{"id":286868,"date":"2021-04-13T09:27:16","date_gmt":"2021-04-13T14:27:16","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-law\/bankruptcy\/bankruptcy-laws-by-state\/north-dakota-bankruptcy-exemptions-and-law.html"},"modified":"2021-04-14T13:16:22","modified_gmt":"2021-04-14T18:16:22","slug":"north-dakota-bankruptcy-exemptions-and-law","status":"publish","type":"page","link":"https:\/\/www.findlaw.com\/bankruptcy\/bankruptcy-laws-by-state\/north-dakota-bankruptcy-exemptions-and-law.html","title":{"rendered":"North Dakota Bankruptcy Exemptions and Law"},"content":{"rendered":"\n
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North Dakota Bankruptcy Exemptions and Law<\/h1>\n
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\n By J.P. Finet, J.D.<\/a> | Legally reviewed by Bridget Molitor, JD<\/a>\n | Last updated\n
\n \n <\/i>\n Legally Reviewed\n <\/summary>\n\n
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This article has been written and reviewed for legal accuracy, clarity, and style by FindLaw\u2019s team of legal writers and attorneys<\/a> and in accordance with our editorial standards<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n\n

\n \n <\/i>\n Fact-Checked\n <\/summary>\n\n
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The last updated date refers to the last time this article was reviewed by FindLaw or one of our contributing authors<\/a>. We make every effort to keep our articles updated. For information regarding a specific legal issue affecting you, please contact an attorney in your area<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n<\/section>\n

The decision to file for bankruptcy is often a difficult one. In today’s society, people fear that filing for bankruptcy will be viewed as a sign of failure by their friends, families, and business associates. However, filing for bankruptcy is often the only way forward if you have gotten into debt over your head and see no route to paying it off.<\/blockquote>\r\n

Bankruptcy will stop the harassing phone calls from creditors. It will stop lenders from foreclosing on your home. It will give you time to resolve your financial problems in an organized manner. You may lose some of your assets during bankruptcy, but you should be nearly debt free and ready to move on with your life at the end of the case.
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<\/a>North Dakota Bankruptcy Law<\/h2>\r\n

Bankruptcy proceedings are conducted in federal courts under the U.S. Bankruptcy Code<\/a>, but the code allows states to enact their own rules on what property residents can protect from creditors. The North Dakota legislature has taken advantage of the opportunity to establish its own rules on exempt property<\/a>, which is the property that cannot be taken away from you in bankruptcy.<\/p>\r\n

If you file for bankruptcy in North Dakota you must use the state exemptions (more about these exemptions below). Some states allow you to choose between their state law exemptions and the federal exemptions<\/a> in the Bankruptcy Code, but North Dakota is not one of them.<\/p>\r\n

Chapter 7 vs. Chapter 13 Bankruptcy<\/h2>\r\n

Before we get into a discussion of North Dakota’s exemptions, it is important that you understand the two types of personal bankruptcy and the role exemptions play in the bankruptcy process.<\/p>\r\n

Chapter 7 bankruptcy is often called a \u201cliquidation bankruptcy" because when you file under this chapter, the bankruptcy trustee can take any property that is not protected by an exemption and sell it to repay your creditors. In return for giving up all of your non-exempt property, you will exit Chapter 7 free from nearly all of your debts. However, the benefits of Chapter 7<\/a> are only available to those whose income falls below a specified level.<\/p>\r\n

Chapter 13 bankruptcy is available to people who have a steady income. It lets them restructure their debts to pay them off over three to five years. These payments are made under a court-approved plan that will sometimes eliminate part of your debt. Another benefit of filing under Chapter 13<\/a> is that if you own a home you can often keep it.<\/p>\r\n

The Automatic Stay Protects You From Creditors<\/h2>\r\n

One of the most powerful tools you will have at your disposal in any bankruptcy case is the automatic stay<\/a> the court will grant you when you file. Regardless of whether you file under Chapter 7 or 13, the stay will protect you from creditor collection actions, including harassing phone calls, foreclosure, and lawsuits.<\/p>\r\n

The purpose of the stay is to give you the breathing room you need to resolve your debt problems in an orderly manner. If one of your creditors violates the stay and contacts you in an attempt to collect its debt, the court may make the creditor pay damages, including attorneys’ fees.<\/p>\r\n

Secured vs. Unsecured Debt<\/h2>\r\n

The most important factor in determining how your debt will be treated in bankruptcy will be whether it is classified as secured<\/a> or unsecured<\/a>. The designation matters because the two types of debt are treated differently in bankruptcy and may be a factor in which type of bankruptcy you choose.<\/p>\r\n

Unsecured Debt<\/h3>\r\n

You have unsecured debt when a creditor has no right to repossess your property if you fail to pay. Nearly everyone who files for bankruptcy has at least some unsecured debt. The most common types of unsecured debt in bankruptcy cases are credit card debt, court judgments, and medical debt.<\/p>\r\n

Creditors that have no right to seize your property for unpaid debt have the least amount of leverage in bankruptcy. Therefore unsecured debt is the most likely to be eliminated in a Chapter 7 or 13 case. Nevertheless, there are some priority unsecured debts that cannot be discharged, like child and spousal support.<\/p>\r\n

Secured Debt<\/h3>\r\n

Secured creditors have the right to repossess your property for failure to pay. This type of debt is most often created when you take out a loan to purchase something expensive \u2014 like a house, boat, or car \u2014 and your lender retains the right to seize the purchased property if you fail to repay the loan. Home mortgages and car loans are among the most common types of secured debt.<\/p>\r\n

Unfortunately, your secured creditors retain the right to repossess your property after you have declared bankruptcy. The automatic stay may postpone any seizure, but your creditors can ask the court to lift the stay so they can repossess their collateral. Ultimately, that means you will either need to return the property or work out a payment plan with the creditor.<\/p>\r\n

How Secured and Unsecured Debt are Treated in Bankruptcy<\/h3>\r\n

In a Chapter 7 bankruptcy case, you can often discharge almost all of your unsecured debt after paying creditors a small fraction of what you owe, or nothing at all. Secured creditors are in a different position and you will need to do one of the following in a Chapter 7 case:<\/b><\/p>\r\n