By: Andrew Walker. North Dakota bankruptcy lawyer since 2025 and Minnesota bankruptcy lawyer since 2011.
If you’ve been feeling the weight of financial stress lately, you’re not alone. After years of historically low numbers, personal bankruptcy filings across the United States are climbing again—and North Dakota is seeing the same trend. National Public Radio recently did a story about the trend.
According to data from the U.S. Bankruptcy Court for the District of North Dakota, bankruptcy filings have been steadily increasing since hitting rock bottom during the pandemic. More families across the state—from Fargo to Bismarck, Grand Forks to Minot, and in rural communities throughout North Dakota—are reaching the point where bankruptcy has become not just an option, but a necessary step toward financial stability.
This isn’t a sign that people are giving up. It’s actually the opposite—it’s a sign that more people are taking control of their financial futures and using the legal tools available to them to get a fresh start.
Let’s talk about what’s really happening, why bankruptcy filings are rising, and what this means if you’re one of the many North Dakotans wondering whether bankruptcy might be the right choice for you.
Understanding the Numbers: What the Data Shows
The nationwide trend is clear: bankruptcy filings dropped to historic lows during 2020 and 2021, but have been rising steadily since then. This follows a predictable pattern that economists and bankruptcy attorneys have seen before—when economic support programs end and financial pressures mount, people need relief.
In North Dakota, the U.S. Bankruptcy Court data shows similar patterns. While we’re not yet back to pre-pandemic filing levels, the upward trend is unmistakable. North Dakota families are filing for both Chapter 7 and Chapter 13 bankruptcy in greater numbers, seeking protection from creditors and a path forward.
These aren’t just statistics—they represent real people: single parents trying to keep a roof over their children’s heads, homeowners fighting to save their houses from foreclosure, families drowning in medical debt from an unexpected illness, workers whose wages are being garnished for debts they simply can’t pay, and farmers and small business owners navigating difficult economic conditions.
Why Are Bankruptcy Filings Rising Now?
Several factors are converging to create financial pressure for American families, and North Dakota residents are feeling it acutely:
The End of Pandemic-Era Protections
During the pandemic, federal and state governments implemented numerous programs to help people stay afloat: enhanced unemployment benefits, stimulus payments, mortgage forbearance programs, student loan payment pauses, and eviction moratoriums. These programs kept bankruptcy filings artificially low.
But now those safety nets are gone. Student loan payments have resumed. Mortgage forbearance periods have ended. The extra financial cushion that kept many families afloat has disappeared, and the debts that were temporarily manageable have become overwhelming again.
Energy Sector Fluctuations
North Dakota’s economy has long been tied to the energy sector, particularly oil and gas production in the Bakken region. While the industry provides good-paying jobs, it’s also cyclical. When oil prices drop or production slows, layoffs and reduced hours follow. Many North Dakotans who built their lives around energy sector income have found themselves struggling when the industry contracts.
Even those still employed in the sector may have taken on debt during boom times—vehicle loans, home mortgages, recreational equipment—that becomes difficult to manage when overtime disappears or positions are eliminated.
Agricultural Challenges
North Dakota’s agricultural communities face unique pressures. Farmers and ranchers deal with unpredictable weather, fluctuating commodity prices, rising equipment and input costs, and the challenge of operating in an industry where profit margins are often razor-thin.
When crop prices drop or drought impacts yields, farm families can find themselves unable to keep up with equipment loans, land payments, and operational debt. Many agricultural families have weathered difficult seasons for years before finally seeking bankruptcy protection to reorganize their finances and save their operations.
Inflation and the Rising Cost of Living
Grocery bills have soared. Gas prices, while fluctuating, remain higher than they were just a few years ago. Housing costs in North Dakota cities—particularly Fargo and Bismarck—have climbed significantly. Even in smaller communities, rent and home prices have increased. When your income stays the same but everything costs more, something has to give.
For many families, credit cards became the bridge to cover the gap between income and expenses. But credit card interest rates are now at historic highs, often exceeding 25% or even 30%. What started as a manageable balance quickly becomes an insurmountable mountain of debt.
