North Dakota bankruptcy laws: What are the Laws Regarding Bankruptcies in the State of North Dakota
If you are an individual planning to file for bankruptcy from the state of North Dakota, it helps to know fully what to expect before you start the process. The federal court governs bankruptcy laws across the U.S.; however, there are laws within each state that provide a certain amount of leniency to debtors. If you are worried about whether you will lose your property and other assets when you are declared bankrupt, this might not necessarily be the case. Here’s a closer look at how the North Dakota bankruptcy laws that govern the state can protect you – but first a quick look at the five types of bankruptcy and what you are eligible to file under.
There are five types of bankruptcy:
- Chapter 7: Also known as straight bankruptcy for individuals and businesses
- Chapter 9: Municipal bankruptcy
- Chapter 11: Rehabilitation or reorganization
- Chapter 12: Rehabilitation for farmers and fishermen
- Chapter 13: Rehabilitation and a payment plan for individuals
- Chapter 15: International cases
This article will concentrate on the laws about an individual applying for bankruptcy. The first step when planning to file for bankruptcy is to understand the type of bankruptcy (chapter) through which you will be eligible to file. As mentioned earlier, individuals will either fall into Chapter 7 or the Chapter 13 category.
Chapter 7 of the North Dakota bankruptcy laws
This is for individuals and business that do not have any means to pay back debts. Under Chapter 7, you can request the court to wipe out all debts and declare you as bankrupt. In return, you must forgo all your property except exempted property that the law allows you to hold onto.
You are exempted on any equity you have in property and automobiles. The State of South Dakota allows you to hold onto property and automobiles if you have been in the habit of paying off your mortgage and automobile loans on time and guarantee to continue to do so for the rest of the mortgage/loan period.
If the exemptions do not cover the equity, the bankruptcy trustee may decide that the property be liquidated and the money be distributed among the creditors.
Married couples can jointly file for bankruptcy.
Chapter 13 of the North Dakota bankruptcy laws
If you are not eligible to apply for bankruptcy through Chapter 7, you might be required to pay off part or all of your debt through Chapter 13. In this case, an individual will in all probability be able to pay off part of his debts through his future income. A debtor can propose to pay off his debts over a three- to five-year period.
Chapter 13 offers several advantages when you apply for bankruptcy, provided you stick to the new repayment plan that you have agreed on. For example, you stop accruing interest on your tax debt; you can pay off pending dues on your mortgage and automobile loans, and retain your exempt property which would otherwise risk house foreclosure.
If you possess property that is not exempted (non-exempt property) that you would like to retain, you must be able to pay your bankruptcy trustee a sum that is equal to the value of this property.
Non-dischargeable debts cannot be discharged by either Chapter 7 or Chapter 13. The liabilities that fall under this category include:
- Child support, money, and other family obligations
- Student loans
- Fines for violating the law
- Income tax and all other tax debts
- Debts for causing personal injury or death due to negligent driving and intoxication
- Debts not listed in the bankruptcy case unless the creditors of that debt are aware of your plans to file for bankruptcy.
The state of North Dakota also allows you to ask for federal exemptions as well as state exemptions.