New Hampshire Bankruptcy Exemptions and Law
If you are a New Hampshire resident and in debt over your head, bankruptcy could protect you from creditors while you pay off or eliminate your debt. Bankruptcy offers people an option for ridding themselves of overwhelming debt and starting over without worrying about being harassed or sued by bill collectors. Additionally, New Hampshire has state laws in place that let residents protect some or all of their assets from creditors during bankruptcy.
The U.S. Bankruptcy Code is a federal law that governs bankruptcy. However, states can choose to write their own laws regarding what property their residents can protect from creditors. New Hampshire has implemented its own rules on exempt property, which is property you can keep to help you get on with your life after bankruptcy.
New Hampshire will let you choose between the federal exemptions provided in the Bankruptcy Code and its state law exemptions. You are free to choose the system that works best for your financial situation, but you will need to stick with one system because you can't pick and choose on an exemption-by-exemption basis.
To better understand the role exemptions play in the bankruptcy process, it helps to be familiar with the two types of personal bankruptcy:
- In a Chapter 7 ("liquidation") bankruptcy you must turn over unexempt property to a bankruptcy trustee who will sell the property and use the proceeds to pay your creditors. Exemptions can play a large role in Chapter 7 filings because you will often lose most of the property that is not covered by an exemption. In return for giving up your nonexempt property, you will usually exit bankruptcy free from nearly all of your debt. But you must first meet strict income thresholds to qualify.
- A Chapter 13 bankruptcy differs in that instead of liquidating assets, people with a steady source of income can enter into a 3-5 year payment plan to pay off their debt. The bankruptcy court must approve the plan, which can sometimes involve lowering the interest you pay. Chapter 13 is popular with homeowners because they can often keep their homes.
One of the most important benefits you will enjoy if you file under either chapter is the automatic stay issued by the court when you file. The stay stops almost all creditor collection activity, including foreclosures and court cases. This prevents collection agencies from harassing you and gives you the breathing room you need to resolve your debt problems.
Secured vs. Unsecured Debt
When you file for bankruptcy your debts will usually be categorized as secured or unsecured. Chapter 7 and Chapter 13 treat debt differently. Which type of bankruptcy you file will determine how much debt you can eliminate.
Your debt is unsecured when a creditor cannot take your property for failure to pay. Common examples of unsecured debt include credit cards and medical debt.
Unsecured debt is the most likely to be eliminated through bankruptcy. Even some unsecured debt, though, cannot be eliminated. Courts will not discharge unpaid child support, for example.
A security interest means that the lender can take back the property if you fail to pay. The most common types of secured debt are mortgages and your car loan. Secured creditors are in a better position during bankruptcy. You will usually need to give up the property or work out a payment plan with the creditor to keep it.
How Bankruptcy Treats Unsecured Debt
Generally, Chapter 7 bankruptcy allows you to discharge most of your unsecured debt. However, secured debt is treated differently and is rarely eliminated in a Chapter 7 case.
In a Chapter 13 bankruptcy, the bankruptcy court may reduce or restructure your unsecured debt. Your mortgage payments will not be included in the plan and you will continue to make those payments separately, but the trustee may negotiate a payment agreement with the lender if you are behind on your payments.
In Chapter 13, unsecured creditors are usually paid with the disposable income that is left over after you have repaid your secured creditors. Any unsecured debt not paid under the plan is discharged when the plan has finished.
To file under Chapter 7 in New Hampshire you must show that your income is low enough to qualify. This is usually done by using one of two means tests.
The first means test is simple: If your household income is less than the median household income for similarly sized households in your state, you qualify. For example, U.S. Census data shows that the median income for a three-person household in New Hampshire was $106,627 as of November 2020. That means that if you live in a three-person household that has less than $106,627 in annual income, you will qualify to file under Chapter 7 in New Hampshire.
If your household income is above the New Hampshire median you can still qualify to file under Chapter 7 based on your disposable income. Your monthly disposable income is calculated by subtracting your monthly expenses from your monthly income. If the calculator shows that you have little disposable income each month, you can file under Chapter 7.
To file under Chapter 13, you will need to show that you have a steady income and unsecured debt of no more than $419,275. Your secured debt cannot total more than $1.26 million.
New Hampshire's exemption system may be used by residents who file for bankruptcy in the state. If your income falls within one of the exemptions, you can protect it from creditors during bankruptcy and use it to start over when you leave bankruptcy.
