What Are the North Dakota Bankruptcy Exemptions?

What are the North Dakota bankruptcy exemptions and why are they important in a Chapter 7 bankruptcy? 

Before you can benefit from the fresh start that Chapter 7 bankruptcy provides, you’ll need to jump through a few hoops. For the most part, you’ll just need to fill out a lot of paperwork to give the court a complete picture of your finances.

After you file bankruptcy, the bankruptcy court will assign a trustee to your case. That trustee will be empowered to sell any of your property that you didn’t exempt while filling out your paperwork. This is why it’s so important to take special care when claiming bankruptcy exemptions.

Exemptions help ensure that your personal property isn’t sold to partially repay your creditors. Once you’ve made a list of what you own and what your property is worth, claiming North Dakota bankruptcy exemptions is a fairly straightforward process.

Does North Dakota allow the use of federal bankruptcy exemptions?

One straightforward thing about filing for bankruptcy in North Dakota is that it doesn’t allow residents to claim federal bankruptcy exemptions. Although 17 jurisdictions in the United States do allow residents to apply federal exemptions to their property, North Dakota law doesn’t provide a choice between federal exemptions and state exemptions.

So, unless you moved to North Dakota less than two years ago, you don’t have to worry about comparing state law with federal law in this regard. Simply evaluate the North Dakota exemptions listed below and claim them if they apply to you. However, if you have qualifying assets, you will also want to take the federal nonbankruptcy exemptions into consideration in addition to the state-specific structure.

North Dakota Bankruptcy Exemptions

If you are filing as a single individual, you can skip ahead to the next section. However, if you’re married and you and your spouse are filing for bankruptcy jointly as a married couple, you’ll want to take note of the “doubling rule.” The doubling rule generally allows each spouse to benefit from a full set of exemptions under the law. This means that, with a few exceptions, you’re entitled to double the exemption amounts listed below, provided that you and your spouse co-own the property you’re seeking to exempt. If only one of you has legal ownership of a particular asset, you’ll apply the “single filer” exemption value available for that particular kind of property.

Real Property - the North Dakota Homestead Exemption

One exemption that married couples may not double is the North Dakota homestead exemption. North Dakota bankruptcy law allows all filers to exempt up to $150,000 of equity in their primary residence. This residence may be a house, house trailer, or mobile home. Equity reflects the amount of money you’ve already paid on your mortgage, not the value of your home or the remaining balance on your mortgage. For example, if you’ve paid $56,000 on your mortgage so far, this number represents the equity you have in your home.

If you don’t own any real estate and don’t need to use this exemption to safeguard your real property, you can claim an additional benefit under the state’s wildcard exemption (discussed in detail later in this guide).

Source: N.D. Cent. Code §§ 28-22-02(7), (10); 47-18-01

Personal Property Exemptions

The more exempt property you have, the less you’ll risk having to repurchase necessities for your family once your bankruptcy process is complete. As a result, it’s important to take your time and exempt as much personal property as possible in the following categories. In most instances, you can estimate your property values according to yard sale pricing, except where doing so doesn’t make sense (when you’re calculating your car’s value, for example). Unless otherwise noted, you can exempt the following personal property up to its full value:

• Burial plot(s)

• Church pew or other seating in a house of worship

• Clothing of the filer and the filer’s family (unlimited); all wearing apparel up to $5,000

• Crops – threshed or unthreshed (up to 160 acres, if these acres are where the filer lives)

• Family Bible or other primary religious text (1)

• Family library, including schoolbooks

• Family pictures

• Health aids prescribed by a professional

• Motor vehicle equity (up to $2,950 – if a vehicle has been modified to accommodate disability, the exemption value available is $32,000)

• Provisions for filer and family to last 1 year (including food, growing food, fuel for home heating, and fuel to power the filer’s car)Tools of the trade or profession (up to $1,500)

If you are concerned about household goods and household furnishings, note that you have additional exemption values available under the state’s wildcard provision, which is discussed later in this guide.

Money Benefits

North Dakota law is more generous when it comes to exempting public benefits, retirement accounts, life insurance proceeds, and other monetary assets than it is regarding personal property. Unless otherwise noted, filers may exempt the following monetary benefits and assets up to their full amount:

• Alimony or spousal support

• Child support

• Crime victims’ compensation

• Disabled veteran’s benefits

• ERISA-qualified benefits, IRAs, Roth IRA and Keoghs (up to $100,000 per plan – more may be made available if necessary for support)

• Fraternal benefit society benefits

• Life insurance proceeds that are payable to an estate and not to a specific beneficiary

• Life insurance surrender value, if the beneficiary is the insured’s dependent and the insured owned the policy for at least 1 year prior to filing for bankruptcy (up to $8,000 per policy but more may be made available if necessary for support)

• Loss of future earnings awards for filer or someone upon whom the filer is a dependent (to extent reasonably necessary for support of filer and filer’s dependents)

• Old-age and survivor insurance program benefits

• Personal injury recovery for filer or someone upon whom the filer is a dependent (up to $18,450, not including payments for pain and suffering or actual pecuniary loss)

• Public assistance

• Public employee - deferred compensation

• Public employee – pension

• Social Security

• Tax-exempt retirement accounts - including 401(k)s, 403(b)s, profit-sharing and money purchase plans, SEP and SIMPLE IRAs, and defined benefit plans (as protected by federal law)

• Unemployment compensation

• Unmatured life insurance contract (excluding credit life insurance)

• Veterans’ disability benefits

• Workers’ compensation

• Wrongful death recovery someone upon whom the filer is a dependent (to extent reasonably necessary for support of filer and filer’s dependents)

Other North Dakota Exemptions

If you haven’t been able to exempt all of your property (or all of the value of certain assets) after claiming every exemption noted above, you can exempt the value in additional property by using the state’s wildcard provision. Depending on your filing status (and the ways in which you have or haven’t used the homestead exemption), you can use the wildcard exemption to additionally exempt property of your choice up to the following values:

• $3,750 if you are single and have no dependents

• $7,500 if you are single but also a “head of household” or you and your spouse are married and filing jointly

• You may also claim an additional $10,000 of property under this exemption if you are not taking advantage of the homestead exemption

Filing Chapter 7 bankruptcy? 

If processing this information feels overwhelming, know that there is a no-cost way to ask a bankruptcy attorney any questions you may have about North Dakota bankruptcy exemptions and/or any other aspect of bankruptcy law. Whether you’re filing for Chapter 7 or Chapter 13 bankruptcy, you can schedule a free consultation with a law firm that offers these no cost meetings in your area. You can take advantage of this opportunity even if you plan to file your bankruptcy case on your own. However, if you want more help but can’t afford the services of a bankruptcy lawyer moving forward, Upsolve may be able to help. In addition to providing the public with access to hundreds of bankruptcy-related guides and articles for free on our website, we help eligible individuals file for Chapter 7 bankruptcy at no cost.