Although North Dakota has the 2nd lowest unemployment rate in the nation, they still have over 2 bankruptcy filings for every 1,000 residents. The economy has hit every state hard, and there are those struggling to make debt payments throughout the country. Those in North Dakota must understand the alternatives available to them, especially if they are considering bankruptcy. There are serious consequences to this step, and it should not be undertaken without the help of a knowledgeable bankruptcy attorney who can advise them about how to get the most legal benefits out of the process with the smallest damage to their assets and credit score.
Finding a Bankruptcy Attorney
There are numerous reliable and helpful lawyers who can assist those considering bankruptcy to find the appropriate solution. They are often recommended through the state bar association or other local legal organizations. Personal recommendations from friends or family can help locate a reliable representative. However, each debtor should do their own research, as well, concluding with a personal interview with several candidates before deciding on the attorney who will have access to a great deal of financial and personal information. In addition, it is important to have them submit an estimate of services and costs in writing to compare with other attorneys in the area.
Bankruptcy Options
While bankruptcy reforms of 2005 have made it much more difficult to qualify for this form of debt relief, it is important to know the options and make an informed decision about which is appropriate for the individual filer:
- For those who have few assets, and indeed, there are many these days who are considered to have “no assets,” Chapter 7 is the best choice. While some property may be liquidated in this type of bankruptcy, much can also be protected under federal or state exemptions. At the end of this procedure, most unsecured debts may be discharged, or erased.
- For those with significant assets they don’t want to see liquidated, or who have sufficient monthly disposable income to pay debts, but at a lower rate, Chapter 13 may be the best choice. Their finances are reorganized and a payment plan that is in the best interest of the creditors and meets the best efforts of the filer is established. At the end of this three- to five-year plan, most debts are either paid in full or discharged.
North Dakota Exemptions
The exemptions that Chapter 7 filers can take advantage of protect a number of types of property from liquidation. While both federal and state exemptions exist, North Dakota allows filers to claim only state exemptions, such as:
| Homestead | Up to $100,000 |
| Personal Property | Clothing; 1 year of food and fuel; burial plots; crops or grain raised on the debtor’s land; motor vehicles up to $2,950; personal injury or wrongful death recoveries up to $15,000; health aids; $3,750 in property for those single with no dependents and who don’t claim crops or grain |
| Wages | 40 times the federal minimum wage or minimum of 75% of disposable weekly earnings, whichever is greater |
| Pensions | Tax exempt retirement accounts; Traditional and Roth IRAs up to $1,095,000/person; disabled veterans’ benefits; simplified employee plans up to $100,000 each; total of pensions and insurance benefits cannot exceed $200,000 (no limit on that which is needed for support) |
| Public Benefits | Social Security; veterans’ benefits; public assistance; crime victims’ compensation; unemployment; survivor insurance and old age insurance benefits; worker’s comp |
| Tools of the Trade | Up to $1,500 of implements of trade, tools, and books |
| Insurance | Fraternal society benefits; some types of life insurance policies or proceeds |
Filing the Petition
Once the filer weighs the benefits versus the consequences of filing bankruptcy, if they believe this is the financial solution for them, they must first undergo credit counselling before filing their bankruptcy petition. It is often a short, one- to two-hour consultation to ensure that they understand how they got into financial trouble and if there are alternative solutions for their circumstances. If the debtor chooses bankruptcy, their lawyer often files the petition with the court, which appoints a bankruptcy trustee to oversee the process.
- The trustee determines if any property needs to be liquidated and which debts can be discharged, or erased.
- The trustee holds a 341 meeting, as described in section 341 of the bankruptcy code, at which the debtor answers questions under oath concerning their finances and assets. Creditors are invited, but not required, to come and ask questions as well.
- The Chapter 13 filer must have their repayment plan approved by the judge
- If the bankruptcy is approved, the filer must attend debt education classes
- Eligible debts are discharged for the Chapter 7 filer
· The Chapter 13 filer cannot have debts discharged until they complete their repayment plan, in three to five years.
