viki
10-02-2007, 04:00 AM
What is the Bankruptcy process?
A Court makes a bankruptcy order only after a bankruptcy petition has been presented. It is usually presented by:
Yourself (Debtor's Petition); or
Creditors who are owed at least £750 by you (Creditors' Petition)A bankruptcy order can still be made even if you refuse to acknowledge or agree to the order. You should therefore try to co-operate fully once the bankruptcy proceedings have begun. If you dispute the creditors' claims you should try and reach a settlement with them before the bankruptcy order is made: trying to do so afterwards is difficult and expensive.
What happens to my beneficial interest and legal title to my home when I am made bankrupt?
Your beneficial interest always transfers to the Official Receiver or trustee. If your home is solely owned, the legal title usually also transfers to the Official Receiver or trustee. If the home is jointly owned, the legal title remains with you and the co-owner but this does not prevent the Official Receiver or trustee taking action in relation to the property.
The Official Receiver or trustee has to realise (or sell) the beneficial interest to raise money to pay your creditors. One way of doing this is to sell the beneficial interest to your husband, wife, partner, a relative or a friend.
What is the difference between Chapter 7 and Chapter 13 bankruptcy? Which one lets me keep my property?
In Chapter 7 bankruptcy, you ask the bankruptcy court to discharge most of the debts you owe. In exchange for this discharge, the bankruptcy trustee can take any property you own that is not exempt from collection (see below), sell it, and distribute the proceeds to your creditors.
In Chapter 13 bankruptcy, you file a repayment plan with the bankruptcy court to pay back all or a portion of your debts over time. The amount you'll have to repay depends on how much you earn, the amount and types of debt you owe, and how much property you own.
You lose no property in Chapter 13, because you fund your repayment plan through your income. In Chapter 7, you select property you are eligible to keep from a list of state exemptions. Although state exemption laws differ, states typically allow you to keep these types of property in a Chapter 7 bankruptcy:
1. Equity in your home, called a homestead exemption. Under the Bankruptcy Code, you can exempt up to $20,200 of equity. Some states have no homestead exemption; others allow debtors to protect all or most of the equity in their home.
2. Insurance. You usually get to keep the cash value of your policies.
3. Retirement plans. Most retirement benefits are protected in bankruptcy.
4. Personal property. You'll be able to keep most household goods, furniture, furnishings, clothing (other than furs), appliances, books and musical instruments. You may be able to keep jewelry only worth up to $1,000 or so. Most states let you keep a vehicle as long as your equity doesn't exceed several thousand dollars. And many states give you a "wild card" amount of money -- often $1,000 or more -- that you can apply toward any property.
5. Public benefits. All public benefits, such as welfare, Social Security, and unemployment insurance, are fully protected.
6. Tools used on your job. You'll probably be able to keep up to a few thousand dollars worth of the tools used in your trade or profession.
A Court makes a bankruptcy order only after a bankruptcy petition has been presented. It is usually presented by:
Yourself (Debtor's Petition); or
Creditors who are owed at least £750 by you (Creditors' Petition)A bankruptcy order can still be made even if you refuse to acknowledge or agree to the order. You should therefore try to co-operate fully once the bankruptcy proceedings have begun. If you dispute the creditors' claims you should try and reach a settlement with them before the bankruptcy order is made: trying to do so afterwards is difficult and expensive.
What happens to my beneficial interest and legal title to my home when I am made bankrupt?
Your beneficial interest always transfers to the Official Receiver or trustee. If your home is solely owned, the legal title usually also transfers to the Official Receiver or trustee. If the home is jointly owned, the legal title remains with you and the co-owner but this does not prevent the Official Receiver or trustee taking action in relation to the property.
The Official Receiver or trustee has to realise (or sell) the beneficial interest to raise money to pay your creditors. One way of doing this is to sell the beneficial interest to your husband, wife, partner, a relative or a friend.
What is the difference between Chapter 7 and Chapter 13 bankruptcy? Which one lets me keep my property?
In Chapter 7 bankruptcy, you ask the bankruptcy court to discharge most of the debts you owe. In exchange for this discharge, the bankruptcy trustee can take any property you own that is not exempt from collection (see below), sell it, and distribute the proceeds to your creditors.
In Chapter 13 bankruptcy, you file a repayment plan with the bankruptcy court to pay back all or a portion of your debts over time. The amount you'll have to repay depends on how much you earn, the amount and types of debt you owe, and how much property you own.
You lose no property in Chapter 13, because you fund your repayment plan through your income. In Chapter 7, you select property you are eligible to keep from a list of state exemptions. Although state exemption laws differ, states typically allow you to keep these types of property in a Chapter 7 bankruptcy:
1. Equity in your home, called a homestead exemption. Under the Bankruptcy Code, you can exempt up to $20,200 of equity. Some states have no homestead exemption; others allow debtors to protect all or most of the equity in their home.
2. Insurance. You usually get to keep the cash value of your policies.
3. Retirement plans. Most retirement benefits are protected in bankruptcy.
4. Personal property. You'll be able to keep most household goods, furniture, furnishings, clothing (other than furs), appliances, books and musical instruments. You may be able to keep jewelry only worth up to $1,000 or so. Most states let you keep a vehicle as long as your equity doesn't exceed several thousand dollars. And many states give you a "wild card" amount of money -- often $1,000 or more -- that you can apply toward any property.
5. Public benefits. All public benefits, such as welfare, Social Security, and unemployment insurance, are fully protected.
6. Tools used on your job. You'll probably be able to keep up to a few thousand dollars worth of the tools used in your trade or profession.