The Best Alternative To Bankruptcy In Alaska

According to the United States Bankruptcy Court for the District of Alaska, there were a total of 820 bankruptcy filings in Alaska in 2020. Of the 820 bankruptcy filings in Alaska in 2020, 616 were  Chapter 7 filings, which is a type of bankruptcy that allows individuals and businesses to discharge most of their debts. There were also 188  Chapter 13 filings, which is a type of bankruptcy that allows individuals to reorganize their debts and create a repayment plan. It’s worth noting that Alaska has a relatively small population compared to other states, so its bankruptcy statistics may not be directly comparable to other states. Additionally, the economic and financial conditions in Alaska may be different from those in other states, which can also impact bankruptcy filings.

Bankruptcy Chapters 7, 13 and 11 – What You Need to Know

According to the US Census Bureau, as of 2020, the median household income in Alaska was $78,394, which is higher than the national median of $67,521. However, Alaska also has a higher cost of living compared to many other states. In terms of debt, according to a report by Experian, as of 2021, the average consumer debt in Alaska was $28,202, which is higher than the national average of $24,090. This includes credit card debt, mortgage debt, and other types of consumer debt. Alaska’s total state debt was reported to be $2.1 billion as of June 2020, according to the State of Alaska Department of Revenue. This includes general obligation debt, revenue debt, and other types of debt.

Bankruptcy laws in Alaska

Bankruptcy laws in Alaska are primarily governed by federal law, specifically the United States Bankruptcy Code. However, there are also certain state-specific rules and regulations that apply to bankruptcy cases in Alaska. Some of the key provisions of the Bankruptcy Code that apply in Alaska include:

1. Chapter 7 Bankruptcy: This is the most common form of bankruptcy in Alaska, where individuals and businesses can discharge most of their debts. To qualify for Chapter 7 bankruptcy, individuals must meet certain income and asset requirements.
2. Chapter 13 Bankruptcy: This is another type of bankruptcy in which individuals can reorganize their debts and create a repayment plan. Chapter 13 bankruptcy is often used by individuals who do not qualify for Chapter 7 bankruptcy or who want to keep certain assets, such as a home or a car.
3. Exemptions: Alaska has its own set of bankruptcy exemptions, which determine what property an individual is allowed to keep during bankruptcy. These exemptions include property such as a primary residence, personal property, and certain retirement accounts.
4. Means Test: The means test is used to determine whether an individual qualifies for Chapter 7 bankruptcy or must instead file for Chapter 13 bankruptcy. The means test looks at an individual’s income and expenses to determine whether they have enough disposable income to pay back some of their debts.

It’s important to note that bankruptcy laws and procedures can be complex, and the best course of action will depend on individual circumstances. Bankruptcy should be a last resort. 

Things to keep in mind when considering business bankruptcy in Alaska

If you are considering business bankruptcy in Alaska, here are some things to keep in mind:

1. Bankruptcy should be a last resort: Filing for business bankruptcy should be considered a last resort after you have exhausted all other options, such as negotiating with creditors, cutting costs, and restructuring your business.
2. Types of business bankruptcy: There are two types of business bankruptcy, Chapter 7 and Chapter 11. Chapter 7 bankruptcy involves liquidating your assets to pay off your debts, while Chapter 11 bankruptcy involves reorganizing your business and creating a plan to pay off your debts over time.
3. Impact on your business: Filing for bankruptcy can have a significant impact on your business, including damage to your reputation, loss of customers, and difficulty obtaining credit in the future.
4. Eligibility requirements: To be eligible for business bankruptcy, your business must meet certain eligibility requirements, such as having a certain amount of debt and meeting certain income requirements.
5. Bankruptcy exemptions: Alaska has bankruptcy exemptions that allow you to protect certain assets from being sold, such as your home, vehicle, and retirement accounts.
6. Filing requirements: Filing for business bankruptcy can be complex and requires detailed documentation, such as financial statements, tax returns, and creditor information.

What debts are not discharged in bankruptcy?

While bankruptcy can help individuals and businesses eliminate or reduce many types of debts, there are certain debts that cannot be discharged or eliminated through bankruptcy. These debts are known as “nondischargeable debts” and include:

1. Certain tax debts: While some tax debts can be discharged in bankruptcy, others cannot. For example, tax debts that are less than three years old or tax debts that were incurred through fraud or willful evasion cannot be discharged in bankruptcy.
2. Student loans: In most cases, student loans cannot be discharged in bankruptcy, unless the debtor can prove that repaying the loan would cause undue hardship.
3. Debts incurred through fraud or willful misconduct: Debts that were incurred through fraud, embezzlement, or other types of intentional misconduct cannot be discharged in bankruptcy.
4. Domestic support obligations: Debts such as child support or alimony payments cannot be discharged in bankruptcy.
5. Fines and penalties: Fines or penalties imposed by government agencies or courts cannot be discharged in bankruptcy.
6. Debts for personal injury or death caused by the debtor’s intoxicated driving: Debts resulting from personal injury or death caused by the debtor’s operation of a motor vehicle while intoxicated cannot be discharged in bankruptcy.

How Bankruptcy In Alaska Affects Your Credit Score And Your Ability To Get A Loan In The Future

Filing for bankruptcy in Alaska can have a significant impact on your credit score. A bankruptcy filing will generally stay on your credit report for up to 10 years, depending on the type of bankruptcy filed. After filing for bankruptcy, it may be difficult to get approved for new credit or loans. Lenders may be hesitant to lend to you because of the risk that you may not be able to repay the debt.

