What are the Idaho Bankruptcy Exemptions?

What are the Idaho bankruptcy exemptions and why are they important in a Chapter 7 bankruptcy? 

One concern a lot of people have when they’re thinking about filing for bankruptcy is that they’ll have to give up their property. That’s where exemptions come into play. Exemptions are laws that allow you to protect some, possibly even all, of your property from your creditors. 

Here’s how it works. The basic idea in a Chapter 7 bankruptcy is that when you file bankruptcy you then turn over your property to the bankruptcy estate, where the bankruptcy trustee can sell it to share the proceeds amongst your unsecured creditors. Now, since no one wants to give up all of their property, and that wouldn’t allow for people to truly get a fresh start, you can use exemptions to protect different types of property up to varying amounts. While this will allow you to protect much (if not all) of your property, it does not extend to items that go beyond what is needed for a basic standard of living. So if you have an investment property or luxury items those are likely to be considered nonexempt by the bankruptcy court and can liquidated for the benefit of your creditors. 

You can think of it as a balance. People should be able to keep what they need to get a fresh start financially, but not at the expense of their creditors. Whenever there is a question about whether something constitutes exempt property, the bankruptcy court will make the decision. 

Does Idaho allow the use of federal bankruptcy exemptions?

Every state has its own set of exemptions for bankruptcy cases. There is also a set of federal exemptions that are listed in the United States Bankruptcy Code. Each state gets to decide if they want to offer the federal bankruptcy exemptions as an alternative choice to their state exemptions. Idaho has opted out of the federal exemptions, which means that residents in Idaho are limited to using Idaho state exemptions in any bankruptcy case. Filers in Idaho can, however, supplement the state exemptions with the federal nonbankruptcy exemptions that protect benefits like federal laws protecting social security benefits from garnishment.

There is a scenario when an Idaho resident can’t use the Idaho state exemptions, which happens if you don’t meet the residency requirement of living there for two years (also referred to as the 730-day rule.) In that case, you need to look back to the six month period before two years before your filing date. This can sound confusing, but to simplify, you should be looking back two and a half years, to determine where you lived for the majority of that 180-day period two years ago. If your prior state allowed for a choice between state and federal exemptions you will be able to make that decision. If it does not, you may be restricted to the state exemptions for your prior state. 

Idaho Bankruptcy Exemptions

Real Property - the Idaho Homestead Exemption

The Idaho homestead exemption is very generous and can protect up to $100,000 of equity in a home or mobile home. This amount is the absolute limit for protecting your homestead, even if you are a married couple filing jointly, this exemption can’t be doubled. The Idaho homestead exemption also covers sale proceeds for six months or insurance proceeds (with specific conditions) for one year. Idaho Code §§ 55-1001, 55-1002, 55-1003, §55-1008, 55-1113

Personal Property Exemptions

Idaho bankruptcy exemptions are contained in the Idaho Code, Titles 11, 41, 45 and 55. Married couples filing jointly can double their exemptions unless expressly prohibited, so long as they have an ownership interest in the property. Filers in Idaho can protect the following items up to the stated dollar amounts.

Motor vehicle: A debtor in Idaho can exempt up to $7,000 in a motor vehicle. Idaho Code § 11-605(3)

Household appliances and furnishings, pets, instruments, heirlooms, musical instruments, family portraits, and items of sentimental value can be protected up to $7,500 of the total value, with a maximum exemption amount of $750 for any one item. Idaho Code § 11-605(1)(a) - (c)

Jewelry: Each debtor can protect up to $1,000 of jewelry in aggregate value if held for personal use. Idaho Code § 11-605(2)

A water right for 160 inches of water used for irrigation of land and crops cultivated on up to 50 acres, are protected by Idaho exemptions, up to $1,000 value. (Idaho Code § 11-605(7))

One firearm up to $750 in value. Idaho Code § 11-605(8)

Filers in Idaho can protect the following items with no limit, so long as certain conditions, if any, are met. 

