When you file for bankruptcy one of the things you should access is what you get to keep. Filing for bankruptcy allows you to keep some assets, so these things are exempt from being claimed. There are some exemptions under federal law, while others are under individual state laws. These exemptions are designed so that the debtor can maintain their basic way of life. However, exemption can vary depending on the case.

Each state has its own list of exemptions, and they may be based on the state you lived in two years before the bankruptcy. The state that you spent most of your time is where the exemption rules will be applicable if you were living in multiple states. Bankruptcy exemptions have the advantage of giving the debtor an automatic stay. This stay is placed when the bankruptcy petition is files. It stops creditors from coming after you with claims of debt repayment. At the federal level, health insurance plans, deferred compensation, certain types of retirement accounts.

When you claim bankruptcy exemptions, you have to proof the value of the asset at the present time and not when you attained it. This is because the court would need to be aware of how much they can get from it should they choose to sell it. The trustee has to determine what non-exempt property is available. They then have to ensure that all non-exempt property is sold off and then use the proceeds to pay off debts.

Exemptions can be complex, so it is advisable to always seek the professional advice of a competent attorney who can guide you on how to maximize your exemptions.

Bankruptcy is often seen as the last resort in solving any debt issues, but I do not subscribe to this. In a related article I will take you through the pros and cons of bankruptcy, and the myths of an IVA which is often touted as the debt solution to take. Please read these and it will become apparent that bankruptcy has been and remains a far more utilised debt solution than the IVA.

The consequences of becoming bankrupt may mean you lose your house, it could prevent you from pursuing certain careers and, for example, prevent you from becoming a company director for the period of time that you are bankrupt.  Having said that, the severity and stigma of bankruptcy has lessened over time and it is now far more acceptable than it used to be. This year some 80,000 individuals will become bankrupt.

Bankruptcy can be a daunting experience. There are however companies such as mine that specialise in taking customers through the bankruptcy process, even attending court with you if necessary. Faced with a statement of affairs of 35 pages which needs to be completed in triplicate can be an unnerving proposition. Advice from an expert as to whether bankruptcy is the right route, and then someone to fill in the forms and help you file them at court and then attend with you is something to be considered, especially when I can help you keep your house and your income.

How do I know if I need to pursue the bankruptcy option?

The easy way to find out is to call an expert debt advisor.  They will, very quickly, get to understand your current financial position and advise the best way to solve your situation. The conversation is completely confidential, free of charge and without obligation. You should choose someone who is not allied to either a Debt management company or an IVA firm such as me I will give impartial advice not the solution which makes me the most commission.

What is bankruptcy?

Bankruptcy means that all your debts (subject to a very few minor exceptions) are written off on the instant you are made bankrupt. If you have disposable income you may be required to pay this to the Official Receiver for a maximum of three years. However part of what I do is to configure your disposable income to reduce as much as possible the potential of having to make income payments. You will generally be discharged from bankruptcy in a year or less. If you have equity in your property or valuable assets you may have to release these to the Official Receiver. Although in the vast majority of cases I have seen this year, with very little if any equity in property, homes can be transferred from the Official Receiver back to the bankrupt or his or her spouse for his fees, of about £400.

If you have ever considered bankruptcy as a way to get out of a debt problem you can do no better than call me today. Below are the details of the local county court.

Hereford County Court

1st Floor
Barclays Bank Chambers
1-3 Broad Street
Hereford Herefordshire
HR4 9BA

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01432 357233

Bankruptcy is often thought of as something to be avoided at all costs. However, if you have unsecured personal debts which you cannot repay, it could the best way to solve your financial difficulties.

According to the Insolvency Service, approximately 6000 people declare bankruptcy every month in England and Wales. Once declared bankrupt, an individual’s debts are taken away from them and after a year, written off completely. Despite this, many people write off bankruptcy as a solution to resolve their debt because they believe that it will mean that they will lose their home and possessions.

The reality is that in very many cases this is just does not happen and bankruptcy is often the best option to resolve an unsecured debt problem.

Tenants are unlikely to lose their property

If you are a tenant you can declare bankruptcy with little or no risk of losing your home. If you rent from the local Council or Housing Association, then as long as you maintain your monthly rent payments, you will certainly be able to stay in your property if you are bankrupt.

If you rent privately, your landlord will be told that you are bankrupt. The majority of private landlords will not have a problem with this as long as you maintain your rent payments.

Property owners with no equity

The worry about bankruptcy if you are a homeowner is that you will have to give up any equity you have in the property. This very often means that the house has to be sold. However, if you have little or no equity, you will normally be able to keep your house. In these circumstances you can buy back the title to your property for a nominal fee meaning there is no risk to your property in the future either.

Will I lose personal possessions?

It is a myth that if you declare bankruptcy, things such as your washing machine, TV and furniture will be taken away. Household goods will only be taken if they are extremely valuable (for example an expensive painting or antique furniture). As such, the majority of people do not have to worry about losing any of their personal possessions

The only asset that does need to be considered carefully is a private car. If you own a car valued above £1,500 it may be at risk. However, this does not mean that you will automatically lose the vehicle. If there is a specific reason for its requirement, you may be able to keep it. Alternatively a friend or family member could offer to pay any amount of its value over £1,500 thus avoiding its loss.

What if I am a Director?

There are of course some occasions when bankruptcy may not be the right option. This is particularly the case for company directors. If you are a director and wish to remain in this position you cannot declare bankruptcy. Bankrupt individuals are not allowed to act as company directors or act in the capacity of managing a limited company for the period covered by their bankruptcy (normally 12 months).

In addition, there is a certain amount of publicity surrounding bankruptcy. As a bankrupt, your name is advertised in the local newspaper. In addition you are added to the insolvency register which is publicly accessible via the internet.

Clearly, bankruptcy is not right for everyone. However, it is an extremely useful debt solution for many people and certainly should not be overlooked because of misconceptions based on a lack of understanding.

If you are struggling with unsecured personal debt, you should certainly familiarise yourself with bankruptcy and whether it might be right for you.

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Credit After Bankruptcy: The easy-to-follow guide to a quick and lasting recovery from personal bankruptcy

Claiming bankruptcy can be a good way of getting relief from your debts. However before you go down this road, you have to be sure that all other avenues have been exhausted. This is usually a last resort for many debtors, when they feel they have too much financial baggage and creditors are breathing down their necks. You will also get a peace of mind. There are downsides to this too. You can end up with no assets and are forced to start from scratch. In addition, you can do very little to hide the fact that you are bankrupt because this is the one debt solution that is highly publicized.

The best way to go about this is to first talk to a bankruptcy lawyer. Since there are so many types of bankruptcy, the lawyer should be willing to advise you on the best option depending on your situation. Your lawyer should then help you in which type of bankruptcy you will need to file. Most people file under Chapter 7(liquidation of assets and the proceeds used to repay creditors), Chapter 11 (which allows a debtor to reorganize payments) and Chapter 13(whereby a creditor gets repayments from the debtor’s paychecks).

If you go the Chapter 7 or Chapter 13 way, there is a requirement by the creditors to file a “proof of claim”. This document is simply evidence you do indeed owe your creditor. The way this works is once you have listed your creditors and file for bankruptcy, they are notified to file a proof of claim against you for the debt that is owed to them. This now makes your creditors responsible for the documents and deadlines. After the proofs of claim are filed it is necessary to review them.

Each creditor’s proof of claim is revisited, throughout the proceedings and each creditor’s case considered as you resolve your debt once you get a discharge.