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Bankruptcy: North Dakota

Filing bankruptcy in North Dakota aims to achieve two things:  First, it gives debtors a chance to overcome crushing debt, and second it allows creditors to be repaid to the extent that the debtor’s property value or earnings permit. 1,595 bankruptcies were filed in North Dakota in 2010, ranking North Dakota 46th in the country for the number of bankruptcy filings per capita. 89% of North Dakota’s bankruptcy petitions in 2010 sought protection under Chapter 7 bankruptcy.

Filing Bankruptcy in North Dakota

Federal law governs bankruptcy proceedings in North Dakota, and as such all bankruptcy cases are filed in the US Bankruptcy Courts located in Bismark, Fargo, Grand Forks and Minot.  While federal courts have jurisdiction over bankruptcy proceedings, North Dakota law bars petitioners from using the exemptions listed in the U.S. bankruptcy code and instead must choose from exemptions listed under North Dakota state law. A North Dakota bankruptcy attorney can help debtors gain a full understanding of what personal property the exemptions permit the petitioner to keep in bankruptcy, and what must be sold.

Chapter 7 Bankruptcy, North Dakota

Chapter 7 bankruptcies in North Dakota are the most common bankruptcy filing.  Chapter 7 is best suited to petitioners who do not have significant assets such as investments or substantial equity in a home, for the reason that a Bankruptcy Trustee may liquidate personal property that isn’t protected by North Dakota’s bankruptcy exemptions. Liquidation occurs when the Trustee converts personal assets to cash for distribution to creditors. North Dakota’s Chapter 7 bankruptcy law allows debtors to keep some essential property and the exempt assets are strictly off-limits to creditors seeking repayment.

The vast majority of Chapter 7 cases are “no-asset” cases where no property is taken.

North Dakota Bankruptcy Exemptions

North Dakota bankruptcy law designates specific property exemptions that permit debtors to keep certain personal property and assets so they may move forward from bankruptcy as productive members of society.  This means the creditors cannot force debtors to sell the shirt off their back.  Bankruptcy in North Dakota permits petitioners to choose exemptions only from the state list.

Property exemption amounts are subject to change, so it is recommended that individuals or couples considering bankruptcy seek the counsel of a North Dakota bankruptcy attorney and discuss the options open to them.  North Dakota bankruptcy exemptions include:

North Dakota Homestead Exemption

  • $80,000 total: Real property, house trailer or mobile home (Husband and wife may not double)

North Dakota Personal Property Exemption

  • Payments to debtor or to individual of whom debtor is a dependent, on account of bodily injury or financial loss to $18,450
  • $1,200 total: Motor vehicle; or $32,000 for vehicle that has been modified to accommodate owner’s disability
  • Crops or grain raised by debtor on 160 acres where debtor resides
  • Food and fuel to last 1 year
  • Professionally prescribed health aids for the debtor or a dependent
  • $100 total: Bible, schoolbooks and other books
  • Clothing and family pictures
  • Burial plots, church
  • $7,500 total: Personal injury recoveries
  • $7,500 total: Wrongful death recoveries
  • Insurance proceeds for exempt property
  • Non-head of household not claiming crops or grain may claim $2,500 of any personal property
  • Head of household not claiming crops or grain may claim $5,000 of any personal property or:
  • $1,000 total: Books and musical instruments
  • $1,500 total: Household and kitchen furniture, beds and bedding
  • $1,000 total: Library and tools of professional, tools of mechanic and stock in trade
  • $4,500 total: Livestock and farm implements

North Dakota Wage Garnishment Exemption

  • 75% of disposable weekly earnings or 40 times the federal minimum wage, whichever is more (Low-income debtors may be authorized for more)

North Dakota Public Benefits Exemption

  • Public assistance
  • Social Security
  • Old age and survivor insurance program benefits
  • Workers’ and Unemployment compensation
  • Crime victims’ compensation

North Dakota Insurance Exemption

  • Fraternal benefit society benefits
  • Any unmatured life insurance contract owned by the debtor, other than a credit Life insurance proceeds payable to deceased’s estate, not to a specific beneficiary
  • life insurance contract
  • $100,000 per policy: Life insurance surrender value, if beneficiary is insured’s dependent and policy was owned over 1 year prior to filing for bankruptcy; limit does not apply if more needed for support

North Dakota Pensions and Retirement Savings Exemption

  • Public employees deferred compensation
  • Public employees pensions
  • Disabled veterans’ benefits, except military retirement pay
  • $100,000 per plan: ERISA-qualified benefits, IRAs and Keoghs; no limit if more needed for support; total exemption (with life insurance surrender value) cannot exceed $200,000
  • Payments from an ERISA-qualified stock bonus, profit-sharing, annuity or similar plan, to extent necessary for support

North Dakota Miscellaneous Exemption

  • Child support payments
  • Alimony, child support needed for support of debtor and dependents

North Dakota Wild Card Exemption

  • $7,500 total: Any property, in lieu of homestead

Chapter 13 Bankruptcy, North Dakota

In 2010, 11% of petitioners filed for protection under Chapter 13 bankruptcy in North Dakota.  Filing Chapter 13 bankruptcy in North Dakota starts a financial reorganization process in which a court-appointed Trustee negotiates with creditors and implements a 3-5 year repayment plan using the debtor’s future earnings to repay creditors.  Chapter 13 petitioners in North Dakota keep most or all of their property.

How to File Bankruptcy in North Dakota

Qualifying for property exemptions should be a primary factor in deciding whether to file for bankruptcy protection from creditors. The aim is to protect major assets and discharge debts. Because each bankruptcy case is unique, a North Dakota bankruptcy attorney can advise debtors of their financial choices concerning Chapter 7 and Chapter 13 bankruptcies.

Bankruptcy Attorney: North Dakota

It is the bankruptcy petitioner’s obligation to know their rights and responsibilities as a debtor.  A North Dakota bankruptcy attorney can simplify the language and procedures, particularly in terms of federal laws and exemption systems.  The counsel and support of a North Dakota bankruptcy attorney is vital to anyone facing the complex and stressful process of personal bankruptcy.