Congress passed new bankruptcy legislation in 2005 that sought to make filing bankruptcy more difficult and less appealing of an option. With consumer bankruptcies down for the first time in a decade, it is clear that they achieved their goal.

The Difference

When it comes to personal bankruptcy, most consumers in Idaho and across the nation prefer Chapter 7. In this type of bankruptcy the debtor is forced to sell their non-exempt assets and use the proceeds to pay off their creditors. In most cases, however, most consumers are so insolvent and with so few assets, the unsecured debt obligations are rarely paid much of anything. So in essence, the debtor is able to get debt relief for free (minus court costs and attorneys fees of course). Under the new law, however, the debtor can potentially be forced to file Chapter 13 bankruptcy if their income exceeds that of the state in which they reside. Listed below is the median income information for Idaho as of 2006:

2-person families 46,876
3-person families 53,194
4-person families 58,066
5-person families 55,425
6-person families 57,839
7-or-more-person families 66,385

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Idaho Personal Bankruptcies

2004: 9,328
2005: 11,826
2006: 2,875

The drop off in the number of filing between 2005 and 2006 in Idaho mirrored much of what was happening on a national level in response to the implementation of the Bankruptcy Abuse Prevention and Consumer Protection Act. In all the total personal bankruptcy cases filed in Idaho decreased by 8,951, or 75.6 percent.