Idaho Exemptions & Debtor’s Exam Process

Bankruptcy attorney Matt Christensen explains debtor’s exams and how they happen in Idaho State Courts. He also covers a list of exemptions that would apply to the collection of those judgments here in Idaho.

Below is a transcript of the video, formatted for readability. 

Hi, my name is Matt Christensen. I am a partner here at Johnson May. Today I am discussing debtor’s exams, how those happen in state courts in the state of Idaho, and then exemptions that would apply to the collection of those judgments.

Collecting Judgments as a Creditor

First, when I’m a creditor and I get a judgment against someone, I want to be able to collect that judgment. That’s the whole point of suing the individual so I can get my payment made. Once the judgment is entered, I can’t just immediately go start taking people’s assets and their things. There’s a specific process that the courts and the Idaho legislature require.

Issuing a Writ and Requesting a Debtor’s Exam

So I first have to get issued a writ, either a writ of execution or a writ of garnishment. A writ of execution is usually directed at a bank account or something specific that I’m asking the sheriff to go collect on my behalf. A writ of garnishment would be something like what goes to an employer that says, “Hey, 25% of this person’s paycheck should be paid to me rather than them.” So I have to go to the court first and get one of those writs issued.

Once the writ is returned by the sheriff and it is returned unsatisfied, meaning it didn’t pay the entire amount of the judgment, then I can request the court order the person to show up for a debtor’s exam. The debtor’s exam will be set at a specific date and time. It’s held at the courthouse. Usually, the process is the judge will come in, start the process, get the person sworn under oath, and then most of the time the judge will go ahead and leave. They may leave a recorder on sometimes the parties will just go out into the hallway and talk on a bench or in a conference room. But the person that’s put under oath has to answer questions about what assets they have, where they bank, who owes them money, that sort of thing. That then gives the creditor a roadmap of what assets there may be to collect.

Exemptions for Debtors

So in that circumstance, the debtor, the person who owes the judgment, is entitled to certain exemptions, and the exemptions are going to apply whether you are in a state court collection proceeding or in a bankruptcy case as well. The way the bankruptcy court works and the bankruptcy code works for the state of Idaho, Idaho has adopted or has opted into a state schedule of exemptions rather than using the exemptions that are found in the bankruptcy code. So the Idaho exemptions will apply both in Idaho state collections proceedings and in a bankruptcy case.

Unlimited Exemptions

Generally, the exemptions work to protect certain assets that a borrower or a debtor may have. There are some exemptions that will apply with no limit to the amount of the exemption. For example:

  • Social security income is generally exempt from creditors.
  • Retirement income, whether from a retirement plan or a qualified retirement account, is fully exempt with no limits.
  • Life insurance proceeds are 100% exempt with no limits.
  • Child support payments cannot be garnished.
  • Medical savings accounts, if set up and funded properly, are exempt without a significant limit.
  • Food storage and related containers are exempt up to 12 months’ worth.

Limited Exemptions

There are also exemptions that are limited in dollar amounts, such as:

  • Homestead exemption: A home or property owned is exempt up to $175,000 in value.
  • Vehicle exemption: A vehicle owned is exempt up to $10,000 in value.
  • Household goods exemption: Household goods are exempt up to a total amount of $7,500, with no one item being exempted over $1,000 in value.
  • Gun exemption: Each individual is entitled to a gun exemption for a gun valued up to $1,500.
  • Tools of the trade exemption: Tools used in one’s trade are exempt up to $10,000 in value.

Understanding the Exemption Caps

The key with limited exemptions is that the dollar amount is the cap. For example, if a home is valued at $400,000, and there is a homestead exemption of $175,000, there would be $225,000 in equity in the home that would not be exempt. It does not mean that the entire home is exempt, only the dollar amount of equity in the home.

Consult with an Attorney

These are some of the common exemptions that would apply to both collection proceedings and in a bankruptcy case. If you are a debtor being collected against or if you are a creditor that has a judgment you want to collect, those are things that we can assist you with, and we urge you to give us a call!