Medical Debt Remains a Leading Factor
Despite policy changes and conversations about healthcare reform, medical debt continues to be one of the primary reasons Americans file for bankruptcy. An unexpected illness, accident, or medical emergency can result in tens or hundreds of thousands of dollars in bills—even for people with insurance.
In North Dakota, where rural communities may be hours from specialized medical care and healthcare costs mirror national trends, medical debt doesn’t discriminate. It affects people with jobs, people with insurance, and people who did everything “right” financially. When medical bills pile up alongside regular living expenses, bankruptcy often becomes the only realistic path to relief.
The Challenge of Rural Living
While North Dakota’s smaller communities offer many advantages, they also present financial challenges. Jobs may be scarce, requiring long commutes that increase vehicle and fuel costs. When financial problems hit, there are fewer local resources and support systems. Economic downturns can hit rural communities particularly hard, with limited options for alternative employment.
The Credit Card Trap
As living costs have risen, many people turned to credit cards to cover basic expenses—not luxuries, but groceries, utilities, car repairs, and other necessities. With interest rates at historic highs, minimum payments barely make a dent in the principal balance. People find themselves paying hundreds of dollars a month just to stay current, while the actual debt never decreases.
What This Trend Really Means
The rising bankruptcy filing rate isn’t a sign of moral failure or irresponsible behavior. It’s actually a sign that people are making informed, responsible decisions to address problems they can’t solve on their own.
Think about it this way: bankruptcy law exists precisely for moments like these. It’s a legal tool created by Congress and enshrined in the Constitution specifically to give people a way out when debts become unmanageable. Using that tool isn’t giving up—it’s taking control.
The rising numbers also tell us that more people are learning that bankruptcy doesn’t carry the stigma it once did. It’s a practical, legal solution to a financial problem. Millions of Americans have filed for bankruptcy and gone on to rebuild their credit, buy homes, start businesses, and live financially stable lives.
Chapter 7 vs. Chapter 13: Which Type of Bankruptcy Is Right for You?
If you’re considering bankruptcy, understanding the two main types available to individuals is essential:
Chapter 7 Bankruptcy: A Fresh Start
Chapter 7 is often called “liquidation bankruptcy,” though most people who file Chapter 7 don’t actually lose any property. This type of bankruptcy wipes out most unsecured debts—credit cards, medical bills, personal loans, and past-due utility bills—usually within three to four months.
Who it helps: Chapter 7 is ideal for people whose income is at or below the North Dakota median income for their household size, or who pass the “means test” showing they don’t have enough disposable income to repay debts. It’s perfect for someone like Laura—a single parent overwhelmed by credit card and medical debt, who needs a clean slate to start fresh.
What it does: Chapter 7 discharges (eliminates) most unsecured debts. You keep your exempt property (like your home equity up to North Dakota’s exemption limits, your vehicle, household items, and retirement accounts). Most people keep everything they own.
What it doesn’t do: Chapter 7 typically won’t eliminate student loans (though there are limited exceptions), recent taxes, child support, or alimony. It also won’t save a home from foreclosure if you’re behind on payments, unless you can catch up quickly.
Chapter 13 Bankruptcy: Reorganization and Protection
Chapter 13 creates a three-to-five-year repayment plan where you pay back a portion of your debts based on what you can actually afford. It’s particularly powerful for homeowners facing foreclosure or people with secured debts they want to keep.
Who it helps: Chapter 13 works well for people with regular income who are behind on their mortgage or car payments and need time to catch up. It’s designed for someone like James—a homeowner who fell behind on his mortgage and wants to save his house while reorganizing his finances.
What it does: Chapter 13 stops foreclosure and gives you up to five years to catch up on missed mortgage payments while keeping your home. It can reduce car loan balances to the vehicle’s actual value and consolidate other debts into one manageable monthly payment.
What it requires: You need to have regular income and be able to make monthly plan payments. The court will approve a payment plan based on your actual income and necessary expenses—not what creditors want, but what you can realistically afford.
