An Alternative To Bankruptcy In North Dakota
As of September 2021, North Dakota’s total state debt was approximately $4.4 billion, according to the US Debt Clock. This includes both general obligation debt and revenue debt. North Dakota has a relatively low debt per capita compared to other states. As of 2020, North Dakota’s debt per capita was $5,303, which ranked it as the 42nd highest state in the country in terms of debt per capita, according to the Tax Foundation. It’s worth noting that North Dakota has a unique financial situation due to its oil revenues. The state has a significant oil industry, which has generated large amounts of tax revenue for the state. This has allowed North Dakota to maintain a relatively low level of debt while still funding its government services. As of September 2021, North Dakota had a bankruptcy rate of 1.48 per 1,000 people, according to the US Courts. This was lower than the national average bankruptcy rate of 2.22 per 1,000 people. In terms of the number of bankruptcy filings, North Dakota had a total of 522 bankruptcy filings in the 12-month period ending on September 30, 2021. This included 383 Chapter 7 bankruptcies, 129 Chapter 13 bankruptcies, and 10 Chapter 11 bankruptcies, according to the US Courts.
Bankruptcy Laws in North Dakota
Bankruptcy laws in North Dakota are governed by federal law, specifically the Bankruptcy Code. The Bankruptcy Code is a set of federal laws that govern the process of bankruptcy and debt relief for individuals and businesses. In North Dakota, individuals and businesses can file for bankruptcy under either Chapter 7 or Chapter 13 of the Bankruptcy Code. Chapter 7 bankruptcy is also known as a “liquidation” bankruptcy and involves the sale of a debtor’s non-exempt assets to pay off creditors. In North Dakota, individuals must meet certain income requirements to qualify for Chapter 7 bankruptcy, which are based on the median income in the state. If an individual’s income is above the median, they may still qualify for Chapter 7 bankruptcy based on a means test that considers their expenses and debts. Chapter 13 bankruptcy, on the other hand, involves the creation of a repayment plan that allows the debtor to pay back their debts over a period of three to five years. Chapter 13 bankruptcy may be a better option for individuals with a steady income who want to keep their assets, such as their home or car. In addition to federal bankruptcy law, North Dakota also has its own exemptions that allow debtors to protect certain assets from being sold off in a Chapter 7 bankruptcy. These exemptions include homestead exemptions, personal property exemptions, and exemptions for retirement accounts.
What Types of Bankruptcy Are There For Your Business and What You Should Keep in Mind
There are several types of bankruptcy that a business may file for, including:
- Chapter 7: This type of bankruptcy involves liquidating all of the business’s assets to pay off its debts. Once the assets have been sold and the creditors have been paid, the business will be dissolved.
- Chapter 11: This type of bankruptcy is often used by larger businesses that want to restructure their debt and continue operating. In a Chapter 11 bankruptcy, the business will create a reorganization plan that outlines how it will pay off its debts over time while still remaining in operation.
- Chapter 13: This type of bankruptcy is similar to a Chapter 11, but it is typically used by smaller businesses. Under a Chapter 13 bankruptcy, the business will create a repayment plan that allows it to pay off its debts over a period of three to five years.
When considering bankruptcy for your business, it’s important to keep the following things in mind:
- Bankruptcy is not a quick fix: Filing for bankruptcy will not solve all of your business’s financial problems overnight. It will take time to complete the bankruptcy process and create a plan for paying off your debts.
- Bankruptcy will impact your credit: Filing for bankruptcy will have a negative impact on your business’s credit score. This can make it more difficult to secure loans or lines of credit in the future.
- You may need to liquidate assets: Depending on the type of bankruptcy you file for, you may need to sell off some or all of your business’s assets to pay off your debts.
- You may still have to pay some debts: Not all debts can be discharged through bankruptcy. Some debts, such as tax debts or student loans, may still need to be paid even after bankruptcy.
- Bankruptcy is complex: The bankruptcy process can be complicated, and it’s important to work with an experienced bankruptcy attorney to ensure that your business’s interests are protected throughout the process.
