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Senate Bill 1118 — Debtors, increase home exemption

Senate Bill 1118 — Debtors, increase home exemption

Parrish Miller
February 28, 2023

Bill Description: Senate Bill 1118 would increase the value of a home that can be exempted from being used to settle outstanding debts in 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?

Senate Bill 1118 would amend Section 55-1003, Idaho Code, which specifies the maximum value of a homestead that can be exempted from the list of assets that can be used to settle outstanding debts in a bankruptcy case.

The bill would increase the current cap of $175,000 to $250,000.

There are two problems with this proposal. 

The first problem is that the bill compromises the property rights of an unpaid creditor. Bankruptcy is supposed to be a last resort, for when repayment of debt is impossible. But exempting up to $250,000 just for a home provides more protection for a debtor's assets while leaving a creditor with nothing. (Tens of thousands of dollars in personal property can be exempted as well) The bill would lessen the value of creditors' property rights and make bankruptcy an easier and more comfortable solution for individuals who have taken on too much debt.

The second problem is with the underlying justification for the bill, expressed in its Statement of Purpose, which says, "This legislation adjusts the statutory homestead limits allowed for debtors to respond to inflation."

This cap was raised by 75% from $100,000 to $175,000 just three years ago, yet Senate Bill 1118 is now proposing an additional 43% increase, ostensibly to cover just three years of inflation. If this bill passes, the cap will have increased by 150% from where it was at the beginning of 2020. 


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