Individuals in New Hampshire who are considering bankruptcy must take a credit counseling course within 180 days prior to filing. The course must be taken through a credit counseling organization that is approved by the Department of Justice's U.S. Trustee Program. During this course, a counselor will go over the debtor's finances, discuss alternatives to bankruptcy and develop a personalized financial plan.
In general, there are two options open to individuals filing bankruptcy in New Hampshire. Chapter 7 is also known as straight liquidation bankruptcy because the debtor's nonexempt assets are liquidated, and the proceeds are used to pay off debts. Chapter 13 bankruptcy involves the establishment of a payment plan and is open to debtors who have regular income.
In Chapter 7 bankruptcy, a New Hampshire debtor will have his or her assets liquidated to repay outstanding debts. However, some assets may be exempted from liquidation, which means that they will not be sold to pay off creditors. If a debtor owns property that is secured by a lien or a mortgage, that property may already be pledged to other creditors.
New Hampshire residents who are considering filing for bankruptcy may feel that doing so may save them from otherwise insurmountable financial complications, but some may not fully understand what each category of bankruptcy entails. Understanding the basic aspects of Chapter 7 and Chapter 13 bankruptcies could help such debtors in planning ahead more effectively.