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House Bill 464 — Debt collection, exemptions

House Bill 464 — Debt collection, exemptions

Parrish Miller
February 14, 2020

Bill description: HB 464 increases the value of property that is exempted from being used to settle outstanding debts in the case of bankruptcy. 

Rating: -1

Does it violate the spirit or the letter of either the U.S. Constitution or the Idaho Constitution? Examples include restrictions on speech, public assembly, the press, privacy, private property, or firearms. Conversely, does it restore or uphold the protections guaranteed in the U.S. Constitution or the Idaho Constitution?

When an individual declares bankruptcy, it is generally because one's debts exceed one's assets, thus making it mathematically unlikely if not impossible to satisfy those debts. When bankruptcy is declared, one's assets are typically used to satisfy some part of the outstanding debt. Idaho law contains numerous exemptions of personal property, however, so that one can declare bankruptcy without sacrificing every asset to creditors. It should be understood that the exempted assets reduce what is available to satisfy the outstanding debts.

HB 464 increases these exemptions — in some cases substantially — as follows:

  • Household furnishings, household goods, appliances, wearing apparel, animals, books, musical instruments, family portraits and heirlooms of particular sentimental value to the individual. The total exempted value of such goods remains unchanged at $7,500, but the maximum exempted value of a single item increases from $750 to $1,000.
  • The aggregate value of exempted jewelry remains unchanged at $1,000.
  • Implements, professional books, business equipment and tools of the trade increase fourfold from $2,500 in aggregate exempted value to $10,000.
  • The exempted value of one retained motor vehicle increases from $7,000 to $10,000.
  • The exempted value of a water right not to exceed one hundred sixty (160) inches of water used for irrigating land cultivated by the individual, and the crop or crops growing or grown on fifty (50) acres of land, leased, owned or possessed by an individual cultivating the same, increases from $1,000 to $5,000. 
  • The exempted value of one retained firearm increases from $750 to $1,500. 
  • The exempted value of an individual's aggregate interest in any tangible personal property increases from $800 to $1,500. 
  • The amount of exempted unpaid earnings increases from $1,500 to $2,500.
  • The exempted value of a homestead increases from $100,000 to $175,000.
  • Additional exemptions exist for life insurance and up to a year's worth of provisions of food and water, including storage containers and shelving. 

At issue here are the property rights of an unpaid creditor. Bankruptcy is supposed to be a last resort when repayment of debt is impossible, but HB 464 proposes to exempt more than $214,000 worth of a debtor's assets while leaving a creditor with nothing. HB 464 lessons the value of creditors’ property rights and makes bankruptcy an easier and more comfortable solution for individuals who have taken on too much debt. 


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