Chapter 12: A Special Option for Family Farmers and Fishermen
North Dakota is one of the few states where Chapter 12 bankruptcy is particularly relevant. Chapter 12 is specifically designed for family farmers and commercial fishermen facing financial difficulty.
Who it helps: Family farmers whose income comes primarily from farming operations and who meet certain debt limits. This includes crop farmers, ranchers, and others in agricultural production.
What it does: Chapter 12 provides more flexibility than Chapter 13 for agricultural operations, allowing farmers to propose repayment plans that account for the seasonal nature of farm income. It can restructure secured debts (like equipment loans and land contracts) and provide time to catch up on missed payments while continuing to operate the farm.
Why it matters: Chapter 12 recognizes that farm income doesn’t come in steady paychecks—it comes in at harvest or when livestock is sold. The repayment plan can be structured around this reality, making it possible for family farms to reorganize debt and continue operating.
Real Benefits of Filing Bankruptcy
Understanding what bankruptcy can actually do for you makes the decision clearer:
The Automatic Stay: Immediate Protection
The moment you file bankruptcy, an “automatic stay” goes into effect. This is a federal court order that immediately stops:
- Collection calls and letters
- Wage garnishments
- Bank account levies
- Lawsuits and judgments
- Foreclosure proceedings (at least temporarily)
- Repossessions
- Utility shut-offs
This protection gives you breathing room—often the first moment of peace you’ve had in months or years.
Debt Discharge: A True Fresh Start
In Chapter 7, most unsecured debts are completely eliminated. You no longer owe them, period. In Chapter 13 and Chapter 12, you pay what you can afford over three to five years, and then remaining qualifying debts are discharged.
This means you can redirect money that was going to hopeless debt payments toward building savings, covering current living expenses, and planning for your future.
Protecting Your Home and Property
North Dakota’s bankruptcy exemptions are designed to protect the property you need to live and work. Most people who file bankruptcy keep their homes, cars, household goods, retirement accounts, and other essential property.
North Dakota offers relatively generous homestead exemptions, which means you can protect significant equity in your primary residence. The state also provides exemptions for vehicles, household goods, tools of the trade, and other necessary items.
Chapter 13 is particularly powerful for homeowners. If you’re facing foreclosure, Chapter 13 can stop it and give you up to five years to catch up on missed payments while keeping your home protected.
Stopping Wage Garnishment
If your wages are being garnished, bankruptcy stops it immediately. In Chapter 7, the garnishment ends and the debt is typically discharged. In Chapter 13, you’ll pay what you can afford through your plan instead of having wages garnished.
Peace of Mind
Perhaps the most underrated benefit of bankruptcy is psychological: the constant anxiety, shame, and fear that comes with overwhelming debt ends. You can answer your phone again. You can sleep at night. You can make plans for the future instead of just surviving day to day.
Common Myths About Bankruptcy (and the Truth)
Let’s clear up some misconceptions that keep people from getting the help they need:
Myth: “Bankruptcy ruins your credit forever.”
Truth: Bankruptcy does appear on your credit report (Chapter 7 for 10 years, Chapter 13 for 7 years), but most people who file already have damaged credit from missed payments and collections. Many people can qualify for a car loan within a year of filing and a mortgage within two to three years. Bankruptcy often improves your financial situation faster than struggling with unpayable debts for years.
Myth: “I’ll lose everything I own.”
Truth: North Dakota’s bankruptcy exemptions protect your home equity (up to certain limits), vehicle equity, household goods, retirement accounts, and other essential property. Most Chapter 7 filers keep everything they own.
Myth: “Everyone will know I filed bankruptcy.”
Truth: While bankruptcy is public record, it’s not published in newspapers or broadcast. Unless someone specifically searches court records, they won’t know. In smaller North Dakota communities where privacy is a concern, the reality is that bankruptcy filings are not announced or publicized.
Myth: “Filing bankruptcy means I failed.”
Truth: Bankruptcy is a legal right, not a moral failing. Circumstances like medical emergencies, job loss, divorce, agricultural challenges, and economic downturns affect responsible people every day. Using the legal tools available to address these problems is smart, not shameful.
Myth: “I make too much money to file bankruptcy.”
