[select:
DALLAS â€" American Airlines and its parent company are suing to stop providing health care and life insurance benefits to current retirees. AMR Corp. and American filed the lawsuit Friday as part of their bankruptcy case in federal court in New York ... In bankruptcy case, American Airlines sues retirees to stop paying insurance ...
Houston Dallas Austin San Antonio Bankruptcy Attorney 888-305-1919 on maintaining homeowners insurance while in bankruptcy. You must maintain it to keep the lender from getting relief from the automatic stay so it can foreclose. Most of the time the lender will escrow the home owners insurance but where you have to make the payments make sure you do not miss them.
insurancesbusiness.blogspot.com Houston Dallas Austin San Antonio Bankruptcy Attorney on the Homeowners Insurance
Buy to Let - IVA or Bankruptcy?
During the real-estate boom which preceded these tough economic times lots of individuals throughout the uk began to dip their toes in the real estate market in the expectation of growing equity over a period of several years in the hope and expectation that this most likely give them a good profit on their investments. Purchase a house at a not too expensive price, let it out for just a few years with the rental income covering the mortgage repayments and then sell it on, pocketing the profits. As a consequence the boom extended to what has become labeled as the Buy to Let sector. The idea was simple enough. Any individual or a couple with a reasonable disposable income obtain a house and let it out to tenants. Mortgage loans of up to 100% were easy to find and also rents were buoyant. In practice the rental income was anticipated to more than cover the monthly mortgage payments. The property was expected to add to in price with each coming year and in time the sale of the property would probably provide an excellent little gain, even allowing for capital gains tax. And why stop at one property? If the idea worked with one investment, why not go for two, six, twenty, a hundred or even more properties?
What on earth could go wrong? Two things could and did. The incessant rise in house prices slowed up and in the end began to go the other way as property sales volumes and purchase prices tumbled. All the interest in rental properties started to reduce and rental money coming in started to go down. Unexpectedly those people who went into the Buy to Let sector found that they were unable to turn back the process comfortably. Given that sales of real-estate fell as a consequence did selling prices. And so did lease incomes. mortgage payments on some houses began to exceed the rental income and in some cases renting properties at any reasonable level of rental income turned out to be impossible. The spectre of negative equity turned out to be a reality for many people in the sector. Selling properties at a loss was a generally unappealing option. Many people retained on to their Buy to Let properties for too long hoping against hope that the real estate market would improve but it simply got much worse. In due course many many of these people discovered that they were insolvent and that their disposable earnings were not sufficient to bridge the difference between their mortgage repayments and their lease income. Thus their home loan payments began to fall into arrears and they began to search for solutions to their financial difficulties.
Due to the fact selling the houses would bring about shortfalls debtors found that their choices were limited to petitioning for Bankruptcy (BCY) or entering into an Individual Voluntary Arrangement (IVA). Picking the right option to pick relied largely on each individuals circumstances. The primary factor to be considered in an IVA is the disposition of the creditors and in BCY the attitude of the Official Receiver and/or of the Trustee.
Buy to Let in an IVA
When it comes to proposing an IVA, the Buy to Let property ought to be considered from two points of views - the net cost to the debtor of keeping the property and the equity therein. When the debtor have several or indeed many such properties, then each property normally has to be treated as a stand alone and on its own merits, so to speak.
If a property is cost neutral i.e. the rental income is totally consumed by the home loan payments (plus any other legitimate associated outlays such as insurance or maintenance) with no significant surplus or deficit arising then creditors are only interested in whether or not there may be any equity available in and recoverable from the property. Unsecured creditors will not force the debtor to dispose of a property which is in negative equity since any shortfall arising would most likely then be introduced into the IVA and probably have the effect of lowering the dividend for all creditors. If on the other hand the property has a large amount of positive equity then creditors will expect all such equity or a large part of it to be introduced into the IVA. Thus the property in question might have to be sold or the equity addressed by some other way such as the contribution of third party funds or remortgage.
If the property is cost positive and yields considerable net income i.e. the lease income exceeds the home loan payments (plus any other genuine relevant costs such as insurance or maintenance), then creditors will expect any such surplus income to be contributed to the IVA throughout the entire term of the IVA. If the property is in negative equity, it is not in the interests of creditors that it be sold. If there is considerable equity in the property then creditors will expect all or a large part of such equity to be realized by sale or remortgage before the end of the term of the IVA, commonly in the fourth or fifth year.
Finally if the property is cost negative i.e. the rental earnings are significantly lower than the mortgage repayments (plus any other legal related costs such as insurance or upkeep), then creditors might require the debtor to sell the property. Following such a sale, the savings made in eliminating the cost negative factor would allow monthly contributions to the IVA to be increased. If the property was in positive equity, any equity realized would be contributed to the IVA. Obviously, if the property was in substantial negative equity, the deficiency following its sale would be claimed as an unsecured debt of the arrangement. This could depress the dividend to such an extent that it would be in the interests of the unsecured creditors to allow the debtor to keep the property, notwithstanding the fact that its retention would be cost negative. However, once the property is no longer in negative equity, creditors might require that it be sold and the savings introduced into the IVA.
