What Are the Alaska Bankruptcy Exemptions?

Why Are Exemptions Important in a Chapter 7 Bankruptcy in Alaska? 

Bankruptcy exemptions are very important because they help ensure you can keep essential property when you file your case. You’ll need to claim exemptions to protect your property when you file Chapter 7. If you don’t, or if you have non-exempt property, the bankruptcy trustee can sell the property and give the funds to your creditors. Though this is legally possible, it’s incredibly rare for Chapter 7 filers to lose any property during bankruptcy.

Does Alaska Allow Filers To Use Federal Bankruptcy Exemptions?

Yes. Alaska allows its residents to choose between the state and federal bankruptcy exemptions.

You can’t pick and choose among individual exemptions, but you do get to decide which set you want to use.

If you use state exemptions, you can supplement them with federal non-bankruptcy exemptions, which can help protect retirement accounts and other money benefits.

Note that you must have lived in Alaska for at least two years to get to choose between state and federal exemptions. If you recently moved to the state, you may be subject to other exemptions. To learn more, read Can I File For Bankruptcy After Moving To A New State? 

Which Is Better: Alaska’s Bankruptcy Exemptions or Federal Bankruptcy Exemptions?

This will depend on what property you own and most want to protect. Here’s a quick overview of state versus federal exemptions for some of the most important property types:

What Are the Alaska Bankruptcy Exemptions?

Alaska bankruptcy exemptions are used to protect three kinds of property:

• Real property such as a home or land

• Personal property such as your car or household items

• Money benefits or intangible property such as retirement accounts or public benefits

Real Property: The Alaska Homestead Exemption

The homestead exemption in Alaska is $54,000. This is the same whether you are single or married and filing jointly. This means you can protect up to $54,000 of equity in your primary residence. To figure out how much equity you have in your home, you’ll need to know the home’s current fair market value and what you still owe on the mortgage. Subtract what you owe on the home loan from the fair market value to get your equity amount.

Alaska’s homestead exemption is more generous than the federal homestead exemption, which is $27,900.

Source: Alaska Statutes § 09.38.010 and 11 USC § 522(d)(1)

Personal Property Exemptions

Exemption amounts listed here are for single filers. If you are married and filing jointly, you can double the exemption amount for each personal property category if you use the state exemption. To do so, both spouses must have an ownership interest in the property.

Here are some of the most common personal property exemptions in Alaska:

• $4,050 for household goods and clothing, books and instruments, and portraits and heirlooms

• $1,350 for jewelry

• $1,350 for pets

• $3,780 for tools of the trade 

The following items are fully exempt:

• Apartment or condo owners' association deposits 

• Burial plot for the individual or individual's family

• Necessary health aids for individual or dependent 

• Liquor licenses

• Permits for limited entry into Alaska Fisheries 

Source: Alaska Statutes §§ 09.38.020(b)(1)-(4), 09.38.015(b), 09.38.015(a)(5), 09.38.015(a)(4), 09.38.015(a)(6), and 09.38.015(a)(10)

Alaska’s Motor Vehicle Exemption

Alaska allows you to protect up to $4,050 of equity in a motor vehicle. If you own the vehicle free and clear, your equity will be equal to the car’s current market value, which you can find on sites like Kelley Blue Book. If you’re still financing the car, you can calculate your equity in it by subtracting what you still owe on the loan from the car’s current fair market value.

The federal motor vehicle exemption is a bit more generous at $4,450.

Source: Alaska Statutes § 09.38.020 and 11 USC § 522(d)(2)

Does Alaska Have a Wildcard Exemption?

No. Alaska doesn’t have a wildcard exemption for bankruptcy like most other states and like the federal government. A wildcard exemption usually allows you to protect any property that’s not otherwise protected by a state’s exemption, or you can add the wildcard amount to an existing exemption to increase its value.

There is a federal wildcard exemption of $1,475, plus any unused portion of homestead exemption up to $13,950.

Source: 11 USC § 522(d)(5)

Money Benefit Exemptions

Money benefits include retirement savings, pensions, government assistance, wages, and more.

Alaska law protects a portion of your wages from creditors. Each week, you can keep either 75% of your take-home pay or $473, whichever amount is greater. So, even if you make more than $473 a week, you're guaranteed to keep at least 75% of your paycheck.

The following are fully protected under Alaska exemptions:

• Child support distributed via a collection agency

• Alimony (to the extent wages are exempt)

• Tuition credits under advance college payment contract

• Crime victim reparations

Note that except for tuition credits, all these money benefits are also exempt under federal law.

Source: Alaska Statutes §§ 09.38.030(a), 09.38.030(b), 09.38.017, 09.38.015(a)(7), 09.38.015(a)(10), 09.17.020

Insurance Benefits

Alaska filers can also protect some insurance benefits with state exemptions. The below insurance benefits are protected up to the amount stated or in full:

• Unmatured life insurance policies and annuity contracts, up to $500,500

• Disability benefits for Alaska filers, protected in full

• Fraternal benefit society benefits, protected in full

Federal bankruptcy exemptions protect the following under insurance: 

• Life insurance payments from a policy for the person you depended on, needed for support, protected in full

• Life insurance policy loan value, in accrued dividends or interest, up to $14,875

• Unmatured life insurance contract, except credit insurance policy, protected in full

• Disability benefits, protected in full

Source: Alaska Statutes §§ 09.38.015(a)(3), 09.38.025(a), 09.38.025(c), 09.38.025(d), and 11 USC § 522(d)

Public Benefits

Alaska state exemptions also protect many public benefits in full, including:

• Unemployment compensation

• Alaska longevity bonus

• Prescription drug benefits for senior care, and Alaska benefits for low-income seniors

• Workers' compensation

• General relief assistance

• Assistance to blind, elderly, and disabled adults.

Similarly, under federal exemptions, the following public benefits are protected in full:

• Public assistance

• Social Security

• Veterans’ benefits

• Unemployment compensation

Source: Alaska Statutes §§ 09.38.015(a)(1), 09.38.015(a)(8), 09.38.015(a)(9), 09.38.030(f), 09.38.065, and 11 USC § 522(d)

Retirement Accounts and Pensions

Finally, both Alaska exemptions and federal laws offer protection for retirement accounts and pensions. The Alaska state exemptions cover the following pension benefits in full:

• Any pensions or retirement accounts for teachers, judicial and public employees, and elected officers

• ERISA-qualified benefits (deposited more than 120 days before filing)

• Medical savings accounts

• Pension benefits

Federal exemptions, by contrast, protect all types of retirement funds and accounts that are tax-exempt under IRC section 401, 403, 408, 408A, 414, 457, or 501(a) in full. Federal exemptions limit IRAs and Roth IRAs to $1,512,350 (excluding rollover contributions), but this limitation could be overruled by a judge in the bankruptcy court. 

Source: Alaska Statutes §§ 09.38.017, 09.38.019, 09.38.025(a), 09.38.025(c), 09.38.030(e), and 11 USC § 522(d)

Need Help Filing Chapter 7 Bankruptcy in Alaska? 

It’s important to have at least a basic understanding of exemptions and other technical elements of bankruptcy. But when it comes to filing your case, you don’t have to do it alone. Take our quick screener to see if you’re eligible to use our free filing tool. This tool has helped thousands of people file Chapter 7 bankruptcy and get a financial fresh start. Upsolve is a nonprofit, so our services are 100% free, and we have great reviews.

If you’re worried about how exemptions will apply in your case or which set you should choose to protect your property, you can also schedule a free consultation with an experienced bankruptcy attorney near you.