Truth: While there are income limits for Chapter 7 (the “means test”), many people with above-median income still qualify, especially with legitimate expenses. And Chapter 13 is available regardless of income level.
Myth: “Bankruptcy will destroy my farm or business.”
Truth: Chapter 12 is specifically designed to help family farmers reorganize debt and continue operating. Many North Dakota farms have successfully used Chapter 12 to restructure debt and remain viable operations.
Is Bankruptcy Right for You?
Bankruptcy isn’t the right solution for everyone, but it might be right for you if:
- You’re using credit cards to pay for basic necessities
- You’re being threatened with foreclosure, repossession, or wage garnishment
- You’re paying minimums on credit cards but the balances never decrease
- Collection calls and letters are constant
- You lie awake at night worrying about money
- You’re avoiding answering your phone
- You’ve stopped opening your mail
- You feel hopeless about your financial future
- Your farm or agricultural operation is struggling with debt that’s preventing you from operating effectively
If you’re experiencing several of these situations, it’s time to at least explore whether bankruptcy could help.
What Happens Next: The Process
Filing bankruptcy is more straightforward than most people think:
- Free consultation: Meet with a bankruptcy attorney to review your situation, discuss your options, and determine which type of bankruptcy makes sense—or whether bankruptcy is even necessary.
- Gather information: Your attorney will help you collect documentation about your income, expenses, assets, and debts.
- Credit counseling: You’ll complete a required credit counseling course (available online, usually takes about an hour).
- File your case: Your attorney prepares and files your bankruptcy petition with the U.S. Bankruptcy Court for the District of North Dakota. The automatic stay takes effect immediately.
- Meeting of creditors: About a month after filing, you’ll attend a short meeting (called a “341 meeting”) where a bankruptcy trustee asks basic questions about your case. This typically takes 10 minutes and can happen at the federal courthouse in Fargo or other locations, or virtually.
- Discharge: In Chapter 7, you typically receive your discharge (debt elimination) about 60-90 days after the 341 meeting. In Chapter 13 or Chapter 12, you complete your payment plan (3-5 years) and then receive your discharge.
Throughout the process, your attorney handles the legal work, communicates with creditors, and protects your interests.
Why North Dakota Experience Matters
Bankruptcy law is federal, but each state has its own exemptions and rules—and each bankruptcy court district has its own procedures and local practices. North Dakota’s bankruptcy exemptions, trustee practices, and court procedures are unique.
Working with an attorney who understands North Dakota’s specific bankruptcy laws means:
- Maximizing the exemptions that protect your property under North Dakota law
- Understanding how North Dakota’s homestead exemption works
- Knowing how to handle agricultural debt and Chapter 12 cases for North Dakota farmers
- Being familiar with the trustees and procedures in the U.S. Bankruptcy Court for the District of North Dakota
- Understanding the unique economic factors that affect North Dakota families—from energy sector employment to agricultural challenges
You also need an attorney who understands that you’re coming to them during one of the most stressful times of your life. The right approach is straightforward: explaining your options in plain language, answering your questions honestly, and guiding you through each step of the process. No judgment, no pressure, no legal jargon you can’t understand.
Taking the Next Step
If the rising bankruptcy numbers tell us anything, it’s that you’re not alone in struggling financially right now. Hundreds of North Dakotans are in the same position, facing the same difficult decisions.
The question isn’t whether you “should” be in this situation—financial struggles can happen to anyone. The question is what you’re going to do about it now.
Bankruptcy offers a real path forward. It’s not a sign of giving up; it’s taking control of your financial life and using the legal tools Congress created specifically for situations like yours.
You don’t have to figure this out alone. A free consultation with an experienced bankruptcy attorney can help you review your specific situation, answer your questions honestly, and help you understand all your options—including whether bankruptcy is even necessary.
If you’re tired of the stress, the collection calls, the sleepless nights, and the feeling of being trapped by debt, it’s time to explore your options. You might be closer to a fresh start than you think.
The bankruptcy filing numbers are rising because more people are making the smart, responsible choice to take control of their financial futures. Maybe it’s your turn to join them.
