Understanding Alaska Bankruptcy Exemptions

Bankruptcy can be overwhelming and complicated. So understanding the laws and exemptions in your state is critical. This post will guide you through the key aspects of filing for bankruptcy in Alaska, including the exemptions available to protect your assets and the requirements you need to meet. Whether you’re considering bankruptcy or simply want to understand the process better, this information will help you better understand your options.

KEY POINTS

• Learning the Alaska Bankruptcy Exemptions to protect your assets.
• You must reside in Alaska 730-days to apply the state’s exemptions.
• Alaska allows you to choose between state or federal exemptions, so compare to see which is best for you.
• The tools of the trade exemption are important for business owners.
• Information on the bankruptcy trustee and the court system are provided.

How Many Bankruptcies Are Filed in Alaska?

For the year ending in 2023, 7,830 Chapter 7 bankruptcies were filed, of which 7,639 were for individuals. The remaining 191 were businesses. There were 1,664 Chapter 13 cases filed. Considering the generous homestead exemption in Alaska, it’s not surprising that more Chapter 7 bankruptcies were filed.

Alaska Bankruptcy Exemptions

Exemptions allow you to protect certain assets in bankruptcy, such as your home or other personal property. Each state has different exemptions, but by knowing your exemptions in advance compared to the value of your assets, you can understand what assets are protected. Let’s review the Alaska bankruptcy exemptions.

Requirements to File for Bankruptcy in Alaska

First and foremost, to file in Alaska, you must reside in the state and have lived there at least 91 days out of the last 180 days. However, you must reside in “The Last Frontier” for 730 days to qualify for the exemptions. If you have not lived in Alaska for 730 days, you would apply for bankruptcy exemptions from the state you resided in before. The blog post below explains in detail the exemptions when relocating.

Finally, the Bankruptcy Code in Section 522 requires that you have owned the home a total of 1,215 days for Alaska’s homestead exemption to apply.

• Where to File for Bankruptcy: Understanding Residency Requirements

If you are planning to relocate to or from Alaska, compare the bankruptcy exemptions of both states to determine which state better protects your assets. This will determine if you need to file sooner rather than later or do the reverse.

It’s important to note that while bankruptcy law is federal law, the Bankruptcy Code allows each state to decide whether it will have its own exemptions or use the federal exemptions. So, exemptions do vary per state. That’s why the residency issue is so important.

However, Alaska is unique because residents can choose between state and federal bankruptcy exemptions. You can’t pick and choose exemptions over specific assets, but you can decide which set of exemptions you want to use.

Applying the Bankruptcy Exemptions

The homestead exemption is $72,900 as of April 1, 2024. Note that most websites do not update the exemptions. I have seen this firsthand when researching for my bankruptcy law textbook. At times, even the state statutes need to be corrected. For example, as of today, the Alaska Legislature under Statute 9.38.010 still has the exemption amount at $54,00. So, my best advice is to triple-check everything.

Determining what amount of your equity is exempt would depend on the value of your home minus the mortgage. The average home value in Alaska is $362,098, according to Zillow. According to Mortgage News Daily, the average mortgage balance is $287,651. Subtracting those two figures leaves $74,447, and subtracting the homestead exemption results in $1,547. Usually, a trustee wouldn’t be interested in a minimal amount of nonexempt property.

Compare this to the federal exemption of $27,900 under 11 USC § 522(d)(1). In this case, there would be $46,547 in nonexempt equity, forcing you into Chapter 13 bankruptcy. So, of course, the Alaska bankruptcy exemptions are more beneficial in this case. 

• Chapter 7 vs Chapter 13 Bankruptcy: Car Loan Solutions

With nonexempt equity, such as the above example, would mean filing Chapter 13 bankruptcy to keep the home. Chapter 13 would allow the nonexempt portion to be paid back over 36-60 months.

Personal Property Bankruptcy Exemptions

Personal property also has exemptions, such as household goods, furniture, and clothing. Note that your personal property is valued at the fair market value, but I prefer to say “garage sale” value.

The personal property exemptions are $4,050, $1,350 for jewelry, and $1,350 for pets. As a pet lover, don’t freak out about your pets. Remember, it’s the current value of your pet. A trustee doesn’t want your dog or cat.

The Tools of the Trade Bankruptcy Exemption

The tools of the trade exemption is only offered in some states. It is a specific exemption that relates to the assets of a business. Many states use the personal property exemption for business assets. However, the tools of the trade exemption is a good way to protect your business and is an exemption under Alaska law. The exemption amount is $3,780.

Other Exemptions

I consider it important to point out that burial plots are exempt in Alaska. In Florida, my state, that is considered personal property. When it’s an elderly couple with limited means who have paid off their plot, this can be devastating. It’s my opinion that every state should protect burial plots. I’ve had one too many elderly couples lose their plots or, worse, lose a plot next to their deceased spouse.

Alaska’s Motor Vehicle Exemption

The Alaska motor vehicle exemption is $4,050. Remember to find out the value of your car and subtract any outstanding loan. You can use sites like Kelley Blue Book to estimate your car’s value.

• Great! The Bankruptcy Trustee Abandoned Your Car

For the bankruptcy trustees in Alaska, please follow this link.

If you need the contact information for the U.S. Bankruptcy Court District of Alaska, please click here:

Alaska’s statutes can be viewed via this link.

Below is my YouTube video discussing the Alaska bankruptcy exemptions.

Colleges and universities can purchase my bankruptcy law textbook directly from Routledge Publishing. For paralegals and students buying single copies, you can do so via Amazon Books. To access my YouTube channel, click this link.

Need to look for prior blog posts or other categories? Click the links below or use the search feature at the top of the page:

• Bankruptcy
• Your Wallet

Please note that the information on this site does not constitute legal advice and should be considered for informational purposes only.