Bankruptcy is a legal process that allows individuals and businesses to eliminate or repay their debts under the protection of the federal bankruptcy court. In New Hampshire, as in other states, bankruptcy can have significant consequences on an individual’s financial situation and credit score. In this blog post, we will discuss the bankruptcy process, the types of bankruptcy, its consequences, and how to avoid it in New Hampshire, including helpful government links.
The Bankruptcy Process in New Hampshire
The bankruptcy process in New Hampshire typically begins with a debtor filing a petition with the bankruptcy court. The debtor must provide a list of all their assets and liabilities, as well as information about their income, expenses, and financial transactions. Once the petition is filed, an automatic stay goes into effect, which prevents creditors from taking any further action to collect the debt.
After the petition is filed, the debtor must attend a meeting of creditors, where they will be questioned about their financial affairs. The debtor may also be required to complete a credit counseling course before the bankruptcy can be discharged. Depending on the type of bankruptcy, the debtor may be required to make payments to a trustee for a set period of time.
Types of Bankruptcy
In New Hampshire, there are two types of bankruptcy that individuals can file: Chapter 7 and Chapter 13.
Chapter 7 bankruptcy is also known as “liquidation” bankruptcy, and it allows individuals to eliminate most of their unsecured debt, such as credit card debt and medical bills. In exchange for the discharge of debt, the debtor must give up certain assets, which are sold to repay creditors.
Chapter 13 bankruptcy is also known as a “reorganization” bankruptcy, and it allows individuals to repay their debts over a period of three to five years. The debtor must have a regular income and must make regular payments to a trustee, who distributes the payments to creditors.
Consequences of Bankruptcy
Filing for bankruptcy in New Hampshire can have significant consequences on an individual’s financial situation and credit score. A bankruptcy filing will remain on an individual’s credit report for up to 10 years and may make it more difficult to obtain credit or loans in the future. Additionally, certain debts, such as student loans and taxes, cannot be discharged through bankruptcy.
How to Avoid Bankruptcy
While bankruptcy may be an option for some individuals, it is important to explore other alternatives first. Here are some tips on how to avoid bankruptcy in New Hampshire:
- Create a budget and stick to it.
- Negotiate with creditors to reduce interest rates or payment amounts.
- Seek credit counseling to learn how to manage debt more effectively.
- Consider debt consolidation or a debt management plan.
Helpful Government Links
If you are considering bankruptcy in New Hampshire, here are some helpful government links:
- New Hampshire Bankruptcy Court: https://www.nhb.uscourts.gov/
- United States Bankruptcy Court District of New Hampshire: https://www.nhb.uscourts.gov/
- New Hampshire Legal Aid: https://nhlegalaid.org/
United States Department of Justice – Bankruptcy Information: https://www.justice.gov/ust/bankruptcy-information
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