What Debts Are Not Discharged in Bankruptcy?
Not all debts can be discharged in bankruptcy. Some debts that are not typically dischargeable include:
- Tax debts: Debts owed to the government, such as back taxes or unpaid payroll taxes, are generally not dischargeable in bankruptcy.
- Student loans: It is difficult to discharge student loan debt through bankruptcy, and it is typically only possible if the debtor can prove that repaying the debt would cause undue hardship.
- Child support and alimony: Debts related to child support and spousal support are not dischargeable in bankruptcy.
- Debts incurred through fraud or illegal activity: Debts that were incurred through fraud, embezzlement, or other illegal activities are not dischargeable.
- Debts owed to certain creditors: Debts owed to certain creditors, such as restitution to victims of a crime or debts owed to a retirement plan, may not be dischargeable in bankruptcy.
How Bankruptcy in North Dakota Affects Your Credit Score and Ability To Obtain A Future Loan
Filing for bankruptcy in North Dakota can have a significant impact on your credit score and ability to obtain a future loan. Firstly, bankruptcy will stay on your credit report for up to ten years, which can negatively affect your credit score. This will make it harder to qualify for loans, credit cards, and other forms of credit in the future. Additionally, lenders may view you as a high-risk borrower, which can result in higher interest rates or more stringent loan terms. Furthermore, filing for bankruptcy can affect your ability to obtain certain types of loans, such as a mortgage, for several years. For example, if you file for Chapter 7 bankruptcy, you may have to wait at least two years before you can qualify for an FHA loan.
How Does Bankruptcy in North Dakota Affect Tax Debt?
Bankruptcy in North Dakota can affect tax debts in several ways, depending on the type of tax debt and the chapter of bankruptcy you file. In a Chapter 7 bankruptcy, most tax debts are generally considered non-dischargeable, meaning they cannot be eliminated through bankruptcy. However, certain tax debts may be discharged if they meet specific criteria. For example, income tax debts may be dischargeable if the tax return was due at least three years before filing for bankruptcy, the return was filed at least two years before filing for bankruptcy, and the IRS assessed the tax debt at least 240 days before filing for bankruptcy. In a Chapter 13 bankruptcy, tax debts are generally considered priority debts and must be paid in full over the life of the repayment plan. However, in some cases, the tax debt may be included in the repayment plan, allowing you to pay it off over time. Additionally, filing for bankruptcy can temporarily stop the IRS from taking collection actions against you, such as wage garnishment or bank levies. This is because of the automatic stay, which goes into effect as soon as you file for bankruptcy. However, this is not a permanent solution, and you will still be required to address the tax debt through the bankruptcy process.
Will You Lose Your Home or Car in Bankruptcy in North Dakota?
Whether you will lose your home or car in bankruptcy in North Dakota depends on several factors, such as the chapter of bankruptcy you file, the amount of equity you have in the property, and whether you are current on your payments. In a Chapter 7 bankruptcy, you may lose your home or car if you have significant equity in the property that is not protected by an exemption. However, North Dakota has a homestead exemption that may allow you to protect the equity in your home up to a certain amount. Similarly, North Dakota has motor vehicle exemptions that may allow you to protect the equity in your car up to a certain amount. If you have little or no equity in the property, you may be able to keep your home or car. In a Chapter 13 bankruptcy, you are generally able to keep your home and car as long as you can continue making the payments under the repayment plan. However, if you are significantly behind on your payments, you may need to work out a repayment plan that includes catching up on missed payments.
Statute of Limitations For Collections in North Dakota
The statute of limitations for collections in North Dakota is six years for most types of debt, including credit card debt, medical debt, and personal loans. This means that creditors have six years from the date of your last payment or last activity on the account to sue you for the debt. It is important to note that the statute of limitations only applies to the creditor’s ability to sue you for the debt. It does not mean that the debt is automatically forgiven or that you no longer owe the debt. Additionally, certain actions, such as making a payment or acknowledging the debt, can reset the statute of limitations.
