Alaska Bankruptcy Guide: Exemptions, Eligibility, and Filing

Alaska’s bankruptcy laws give its residents the chance to clear their debts and get a fresh start while protecting needed personal property and home equity. The bankruptcy process stops creditor collections and eliminates unsecured debt.

Alaska gives debtors the option of choosing between federal exemptions and Alaska state exemptions in bankruptcy cases. Which one you select depends on your circumstances and the property you need to protect. This article reviews the alternatives and types of bankruptcy most Alaska residents consider when facing bankruptcy.

Alaska Bankruptcy Law

To file for bankruptcy under Alaska law, you must meet a few basic requirements. If you plan to use Alaska bankruptcy exemptions, you must have lived in the state for 730 days (two years) prior to filing for bankruptcy. Otherwise, you must use either your previous state’s exemptions or federal exemptions.

Before filing for any bankruptcy, you must complete a mandatory credit counseling course within 180 days of filing. Approved credit counseling agencies can be found on the Bankruptcy Trustee website. After discharge, you will need to take a financial management course.

Alaska follows the Federal Rules of Bankruptcy Procedure and the Federal Bankruptcy Code for most bankruptcy proceedings. Bankruptcy cases are filed in the U.S. Bankruptcy Court of the District of Alaska in either Anchorage, Juneau, or Fairbanks. The filing fees are typically $338 for Chapter 7 and $313 for Chapter 13. You may request installment payments or a fee waiver. If you use an attorney, it may be possible to make installments through the attorney’s fee.

Debtors should consult a bankruptcy attorney when deciding what type of bankruptcy to file. There are two basic types of consumer bankruptcy for most individual filings. Let’s take a closer look at each one.

Chapter 7 Bankruptcy

A Chapter 7 bankruptcy, also called a liquidation bankruptcy, is often used by debtors who have unsecured debts like medical bills and credit card debt. In Chapter 7, a bankruptcy trustee takes charge of your personal assets and sells any non-exempt property to pay off creditors. At the end of the process, the bankruptcy judge discharges any remaining debt.

To qualify for Chapter 7, you must pass a means test. If your annual income is less than the median annual income in Alaska, you automatically qualify. For other applicants, the court looks at income and monthly living expenses to determine eligibility. The median annual income varies by location and is adjusted by the U.S. Department of Justice’s Bankruptcy Trustee Program.

Chapter 13 Bankruptcy

In a Chapter 13 bankruptcy, also known as reorganization, debtors work with the bankruptcy trustee to develop a repayment plan. Debtors must have enough disposable income to pay their creditors and cover their living expenses for three to five years. The repayment plan allows debtors to keep their property while paying off their unsecured debts.

As long as the debtor has stayed current on their payment plan, the judge discharges any remaining deficiencies at the end of the process. Chapter 13 bankruptcy is often used in foreclosures to allow debtors to eliminate excess unsecured debt so they can begin paying their mortgages.​

Automatic Stay

Both types of bankruptcy begin with an automatic stay. The stay immediately halts all creditor collection activities, including:

• Foreclosure and repossession
• Eviction (in some instances)
• Phone calls, texts, and emails
• Wage garnishment
• Lawsuits

The automatic stay begins as soon as you file the bankruptcy petition. For Chapter 13 bankruptcies, it remains in place throughout the repayment plan if you stay current on your payments. For Chapter 7 bankruptcies, it usually lasts for at least 90-120 days, unless a creditor files a motion for relief.

Alaska Bankruptcy Property Exemptions

Property exemptions let you protect some of your property from the bankruptcy trustee and creditors during the bankruptcy proceeding. In Chapter 7, the trustee will sell your assets to pay off your creditors unless they are exempt from sale. Alaska state statutes let homeowners exempt up to $72,900 in home equity for their primary residence. In addition, you may exempt:

• Retirement plans and pensions: Unlimited
• Household goods, clothing, and books: Up to $4,050 in total
• Pets: Up to $1350 in total
• Motor vehicle: Up to the value of $4,050

Alaska residents may choose the federal exemptions instead, but cannot mix and match. Alaska has a higher homestead exemption, but a lower personal property exemption. If you have not lived in Alaska for 730 days, you must choose between your prior state or federal exemptions.

Debtors should seek legal advice when making their decisions about bankruptcy filing. A Bankruptcy is a serious undertaking, so speaking to an Alaska bankruptcy attorney before filing is a good idea.

Non-Exemptions in Bankruptcy Cases

Not every debt can be part of a bankruptcy filing. Debtors cannot exempt:

• Student loans (with a few exceptions)
• Mortgages
• Tax liens
• Child support and alimony arrearages

In Chapter 13, your payment plan will pay off some of these debts. In Chapter 7, you will still have these debts after your discharge. A bankruptcy discharge only clears unsecured debt.

Get Legal Advice From an Alaska Bankruptcy Attorney

In addition to the complex state and federal rules surrounding bankruptcy, there are local bankruptcy rules about how cases must be filed. An Alaska bankruptcy lawyer can advise you on how to file your case, ensure that you get all the exemptions you need, and be there for any court hearings and trustee meetings. Before filing for debt relief, contact an Alaska bankruptcy attorney for advice.