Bankruptcy Information
Bankruptcy, what is it and is it right for you?
Bankruptcy is a legal process that may help a person who cannot pay their bills get a fresh financial start. The right to file for bankruptcy is provided by federal law, and all bankruptcy cases are handled in federal bankruptcy court. Filing bankruptcy immediately stops all of your creditors from seeking to collect debts from you, at least until your debts are sorted out according to the law.
What can bankruptcy do for you?
Bankruptcy may make it possible for you to:
- Erase most or all of your debts. This will give you a fresh financial start.
- Stop foreclosure on your home and allow you the opportunity to make missed payments.
- Prevent repossession of a car or other property.
- Stop wage garnishments, debt collection calls, and other creditor actions to collect debt.
Does a bankruptcy affect my credit?
Yes. Future lenders may consider your bankruptcy when they are deciding whether to loan you credit or money. However, certain laws exist to prevent unlawful discrimination against you just because you filed for bankruptcy. The fact that you have filed for bankruptcy may be carried on your credit records for 10 years or longer.
How do I file bankruptcy and what happens to me after I do?
The filing of any type of bankruptcy petition requires that you prepare schedules that list all of your property and the debts that you owe. You are also required to disclose your current income and monthly expenses. You must also answer questions regarding your financial affairs - such as recent payments made to creditors and transfers of property that were made within the year prior to filing bankruptcy. The completed forms are filed at the District Court for the NMI. After the forms are filed, a bankruptcy trustee will be appointed and will administer your case. You are required to provide all of your creditors notice that you have filed bankruptcy using a standard form. This form advises your creditors of certain things that they may and may not do during your bankruptcy case.
Should I file on my own or should I hire an attorney?
Bankruptcies can range from simple to very complex. What assets you keep or how long you can pay for the assets you wish to keep may vary based upon your personal situation. There are a variety of ways that debt can be managed in bankruptcy that requires more in-depth knowledge of bankruptcy laws. We strongly encourage you to consult a lawyer who is knowledgeable in bankruptcy practice for initial advice. Court staff cannot give you legal advice.
What classes do I have to take?
All individual filers are required to complete pre-bankruptcy credit counseling and predischarge debtor education.
- Credit counseling must be completed within 180 days of filing the bankruptcy petition.
- Debtor education must take place after you file.
A certificate of completion for both classes are required. The certificate of credit counseling must be filed with the petition.
For a list of approved online agencies, visit -
Credit Counseling
https://www.justice.gov/ust/credit-counseling-bystate/Northern-Mariana-Islands
Debtor Education
https://www.justice.gov/ust/debtor-educationby-state/Northern-Mariana-Islands
How long does a bankruptcy case typically take? Do I have to attend any court hearings?
After you file the bankruptcy petition, you must attend a meeting of creditors, often referred to as a “341 Meeting.” In a Chapter 7 case, if no objections are filed after the meeting of creditors, then discharge may be entered in 90 days.Chapter 13 bankruptcies require a minimum of 36 or maximum of 60 months, depending on your income. They may involve a number of hearings with both the trustee and the court over a longer period of time.
Are there different types of bankruptcy?
Yes. Bankruptcies are divided into types, also called Chapters. The four most common bankruptcies are:
- Chapter 7 (Liquidation) is the most common form of bankruptcy. This is when you have more bills than you can pay, and there is a low probability you’ll be able to pay them.
- Chapter 11 is primarily used for businesses and companies with large complex debt.
- Chapter 12 is for farmers.
- Chapter 13 (Reorganization) is a process to repay an individual’s debts over 36 to 60 months. Chapter 13 allows you to catch up on rent or mortgage payments, or remove second mortgages as secured debts, or to refinance secured debt (ex. car loans). Chapter 13 allows you to keep property you would lose in a Chapter 7 - such as a home with little or no mortgage debt.
What is the cost of filing bankruptcy?
The filing cost differs based on the Chapter of bankruptcy you file. Currently, fees are $338 for a Chapter 7 case, $1,738 for Chapter 11 case, and $313 for Chapter 13 case.
