Have you ever listened to a song or piece of music and felt free? Truly free, as if you could fly? For those struggling under the weight of massive debt through medical, credit card or mortgage bills, free is a feeling that feels so very far away. With a Chapter 7 bankruptcy, you may be able to regain your freedom, starting over fresh with little to no debt.
All about Bankruptcy – Chapter 7
Bankruptcy allows those who are struggling with financial burdens to break free from their problems and say goodbye to bad debt forever. Some common reasons individuals or families file for bankruptcy include:
- Mounting medical bills
- Job loss
- Creditor harassment
- Pending foreclosure or short sale
- Threat of Vehicle Repossession
- Living paycheck to paycheck
- Unable to make minimum payments on credit cards
A Chapter 7 bankruptcy is known as a liquidation bankruptcy or a “straight bankruptcy.” This means all personal property, assets, and debts are liquidated in a bankruptcy. While you will still be able to keep some assets, the majority of your debt will be wiped away.
There might be some debt, such as secured loan on a house or car that you will want to retain or reaffirm. As you work with a bankruptcy attorney to prepare your financial documents for court (a petition) he/she will outline what debts you can reasonably afford due to your present financial circumstances.
From the time you file until your case is discharged, a Chapter 7 bankruptcy will last anywhere from three to six months. Most of the work will be handled by your bankruptcy attorney, but you will be required to attend court, for a “Meeting of Creditors.” Typically a representative for all your creditors called a Trustee will be present, along with a judge, and your attorney. The meeting will last just a few minutes. You will be asked a couple of basic “yes or no” type questions and then you will be on your way.
The Median Income Level
In order to qualify for a bankruptcy, debtors must fall at or below the median income level for the state they live in. Each state has its own income level. If you exceed this amount, you still may be able to file for bankruptcy, but you will need to supply additional documentation and pass a means test. This test is a series of calculations that have been instituted by the Bankruptcy Court to determine that you qualify for bankruptcy and that your financial situation reflects one of hardship.
For residents filing bankruptcy, Chapter 7, the income level is as follows:
- Single Individual—$41,443
- Family of Two (or married couple)—$56,411
- Family of Three—$69,328
- Family of Three—$69,328
- Family of Four—$79,647
If your family is larger than four, you must add an additional $7,500 per person to your income level. These amounts may change to reflect inflation.
Filing a Petition
For North Dakota residents that qualify for a bankruptcy the next step is to file your petition with the court. You need to supply your bankruptcy attorney with accurate information about your finances so that your petition will not be dismissed. Typically an attorney will as for the following information:
- Last six months of pay stubs (for both you and your partner, if filing jointly)
- Last year’s filed tax returns
- A complete list of creditors (including vehicle and home loans, second mortgages and any liens)
- Information on a judgment, frozen bank account or garnishment
As soon as you file your petition, all creditor calls will stop, garnishments will lift, and foreclosures will halt. It is against federal bankruptcy law for any creditor to contact you to collect a debt after you have filed. You should contact your bankruptcy attorney if you continue to receive harassing calls.
Keeping Assets and Personal Property
In some states, bankruptcy law allows the use of both federal and state exemption laws to apply to specific bankruptcies. However, North Dakota only allows state exemption laws to apply to Chapter 7 bankruptcy petitions. The good news is that these exemption laws allow you to keep nearly all of your personal property as well as a number of other cash assets and physical property.
North Dakota exempt assets and property include:
- A Home—Up to $100,000 in value is exempt for any primary residence (including mobile homes, condos, and other property)
- Wages—75% of all wages are exempt not including taxes
- 100% of Fraternal Benefits Society benefits
- 100% of available money in a life insurance policy payable to deceased or an estate
- 100% un-matured life insurance
- 8,000 worth of aggregate interest in a life insurance policy
- 100% life insurance payments
- Pensions and Benefits
- 100% pensions or annuities relating to retirement, death or disability
- 100% in pension Interest for Foreign Service employees
- 100% Social Security benefits
- 100% Public Safety officers’ death benefits
- 100 Veterans administration benefits
- Personal Property—Up to $7,500 worth in personal property
- Motor Vehicle—a vehicle worth $2,950 or less is exempt. If you are disabled that amount increases to $32,000.
Note that exemption amounts may change from year to year. It’s important to contact your attorney or the Bankruptcy Court for current exemption laws.
You deserve to feel just as free as anyone else. Hanging on with credit debt will just make you miserable. Contact your North Dakota bankruptcy attorney today to find out how you can set yourself free from debt. Even if you don’t qualify for a Chapter 7 bankruptcy, other options, such as Chapter 13 may be available for you.
North Dakota Bankruptcy Court
Quentin N. Burdick United States Courthouse
655 First Avenue North, Suite 210
Fargo, North Dakota 58102
Phone: (701) 297-7100