Buy to Let in Bankruptcy
The bankrupts estate vests in the trustee immediately on his appointment taking effect or in the case of the official receiver, on his becoming trustee. The trustee can disclaim any onerous property and any property in significant negative equity would be regarded as onerous property.
Property with equity of up to 1,000 - looked at as de minimis - can be purchased back from the trustee for a moderate amount of money. It is not uncommon for the family of a bankrupt to buy such a property on payment of 1 plus the official receivers costs of 211. A recent change in policy by the Insolvency Service means that this buy back will normally not now take place until two years and three months have elapsed since the bankruptcy order was created.
If the equity in the property is in the range of 1,000 to 5,000 then the trustee may try to register a charge on the property rather than seeking to realise this equity by having the property sold, with the risk that the sales price may well not achieve market value and that the equity realized might not cover the cost of sales.
If the equity in the property exceeds 5,000, the trustee may seek to sell the property and to realize the equity for the benefit of creditors and to pay the costs of bankruptcy. The bankruptcy laws deal in great detail with the rights and duties of the trustee and of the bankrupt and with the rights of other parties such as the bankrupts family and of creditors.
Where a bankrupt owns one or more Buy to Let properties it appears that there has been a relatively recent change in the attitude of some trustees to the treatment of such properties. Historically where there was little or no equity in such a property, trustees allowed the bankrupts family to buy back the property and allowed the bankrupt to manage the letting of the property and the servicing of the mortgage. Any surplus income thus generated would constitute part of the bankrupts disposable income and be subject to an income payments order. Thus the trustee would receive payments from the bankrupt for up to three years.
More recently, it appears that a small number of trustees try to assume control of such Buy to Let properties and to assume all responsibility for them: receive all rental income; pay the mortgage and all associated insurance & maintenance costs; deal with all rental and tenant issues and take all the regular decisions regarding the properties. If the properties go into significant positive equity in the first three years of the bankruptcy, the trustee would also be in the position to realize the equity prior to the property re-vesting in the bankrupt person. The motivation for this change in approach by trustees is unclear unless they expect to enhance yields for creditors by taking such action. Should you become bankrupt and the trustee is planning to seize control of your Buy to Let properties, you should look to obtain legal advice on this matter.
More Bankruptcy Advice Topics
Question by Missee: Can mortgage company file an insurance claim on 3 year old foreclosed home that was included in bankruptcy? I filed CH 7 Bankruptcy 3 years ago and the mortgage company foreclosed on the property. MY insurance company just called and said the mortgage company called them and filed a claim on the house for roof damage and if they paid it there is a $ 2000.00 deductible I will have to pay. Is this right? I have not lived in the home for 3 years! Best answer for Can mortgage company file an insurance claim on 3 year old foreclosed home that was included in bankruptcy?:
Answer by fth106
I'm not an expert in Bankruptcy and foreclosure procedures but this doesn't smell right. If the damage to the roof occurred during the time that your insurance was in force, why are they only now contacting you? To my knowledge, all HO insurance coverage is based on the date of the occurrence or loss. That means that whichever insurance company was insuring the home at the time the loss occurred, is responsible to handle and pay the claim. It is hard to believe that a loss over 3 years old would just now be discovered and filed.
Answer by girl.
Who ever get the money pays the deductible .
Answer by MSAD
Yes. They can. If the home was damaged while you owned it and it was insured with them. Then yes the mortgage company can file a claim. Usually they do it right after the foreclosure.
Question by Amber: Will I still owe my home insurance if I lose my house? I can't afford my home insurance because of severe water damage that caused my insurance premium to go up. I need to file bankruptcy for my bills & I am ready to go into foreclosure because I am on unemployment. I hear that if you don't pay your home insurance your mortgage company buys home insurance for you at a higher price, forcing you to pay it within your mortgage. What happens if my home goes into foreclosure and I file bankruptcy? Will I still owe my home insurance? Thanks. Best answer for Will I still owe my home insurance if I lose my house?:
Answer by Will
If you wish to retain your home and your mortgage has insurance built into an esgrow that the mortgage company pays out twice a year as well as say your property taxes then you have nothing to fear. However the mortgage company could seek a relief of stay due the fact that your payments are late and your home has no insurance coverage. If you do not plan to retain the home and you are just biding time until eviction then you can allow payments on the mortgage and insurance to lapse.
