Bankruptcy is not an option for everyone but can be an option if only the minimum of bills can be paid, budgeting will not decrease debts in less than five years, mortgages and other loans are being foreclosed, or financial set back has led to maximum debts. Divorce, the loss of an important client, and illness can sink individuals into unnecessary debt.

Even though bankruptcy can decrease loans and eliminate debts, not all debts can be removed through bankruptcy. Fraudulent debts, alimony, cash advances of eight hundred twenty-five dollars in a seventy-day period, child support, student loans, purchases of more than five hundred fifty dollars on luxury items in a ninety-day time period, pay back taxes, and penalties and fines from the government cannot be relieved due to filing for bankruptcy.

New Hampshire residents have the option of filing as consumers for Chapter Seven or Chapter Thirteen bankruptcy. Chapter Seven bankruptcy is usually known as straight bankruptcy where all debts are removed for a restart to finances. Chapter Thirteen bankruptcy is known as wage earner bankruptcy where repayment is done through a specific monthly plan.

Bankruptcy Abuse Prevention and Consumer Act
Bankruptcy used to be less complicated and a lot simpler. But due to former abuse of the bankruptcy system, new laws were created and are now mandated as of April 2005. These laws will protect consumers from bankruptcy problems and will inhibit those abusing the system.

The Bankruptcy Abuse Prevention and Consumer Protection Act limits the public's access to United States bankruptcy court systems. This act also established increases in Chapter Thirteen monthly payments, established new bans on Chapter Seven bankruptcy altogether, reduced any judicial discretion for banning competitive interests, and established new beliefs against all debts who have increasing penalties.

Means Tests of New Hampshire
Before a bankruptcy petition can be granted a means test must first be taken. This test will be the determiner of which kind of bankruptcy an individual will qualify, either Chapter Seven or Chapter Thirteen. The means test is designed to eliminate the individuals who can pay their debt and choose not to from filing for Chapter Seven bankruptcy.

An individual's yearly income is measured against the other incomes for New Hampshire residents. If the individual falls under the median, he or she will be eligible for Chapter Seven bankruptcy. Those who make more than the median of the state may file for Chapter Thirteen bankruptcy.

Property Exemptions
While Chapter Thirteen bankruptcy sets up a monthly payment plan, Chapter Seven bankruptcy eliminates debts by liquidating non-exempt property. Property that is under a certain value and particular kinds of property can qualify as exempt from liquidation.

Property that is exempt usually includes clothing, bedding, furniture under thirty-five hundred dollars, homes under one hundred thousand dollars, a refrigerator, a stove, a sewing machine, military uniforms, military arms, occupational tools under five thousand dollars, books accumulated to be under five thousand dollars, fuel under four hundred dollars, most jewelry, burial plots, motor vehicles under four thousand dollars, oxen, pension, workers' compensation, life insurance, unemployment compensation, and others.