Personal bankruptcy skyrockets in Idaho

Story Created: Nov 18, 2008 at 3:46 PM MST

Story Updated: Nov 21, 2008 at 5:56 AM MST By Kiersten Throndsen 2news.tv Boise, Idaho

BOISE - Everyone can relate to being stressed out about money. You can lose sleep, spend your days worrying. But now a growing number of people are turning to their last ditch effort to stay afloat: bankruptcy.

The number of people filing for bankruptcy is up more than 30 percent nationwide from this time last year and in Idaho, that trend is the same. But before you decide to make the choice there are some things to know.

Home foreclosures are up, the number of unemployed is up, and now so is the number of personal bankruptcy filings.

"It's very, very important that people realize that this is serious business," said Jake Peterson, a bankruptcy attorney in Boise.

Peterson says his business is booming but his clients are taking a big financial blow.

"They realize looking forward in the future they won't be able to make those house payments and so that's very disheartening," said Peterson.

Here's what's happening in Idaho:

In October of 2007, 336 Idahoans filed for personal bankruptcy. Compare that to this October where 498 people filed, and that number is up almost 50 percent. More than half of those filings are from the Boise area.

"That's scary," said Paul Murray, a Boise resident.

When asked if Tanner Allen, another Boise resident, knows anyone who has filed for bankruptcy, he said: "My parents."

Why? "They couldn't afford to pay for the house."

But not everyone who files gets all of their debt wiped out. Peterson says if someone makes more than the median income for the county they live in, they'll likely have to file for chapter 13 which means they'll still owe money.

"They'll have to pay back money based on the difference between their income and expenses for a term of 60 months," he said.

Bankruptcy stays on a persons credit report for 10 years. While people may still be able to get a loan, interest rates may be higher and down payments larger.

"If you're concerned about your credit score, maybe you shouldn't file bankruptcy," said Peterson.

But he says if the rising numbers prove anything, filing doesn't come with the same stigma it use to, after all, almost 500 people for the month of October are in the same boat.

Something else to note if you're looking to file bankruptcy is that filing has no affect on certain types of debt including alimony, child support, taxes and student loans.