A Griggs County reader wrote me the following:
We really like this new addition to The Forum, with all the good questions and better answers. Excellent information. Thank you.
My question is about bankruptcy law and conditions concerning chapters 7, 11 and 13 and what we don’t see in the paper. More details please on where a person files for (bankruptcy), how often can be declared, what can or cannot be taken, returned or excluded from one and more. Thanks.â€Â
Thanks for writing! I talked to the Attorney Generalâ€™s Office and their advice is to visit with a private attorney. I received similar advice from Aaron Birst, executive director of the North Dakota Stateâ€™s Attorneys Association.
â€œMost cases are filed under the three main chapters of the Bankruptcy Code â€“ Chapter 7, Chapter 11 and Chapter 13. Federal courts have exclusive jurisdiction over bankruptcy cases. This means that a bankruptcy case cannot be filed in a state court.
â€œSome bankruptcy cases are filed to allow a debtor to reorganize and establish a plan to repay creditors, while other cases involve liquidation of the debtorâ€™s property.
â€œChapter 13 â€¦ is designed for an individual debtor who has a regular source of income. Chapter 13 is often preferable to chapter 7 because it enables the debtor to keep a valuable asset, such as a house, and because it allows the debtor to propose a plan to repay creditors over time â€“ usually three to five years.
â€œChapter 11 â€¦ ordinarily is used by commercial enterprises that desire to continue operating a business and repay creditors concurrently through a court-approved plan of reorganization.
â€œChapter 7 â€¦ contemplates an orderly, court-supervised procedure by which a trustee takes over the assets of the debtorâ€™s estate, reduces them to cash and makes distributions to creditors, subject to the debtorâ€™s right to retain certain exempt property and the rights of secured creditors. Because there is usually little or no nonexempt property in most chapter 7 cases, there may not be an actual liquidation of the debtorâ€™s assets.â€
(On a related note here, I went to FindLaw.com, which lists property that a debtor usually has to give up and what property can usually be kept under Chapter 7 bankruptcy. For example, a second car or truck may not make the cut, but one can keep necessary clothing.
You can find those lists here. Like everyone else, the website advises talking to an attorney about this matter.)
Returning to bankruptcy information on www.uscourts.gov:
â€œThe court will deny a discharge in a later chapter 7 case if the debtor received a discharge under chapter 7 or chapter 11 in a case filed within eight years.
â€œThe court will also deny a chapter 7 discharge if the debtor previously received a discharge in a chapter 12 or chapter 13 case filed within six years â€¦ unless (1) the debtor paid all â€œallowed unsecuredâ€ claims in the earlier case in full, or (2) the debtor made payments under the plan in the earlier case totaling at least 70 percent of the allowed unsecured claims and the debtorâ€™s plan was proposed in good faith and the payments represented the debtorâ€™s best effort.
â€œA debtor is ineligible for discharge under chapter 13 if he or she received a prior discharge in a chapter 7, 11 or 12 case filed four years before the current case or in a chapter 13 case filed two years before the current case.â€
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