basic bankruptcy that doesn’t involve an attorney might look like:.
- Your income is below the state median;
- You have no property;
- Your debts will be considered dis-chargeable.
Working With An Attorney
Most of the time, it is usually in one’s best interest to work with a bankruptcy attorney. A bankruptcy lawyer is there to represent you and not in the interest of creditors.
An attorney is also accustomed with exemption laws. Plus, they can come up with creative strategies to keep your assets through practical repayment strategies that are fair to everyone involved.
While you may have the fight and ability to manage a Bankruptcy on your own, it tends to make things a lot easier on an already stressful situation, especially when there is so much at stake.
What Does Bankruptcy Include?
Once you file for bankruptcy in ID, the courts put in place an order called an Automatic Stay. This order will stop debt collection calls, wage garnishments, and additional claims. Keep in mind that payments regarding child support and criminal cases will still need to be made during this time.
In any event, Bankruptcy will be able to include:
- credit card debt
- protection from eviction
- avoidance of foreclosure
- utility bills
- medical expenses
Again, unless you are filing a complex Chapter 13 case, you will lose all assets associated with a Chapter 7 Bankruptcy protection. You will, however, be able to prevent any and all collections from occurring as long as they were incurred before the date of filing and discharge.
Final Thoughts And Considerations On Filing For Bankruptcy In Idaho
As you can see, there a lot of information associated with successfully filing for bankruptcy and then exiting it unscathed or satisfied. Only a licensed bankruptcy attorney can guide you through this arduous process, particularly when it comes to complex cases. Be sure to hire someone you respect and trust.
Bankruptcy Courts In IdahoJames A. McClure Federal Building and United States Courthouse
550 West Fort Street
Idaho Bankruptcy Court
Federal Building and United States Courthouse
801 East Sherman Street
Idaho Bankruptcy Court
Additional Idaho Resources
Foreclosure Help Program
Disability SSDI Benefits