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Chapter 11 and Chapter 13 bankruptcy will not involve any liquidation of your property. You can keep your nonexempt property as long as you are able to pay the value of the property.

If you are filing Chapter 7 bankruptcy, some of your property may be liquidated for debt repayment, but it is often the case that most of your property is either exempt from this step or will not sell for enough money anyway. Some examples of property exempt from Chapter 7 liquidation in North Dakota include:

• up to $100,000 of your equity in your home;
• up to $1,500 for any tools you use in your trade or profession;
• up to $100,000 in each tax-exempt retirement account;
• public benefits (e.g., Social Security, unemployment, veterans’ disability benefits, workers’ compensation);
• personal items like family photos, books comprising the family library, etc.;
• life insurance benefits;
• up to one year’s provisions to support your family.

Not all your debts will be discharged in bankruptcy, but all your remaining unsecured debts like credit card debt, medical bills, personal loans, and unpaid utility bills will be erased upon the completion of your bankruptcy case (or upon the completion of your repayment plan). Note that debts like child support and alimony arrears, as well as tax obligations, will not be discharged automatically. Student loan debts will also not be automatically discharged in bankruptcy, and you will need to file a request with the bankruptcy court in order to discharge these debts.

Bankruptcy is a common debt relief option that can offer significant protections to debtors. For instance, filing for any chapter of bankruptcy will usher in the “automatic stay,” which stops collection actions against you for a period of time. As a result, creditors and collectors will be prohibited from pursuing lawsuits against you, foreclosure, wage garnishment, and other harassing behavior. A successful bankruptcy case will also discharge a significant amount of your debts that can allow you the necessary leeway to rebuild your financial health.

Chapter 7 is known as “liquidation” bankruptcy and involves liquidating, or selling, your nonexempt assets and using the proceeds to pay back your creditors. Chapter 11 and Chapter 13 are “reorganization” bankruptcies that do not require you to liquidate any of your assets. Chapter 11 is for individuals and businesses, while Chapter 13 is available only to individuals with a regular disposable income. Both involve developing a plan for repaying creditors over time (typically 3-5 years for Chapter 13 repayment plans).

Each type of bankruptcy has its own eligibility requirements. Anyone can file for bankruptcy if they meet these requirements, and it is likely the case that if you don’t qualify for, say, Chapter 7, you qualify for Chapter 13.

Here’s a brief summary of the eligibility requirements for each chapter of bankruptcy:

• Chapter 7 – Your gross household income is less than North Dakota’s median income for your family size (this is called the “means test”) or, if your income is higher than the state median, you do not have enough disposable income to pay into a Chapter 13 repayment plan.
• Chapter 13 – You are not a business, and you do not exceed the established debt limits (view these limits here). You should also demonstrate that you have a regular, steady flow of income that enables you to commit to your repayment plan.
• Chapter 11 – Most individuals and businesses are eligible for Chapter 11 if they do not pursue the above two options. Small businesses can pursue a simplified option through Subchapter V.