When a married couple files for bankruptcy together in New Hampshire, each spouse is usually allowed to claim a complete set of exemptions if they both own the property.s
New Hampshire provides an exemption for up to $120,000 of the equity in your home. The exemption doubles to $240,000 if you are married, own the home together, and file for joint bankruptcy. The state defines homestead as a dwelling that you use as your principal residence, including manufactured housing.
You are allowed to keep up to 50 times the federal hourly minimum wage per week, you and your spouse's earned but unpaid wages, and designated payroll account deposits. Your minor child is also allowed to keep his or her wages.
Personal Property Exemptions
The following are fully exempt in New Hampshire:
- Clothing for your family's use
- Beds and beddings for your family
- Home health aids
- A pew in a place of worship and a burial plot
- Some farm animals and up to four tons of hay
The following are exempt up to $3,500 in combined value:
- A stove
- A refrigerator
- A sewing machine
The state provides for these additional exemptions:
- Up to $800 in books
- Up to $500 in jewelry
- Up to $5,000 of the insurance proceeds for exempt property that was lost or destroyed
- Up to $400 in food and fuel
Motor Vehicle Exemption
You can exempt up to $10,000 of the equity you have in a motor vehicle.
Tools of the Trade Exemption
New Hampshire lets you exempt up to $5,000 of the tools you use in your trade or occupation.
The state's wildcard exemption allows you to exempt up to $1,000 of property of your choosing. Additionally, you can utilize up to $7,000 of your unused exemptions for tools of the trade, a motor vehicle, furniture, or books.
Insurance Benefits Exemption
The following insurance benefits are exempt:
- Up to $5,000 of homeowner's insurance proceeds received for exempt property that was lost or destroyed.
- Life insurance proceeds that don't include cash surrender value
- Firefighter's aid insurance
- Fraternal benefit society benefits
Pension and Retirement Exemptions
Most pension and retirement plans are exempt in New Hampshire, including:
- Tax-exempt retirement accounts such as 401(k)s, IRAs, and defined benefit plans
- Public employee, police officer, and firefighter benefits
Public Benefit Exemptions
The following public benefits are exempt:
- Social Security benefits
- Unemployment compensation
- Workers' compensation
- Aid to the blind, aged, disabled, or families with dependent children (AFDC)
- Alimony and child support to the extent reasonably necessary for support
- Business partnership property
- Jury and witness fees
If you are filing for bankruptcy anywhere in the U.S. you must first complete a counseling course within 180 days of filing. The course is designed to help you assess whether you can pay your debts outside of bankruptcy.
If you plan to file under Chapter 13, you may be asked to prepare a repayment plan to file with the court as part of the course. You must file a course completion certificate along with your bankruptcy filing.
When you file without an attorney you will begin the process by finding and downloading the correct forms for the U.S. Bankruptcy Court for the District of New Hampshire. The instructions included with the form will let you know which additional forms and documents you will need to file.
It will cost you $338 to file for Chapter 7 bankruptcy in New Hampshire and $313 to file under Chapter 13. The fees are the same whether you represent yourself or hire an attorney. If you can't afford the filing fee, you can ask to pay in installments over 120 days. If you earn less than 150% of the poverty line you can request that the fee be waived.
Most people who file for bankruptcy choose to be represented by a lawyer. While each bankruptcy case is unique and fees can vary depending on where you live in the state, most New Hampshire bankruptcy lawyers will charge between $1,200 to $1,500 for a fairly straightforward Chapter 7 case. Since Chapter 13 cases are usually more complex, most attorneys will charge more to represent you in those cases.
Need Help Filing for Bankruptcy in New Hampshire?
If you are having trouble paying your bills, hiring an attorney to represent you in bankruptcy may seem like an expensive luxury when you could file on your own. However, even simple bankruptcy cases can involve complex court filings and meeting strict deadlines. An experienced local bankruptcy attorney will help guide you through the filing process, represent you in court, and negotiate with your creditors to ensure that you retain as many of your assets as the law allows.
Note: State laws are always subject to change through the passage of new legislation, rulings in the higher courts (including federal decisions), ballot initiatives, and other means. While we strive to provide the most current information available, please consult an attorney or conduct your own legal research to verify the state law(s) you are researching.
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