Cons of Bankruptcy in North Dakota
Bankruptcy is a legal process that can provide relief to individuals and businesses who are unable to pay their debts. However, it is important to understand that filing for bankruptcy also has some potential negative consequences. Here are some cons of bankruptcy in North Dakota:
- Negative Impact on Credit Score: Filing for bankruptcy can have a significant negative impact on your credit score. A bankruptcy filing will stay on your credit report for up to ten years, making it difficult to obtain credit in the future.
- Risk of Losing Assets: Depending on the type of bankruptcy you file, there is a risk of losing some of your assets. In a Chapter 7 bankruptcy, a trustee may sell some of your assets to pay off your debts. In a Chapter 13 bankruptcy, you will need to make payments to your creditors for several years, which can be difficult to maintain.
- Limited Access to Credit: After filing for bankruptcy, you may have limited access to credit for some time. It can be challenging to obtain credit cards, loans, or mortgages. Even if you are approved for credit, you may have to pay higher interest rates due to your bankruptcy history.
- Public Record: Bankruptcy filings are public record, which means that anyone can access this information. This can be embarrassing and may negatively impact your reputation.
- Difficulty Getting a Job: Some employers may view bankruptcy as a negative mark on your record and may be hesitant to hire you. This can be particularly true for positions that require financial responsibility.
- Emotional Stress: Bankruptcy can be emotionally stressful, and it can take a toll on your mental health. It can be difficult to deal with the financial and emotional consequences of bankruptcy.
Compare the Pros and Cons of Bankruptcy: Pros and Cons of Filing Bankruptcy
Why People Regret Filing Bankruptcy
While bankruptcy can provide a fresh financial start for those overwhelmed by debt, some people may regret filing for bankruptcy for various reasons. Here are some reasons why people may regret filing for bankruptcy:
- Damage to Credit Score: As previously mentioned, filing for bankruptcy can significantly impact a person’s credit score, which can make it difficult to obtain credit in the future. This can be a source of regret for people who find themselves in need of credit in the future.
- Loss of Assets: Depending on the type of bankruptcy filed, individuals may have to surrender some of their assets to repay creditors. This can be a significant source of regret for people who may lose assets that they value.
- Emotional Toll: Bankruptcy can be a stressful and emotionally challenging process. It can be difficult to come to terms with the need for bankruptcy and the financial difficulties that led to it.
- Public Record: Bankruptcy filings are public record, which means that anyone can access the information. Some people may regret the stigma associated with bankruptcy and the potential damage to their reputation.
- Limited Access to Credit: After filing for bankruptcy, it can be difficult to obtain credit, and even when credit is available, it may come with high interest rates and unfavorable terms.
- Perceived Failure: Some people may perceive filing for bankruptcy as a personal failure, which can lead to regret.
Why Debt Settlement In North Dakota Is A Better Option Than Bankruptcy:
Here are some reasons why debt settlement may be a better option than bankruptcy for some people:
- Avoiding the stigma of bankruptcy: Bankruptcy can carry a social stigma, and some people may feel ashamed or embarrassed about having to file for bankruptcy. Debt settlement can provide debt relief without the public record and social stigma associated with bankruptcy.
- Potential for less damage to credit: Debt settlement may not have as long-lasting of an impact as bankruptcy. With debt settlement, a debt settlement firm will negotiate with your creditors to pay off a portion of your debt, which can result in a less negative impact on your credit score.
- Keeping assets: In a Chapter 7 bankruptcy, you may be required to liquidate assets to pay off creditors. Debt settlement can provide debt relief without the loss of assets.
- Lower cost: While both debt settlement and bankruptcy involve costs, debt settlement may be less expensive than bankruptcy, as there are no court fees or attorney fees associated with debt settlement.
CuraDebt – The Alternative You Are Looking For
CuraDebt, a professional debt settlement firm, is a great alternative to bankruptcy. We have a team of debt professionals who are ready to help you better understand and potentially eliminate your debts. Contact us today for your free consultation. 1-877-850-3328