• Burial plot Idaho Code § 11-603(1)

• Health aids that allow you or a family member to work and maintain your health Idaho Code § 11-603(2)

• Provisions of food or water together with storage containers and shelving, sufficient for twelve (12) months for use of the debtor or dependents. Idaho Code § 11-605(4)

• Building materials: if furnished for use in construction are protected from all creditors other than creditors who financed the purchase of the materials. Idaho Code § 45-514

Finally, Idaho allows for a wildcard exemption for up to $800 or any tangible personal property. This can’t be used on real estate or nontangible property interests. Idaho Code §11-605(10)

Miscellaneous other personal property

Idaho filers can protect their tools of trade they use for their trade or business for up to $2,500. (Idaho Code § 11-605(2))

Idaho filers can also protect a liquor license in full. (Idaho Code § 23-514)

Money Benefits

Some of your property, often in the form of money or benefits to which you are entitled, can’t be touched. Idaho bankruptcy exemptions protect the below funds or benefits up to the amounts stated:

Wages: Idaho filers can protect up to $1,500 in disposable earnings per calendar year. Idaho Code § 11-605(11)

College savings program account. Idaho filers can protect this in full. Idaho Code § 11-604A(4)(b)

Annuity contract proceeds to $1,250 per month; if no payments are currently being made under the contract, the cash surrender value is protected up to the amount of premiums paid during six months before filing. Idaho Code § 41-1836

Insurance benefits: no limit. Idaho Code §§ 41-1833(1), 41-1930

Group life insurance benefits: no limit. Idaho Code §41-1835

Life insurance proceeds: no limit. Idaho Code § 41-1930

Fraternal benefit society benefits no limit. Idaho Code § 41-3218

Medical, surgical, or hospital care benefits and amount in medical savings account no limit. Idaho Code § 11-603(5)

The below funds and benefits are exempt to the extent reasonably necessary for the support of filer and filer’s dependents. The Idaho Code defines this as the property required to meet the present and anticipated needs of the individual and his dependents, which is determined by the court. 

• Alimony or support payments: (Idaho Code § 11-604(1)(b))

• Death or disability benefits: no limit. (Idaho Code § 11-604(1)(a))

• Personal injury or wrongful death recoveries: no limit. (Idaho Code § 11-604(1)(c))

Other Idaho Exemptions

The above exemptions are all available in the Idaho Code. There are, however, additional protections available under Idaho law to protect your property, whether or not you file for bankruptcy. These additional protected benefits include without limit:

Public benefits

• Aid to blind, aged, disabled (Idaho Code § 56-223)

• Earned income tax credit (but not the child tax credit, or education tax credit) (Idaho Code § 603(4)

• Federal, state, & local public assistance (Idaho Code § 11-603(4))

• General assistance (Idaho Code §56-223)

• Social Security (Idaho Code §11-603(3)

• Unemployment compensation (Idaho Code §11-603(6)

• Veterans' benefits (Idaho Code §11-603(3)

• Workers' compensation (Idaho Code § 72-802)

Pension and retirement benefits

Idaho filers who have ERISA-qualified benefits use Idaho Code §§ 50-1011, 11-604A to exempt their pension.

Idaho filers who are public employees use Idaho Code §§ 59-1317, 59-1325 to exempt their pension. 

Firefighters can protect their Firefighters fund retirement benefits under Idaho Code § 72-1422.

Any Idaho filer can exempt their employee plan benefits under Idaho Code §§ 11-604(1), 11-604A, 41-1834.

Filing Chapter 7 bankruptcy? 

It can be helpful to seek legal advice when you are considering filing bankruptcy. Most bankruptcy attorneys offer a free consultation so you can do so without cost or commitment. This will also give you a chance to confirm that you are going to be able to protect your property under Idaho laws as you expect. Depending on what property you are the most concerned about, it may be that filing for Chapter 13 bankruptcy is a better option for getting debt relief and meeting your financial goals. Hiring an attorney, especially in the case of Chapter 13, may well be worth it for peace of mind throughout your Idaho bankruptcy process.

If you can’t afford to hire an attorney you still have the option to move forward on your own to file Chapter 7 bankruptcy. Understandably this prospect can be a little daunting. You can check out Upsolve’s screening tool to see if you can use our online web app to prepare the bankruptcy forms for your Idaho bankruptcy case for free.