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Idaho Bankruptcy Laws



Idaho Bankruptcy Laws should be known by every resident of the state of Idaho. For Idaho citizens who have been failing in their payments of credit card bills, creditors take immediate legal actions by suing them in court, and most of the time the only alternative they have is to invoke bankruptcy protection. However, since the passing of the federal reform bankruptcy laws in 2005, Idaho bankruptcy laws have also been affected in turn. The requirements of applying for Chapter 7 or 13 bankruptcy protection have become more tedious and complicated.

It is not enough that you know the basics. Given the complexity of the system, a lawyer’s help would come in handy. It is beneficial to enlist a lawyer’s expertise because there are a lot of paper works to handle and there may be some complications that need to be addressed.

If you haven’t decided what bankruptcy chapter to file for, you can refer to your lawyer for advice. Chapter 7 may be the easiest way out but it also has limitations, especially with the current federal reforms being implemented. To qualify for Chapter 7, a trustee randomly chosen by the court for each case will implement the means test. This test will determine if your monthly income is lower than the mean annual income of the state. If you don’t qualify for this, another complicated test will be used by the trustee to determine that your disposable cash is not enough to pay for your financial obligations. If you still fail in this regard, then you have no other choice but to file for Chapter 13.

Compared with Chapter 7, Chapter 13 is much better and more beneficial for individuals, couples, or families who have just recently purchased a house or car. This type of bankruptcy protection will not seize your assets. It is the debtor’s responsibility to come up with a debt restructuring plan proposing a scheme to pay all outstanding debts within a period of 3 to 5 years. Once approved by the court, this plan will be implemented with the trustee collecting the payment from the debtor and in turn distribute this to the respective creditors based on the precedence specified by the court. An automatic stay is usually imposed by the court to stop creditors from hounding the debtors while enrolled in the repayment plan.

As per federal laws, specific assets are exempted from seizure. These assets protected by the court are deemed exemptions. There are federal laws and Idaho bankruptcy laws exemptions. It is up to the debtor, with the advice of his lawyer, to choose between these two. The state of Idaho has the following exemptions:

• Homestead exemption of up to $100,000;
• A single vehicle worth $5,000 or lesser;
• 75% of disposable earnings;
• Tools of trade up to $1,500;
• Personal belongings costing $500 each like clothing, books, family portraits, and music instruments but should not exceed a total price of $5,000;
• Jewelry worth $1,000;
• Benefits like health aid, disability benefits, insurance policy, pension, and medical benefits.

In every bankruptcy protection application, you must be a permanent resident of the state of Idaho and you must take a complete credit counseling program.