Statute Of Limitations For Collections In Alaska

In Alaska, the statute of limitations for collections on most types of debts is three years. This means that creditors and debt collectors generally have three years from the date of the last payment or activity on the account to sue you for the debt. It’s important to note that the statute of limitations can vary depending on the type of debt. For example, the statute of limitations for written contracts in Alaska is also three years, while the statute of limitations for judgments is 10 years.

Cons Of Bankruptcy

While bankruptcy can provide relief from overwhelming debt and financial stress, there are also potential drawbacks and risks to consider. Some cons of bankruptcy are as follows:

1. Damage to Credit Score: As mentioned earlier, filing for bankruptcy can have a negative impact on your credit score. The bankruptcy filing will remain on your credit report for up to 10 years and can make it difficult to obtain credit or loans in the future.
2. Loss of Property: Depending on the type of bankruptcy filed, you may be required to sell some of your property to repay creditors. This can be a difficult and emotional process, especially if the property has sentimental or personal value.
3. Stigma and Emotional Toll: Filing for bankruptcy can be an emotional and stressful experience. Many people feel a sense of shame or stigma associated with bankruptcy and may experience depression, anxiety, or other mental health issues as a result.
4. Legal Costs and Fees: Filing for bankruptcy can be expensive, and you may incur legal costs and fees associated with the process.
5. Impact on Future Employment: Some employers may view bankruptcy negatively and may be hesitant to hire someone who has filed for bankruptcy.
6. Fraud and Misrepresentation: If you engage in fraud or misrepresentation during the bankruptcy process, you could face serious legal consequences, including fines and imprisonment.

Compare the Pros and Cons of Bankruptcy: Pros and Cons of Filing Bankruptcy

Why People Regret Filing Bankruptcy:

While bankruptcy can provide relief from overwhelming debt and financial stress, some people may regret filing for bankruptcy for a variety of reasons. Here are some of the common reasons why people regret filing for bankruptcy:

1. Damage to Credit Score: As mentioned earlier, bankruptcy can have a negative impact on your credit score and make it difficult to obtain credit or loans in the future.
2. Loss of Property: Depending on the type of bankruptcy filed, you may be required to sell some of your property to repay creditors. This can be a difficult and emotional process, especially if the property has sentimental or personal value.
3. Stigma and Emotional Toll: Filing for bankruptcy can be an emotional and stressful experience. Many people feel a sense of shame or stigma associated with bankruptcy and may experience depression, anxiety, or other mental health issues as a result.
4. Limited Access to Credit: Even after bankruptcy, it may be difficult to obtain credit or loans, and those that are available may come with high interest rates and fees.
5. Legal Costs and Fees: Filing for bankruptcy can be expensive, and you may incur legal costs and fees associated with the process.
6. Limited Career Opportunities: Some employers may view bankruptcy negatively and may be hesitant to hire someone who has filed for bankruptcy.

Will You Lose Your Home Or Car In Bankruptcy In Alaska?

Whether or not you will lose your home or car in bankruptcy in Alaska depends on a variety of factors, including the type of bankruptcy you file and the amount of equity you have in the property. Under Chapter 7 bankruptcy, also known as a liquidation bankruptcy, you may be required to sell some of your assets to repay creditors. However, Alaska has exemptions that allow you to protect certain assets from being sold, including up to $74,750 of equity in your primary residence and up to $3,775 of equity in your motor vehicle. If you have more equity than the exemption amount, the bankruptcy trustee may sell the property to repay your creditors. Under Chapter 13 bankruptcy, also known as a reorganization bankruptcy, you may be able to keep your home and car by creating a repayment plan that allows you to catch up on missed payments over a period of three to five years. You may also be able to reduce the amount of debt owed on your car or other secured debts by negotiating a repayment plan with your creditors.

How Does Bankruptcy In Alaska Affect Tax Debts?

Bankruptcy in Alaska can affect tax debts in different ways depending on the type of bankruptcy filed and the type of tax debt owed.

Under Chapter 7 bankruptcy, certain tax debts may be discharged, meaning that you will no longer be legally obligated to repay them. However, to qualify for discharge, the tax debts must meet certain criteria, including:

1. The tax debts must be income tax debts that are at least three years old.
2. You must have filed a tax return for the debts at least two years prior to filing for bankruptcy.
3. The tax debts must have been assessed by the IRS at least 240 days prior to filing for bankruptcy.

If your tax debts do not meet these criteria, they may not be eligible for discharge under Chapter 7 bankruptcy. 

Under Chapter 13 bankruptcy, you may be able to include tax debts in your repayment plan, allowing you to catch up on missed payments over a period of three to five years. 

What Happens If You Do Not Qualify For Bankruptcy In Alaska?

If you do not qualify for bankruptcy in Alaska, it may mean that you do not meet the eligibility criteria for filing under Chapter 7 or Chapter 13 bankruptcy. In this case, you may need to explore other options for managing your debt, such as debt settlement. Debt settlement involves negotiating with creditors to settle your debts for less than the full amount owed. 

Learn more: What Are Your Options When You Don’t Qualify for Bankruptcy

Why Debt Settlement In Alaska Is Better Than Bankruptcy:

1. Avoiding bankruptcy stigma: Debt settlement does not carry the same stigma as bankruptcy, which can be important if you are concerned about the long-term impact on your reputation.
2. Avoiding legal fees: Debt settlement may be less expensive than bankruptcy.
3. Maintaining some control: With debt settlement, you may have more control over the process and the outcome compared to bankruptcy, as you can potentially preserve some of your assets.

Bankruptcy vs. Debt Relief: What’s Right For You and How We May Be Able To Help

CuraDebt Is At Your Service

CuraDebt, a professional debt settlement firm, is a great alternative to bankruptcy. We have a team of debt professionals who are ready to help you better understand and potentially eliminate your debts. Contact us today for your free consultation. 1-877-850-3328

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