Free Guide to Understanding US Bankruptcy Court in New Hampshire

What Is Bankruptcy and How Does It Work in New Hampshire

Bankruptcy is a legal process that allows people or businesses struggling with debt to get relief through the court system. When someone files for bankruptcy, they're asking a federal court to help them manage debts they cannot pay. The process is governed by federal law, but each state—including New Hampshire—has its own federal bankruptcy court that handles these cases.

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In New Hampshire, bankruptcy cases are heard in the U.S. Bankruptcy Court for the District of New Hampshire, located in Concord. This court handles thousands of cases each year from individuals and businesses throughout the state. The court operates under federal bankruptcy law, primarily the Bankruptcy Code, which was created to give people a fresh financial start while also protecting creditors' rights as much as possible.

There are different chapters of bankruptcy law, each serving different purposes. Chapter 7 is sometimes called "liquidation" bankruptcy because it involves selling off certain assets to pay creditors. Chapter 13 is reorganization bankruptcy, where a person keeps their assets but creates a payment plan to repay debts over three to five years. Chapter 11 is typically used by businesses. Each chapter has different rules and different outcomes.

The bankruptcy process typically starts when someone files paperwork with the court. The court then appoints a trustee—a person who oversees the case and makes sure rules are followed. The person filing (called the debtor) must provide detailed information about their income, expenses, assets, and debts. Creditors are notified and can attend court hearings. The entire process can take several months to a few years depending on which chapter is filed.

New Hampshire has specific rules that apply alongside federal bankruptcy law. For example, New Hampshire offers certain protections for property you own—called exemptions—that may not be taken to pay debts in bankruptcy. Understanding how New Hampshire law combines with federal bankruptcy rules is important for anyone considering this option in the state.

Practical Takeaway: Bankruptcy is a court-supervised legal process, not a simple debt relief program. It involves specific rules, timelines, and court oversight. Learning the basics helps you understand what to expect if you encounter bankruptcy information in your life.

Understanding Chapter 7 Bankruptcy in New Hampshire

Chapter 7 bankruptcy is the most common type filed in New Hampshire. In a Chapter 7 case, the court appoints a trustee who reviews all the debtor's property and debts. The trustee's job is to sell any property that isn't protected by exemptions and use the money to pay creditors. After this process, many debts are erased, giving the debtor a fresh start. However, certain debts cannot be erased, including student loans (with rare exceptions), child support, alimony, and recent income taxes.

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When someone files Chapter 7 in New Hampshire, they must pass a "means test." This test compares the person's monthly income to the median income for New Hampshire households of the same size. According to recent data, the median household income in New Hampshire is approximately $90,000 per year. If your income is below the state median, you generally pass the means test automatically. If your income is above the median, you must show that your expenses are high enough that you don't have enough money left over to pay debts.

New Hampshire offers property exemptions that protect certain items from being sold in bankruptcy. These exemptions include a certain amount of home equity (the current homestead exemption in New Hampshire is $120,000), a vehicle, household items, and tools needed for work. There are also exemptions for retirement accounts and life insurance. These protections mean that in many Chapter 7 cases, people don't actually lose property because everything they own falls within the exemptions.

The timeline for Chapter 7 in New Hampshire typically takes three to six months. The process includes filing paperwork, attending a meeting with the trustee (called the 341 meeting), creditors can file claims, and then the debtor receives a discharge order that erases qualifying debts. After discharge, the debtor is no longer legally required to pay those debts, and creditors cannot pursue collection efforts.

Chapter 7 does affect your credit report. The bankruptcy filing stays on your credit report for ten years, but the negative impact decreases over time, especially as you rebuild credit after the discharge. Many people who file Chapter 7 are able to obtain new credit within a year or two after discharge.

Practical Takeaway: Chapter 7 involves a review of your property and income. Understanding exemptions and the means test helps explain why some people keep all their property in Chapter 7 while others may lose some assets.

Understanding Chapter 13 Bankruptcy in New Hampshire

Chapter 13 bankruptcy, also called reorganization bankruptcy, works differently from Chapter 7. Instead of liquidating assets, a debtor proposes a payment plan to repay debts over three to five years. During this time, the debtor keeps all their property and makes monthly payments to a trustee, who then distributes money to creditors according to the plan. After the payment plan is complete, remaining qualifying debts are erased.

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Chapter 13 can be valuable for people who want to keep their home or have debts that cannot be erased in Chapter 7. For example, someone behind on mortgage payments can use Chapter 13 to catch up on what they owe while keeping their house. Similarly, debtors with significant student loan debt or income above the Chapter 7 means test threshold might choose Chapter 13. About 35% of bankruptcy filings in New Hampshire are Chapter 13 cases, compared to about 65% Chapter 7 cases.

In a Chapter 13 case, the debtor must have regular income to make the plan payments work. The payment amount is based on the debtor's income, expenses, and the amount of debt owed. New Hampshire courts look at whether the debtor can afford to make the proposed payments and whether the plan treats creditors fairly. The bankruptcy judge must approve the payment plan before it goes into effect.

Chapter 13 also offers the "cram down" option, which allows debtors to reduce what they owe on certain secured debts, like car loans. For example, if someone owes $15,000 on a car worth $8,000, they might be able to reduce the debt to the car's actual value. This option is valuable for people with underwater debts on vehicles.

During the payment plan, the debtor must follow certain rules. They cannot take on significant new debt without court permission, and they must report changes in income or expenses to the trustee. If circumstances change—like losing a job—the plan can sometimes be modified. If the debtor cannot complete the plan, the case can be dismissed or converted to Chapter 7.

Practical Takeaway: Chapter 13 offers a way to keep property while repaying debts through a court-approved plan. This chapter is useful for homeowners or people with debts that cannot be erased in Chapter 7.

The New Hampshire Bankruptcy Court Process and Timeline

Filing for bankruptcy in New Hampshire involves several steps and requires completion of specific forms. The process begins when the debtor files a petition along with detailed schedules listing all debts, income, expenses, and property. These forms are submitted to the U.S. Bankruptcy Court for the District of New Hampshire. The filing fee for Chapter 7 is currently $338, and for Chapter 13 it is $313, though fee waivers or reductions may be available for those with low income.

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Before filing, debtors are required to complete credit counseling from an approved agency. In New Hampshire, several agencies provide this counseling by phone or online. The counseling takes about one to two hours and costs typically $50 to $100. After completing counseling, the debtor receives a certificate they must include with their bankruptcy filing. This requirement exists to help people understand their options before filing.

After filing, an automatic stay goes into effect immediately. This is a court order that stops creditors from contacting the debtor, making collection calls, pursuing lawsuits, or foreclosing on property. The automatic stay provides breathing room while the case proceeds. Certain creditors, like those collecting child support or criminal fines, may be able to proceed despite the stay.

About 20 to 40 days after filing, the debtor attends a meeting with the trustee, called the 341 meeting or meeting of creditors. The debtor brings proof of identity and recent tax returns. The trustee asks questions