Answer by Satrap
It depends... If you got your insurance through your mortgage, then your mortgage company can/may decide to purchase its own home insurance. That means they will add the insurance payment to the loan you still owe. So, if you try to get back on track and decide to keep the house and pay the paymnets, then you will have to pay extra for that insurance as well. However, if you deal directly with your insurance company (meaning you pay them directly), then there is really nothing they can do if you stop paying. However, as long as you are staying in that house, I would advice you keep paying the insurance. You never know what may happen. I wish you the best.
Answer by Incognito
If your home goes into foreclosure and you file bankruptcy you will not "still owe" home insurance.
Answer by car253
No you will not owe anyone anything. Why not repair the water damage? Did the insurance company pay you for the damage?
Answer by crbesq
Most likely a bankruptcy will discharge that debt. However, to be sure you should consult with an attorney. Nearly all consumer bankruptcy attorneys offer free consultations. Take advantage of this to meet with one and get advice based on all of the details of your particular situation. You can find a referral at NACBA.org (National Association of Consumer Bankruptcy Attorneys).
Suzanne answers another FAQ - how long is the wait to buy a home again after a major credit event eg bankruptcy, foreclosure, etc. Delta delivers simple solutions!
insurancesbusiness.blogspot.com Foreclosure, Bankruptcy, Short Sale. How long is the wait to buy again?
Nationwide Mutual Insurance Co. has become the first major insurance company to say it won't cover damage related to a gas drilling process that blasts chemical-laden water deep into the ground.More >>. Nationwide Mutual .... Bankruptcy experts say the ... Bills, few options mean bankruptcy for CA city
Buy to Let - IVA or Bankruptcy?
During the real-estate boom which preceded these tough economic times lots of individuals throughout the uk began to dip their toes in the real estate market in the expectation of growing equity over a period of several years in the hope and expectation that this most likely give them a good profit on their investments. Purchase a house at a not too expensive price, let it out for just a few years with the rental income covering the mortgage repayments and then sell it on, pocketing the profits. As a consequence the boom extended to what has become labeled as the Buy to Let sector. The idea was simple enough. Any individual or a couple with a reasonable disposable income obtain a house and let it out to tenants. Mortgage loans of up to 100% were easy to find and also rents were buoyant. In practice the rental income was anticipated to more than cover the monthly mortgage payments. The property was expected to add to in price with each coming year and in time the sale of the property would probably provide an excellent little gain, even allowing for capital gains tax. And why stop at one property? If the idea worked with one investment, why not go for two, six, twenty, a hundred or even more properties?
What on earth could go wrong? Two things could and did. The incessant rise in house prices slowed up and in the end began to go the other way as property sales volumes and purchase prices tumbled. All the interest in rental properties started to reduce and rental money coming in started to go down. Unexpectedly those people who went into the Buy to Let sector found that they were unable to turn back the process comfortably. Given that sales of real-estate fell as a consequence did selling prices. And so did lease incomes. mortgage payments on some houses began to exceed the rental income and in some cases renting properties at any reasonable level of rental income turned out to be impossible. The spectre of negative equity turned out to be a reality for many people in the sector. Selling properties at a loss was a generally unappealing option. Many people retained on to their Buy to Let properties for too long hoping against hope that the real estate market would improve but it simply got much worse. In due course many many of these people discovered that they were insolvent and that their disposable earnings were not sufficient to bridge the difference between their mortgage repayments and their lease income. Thus their home loan payments began to fall into arrears and they began to search for solutions to their financial difficulties.
Due to the fact selling the houses would bring about shortfalls debtors found that their choices were limited to petitioning for Bankruptcy (BCY) or entering into an Individual Voluntary Arrangement (IVA). Picking the right option to pick relied largely on each individuals circumstances. The primary factor to be considered in an IVA is the disposition of the creditors and in BCY the attitude of the Official Receiver and/or of the Trustee.
Buy to Let in an IVA
When it comes to proposing an IVA, the Buy to Let property ought to be considered from two points of views - the net cost to the debtor of keeping the property and the equity therein. When the debtor have several or indeed many such properties, then each property normally has to be treated as a stand alone and on its own merits, so to speak.
If a property is cost neutral i.e. the rental income is totally consumed by the home loan payments (plus any other legitimate associated outlays such as insurance or maintenance) with no significant surplus or deficit arising then creditors are only interested in whether or not there may be any equity available in and recoverable from the property. Unsecured creditors will not force the debtor to dispose of a property which is in negative equity since any shortfall arising would most likely then be introduced into the IVA and probably have the effect of lowering the dividend for all creditors. If on the other hand the property has a large amount of positive equity then creditors will expect all such equity or a large part of it to be introduced into the IVA. Thus the property in question might have to be sold or the equity addressed by some other way such as the contribution of third party funds or remortgage.
If the property is cost positive and yields considerable net income i.e. the lease income exceeds the home loan payments (plus any other genuine relevant costs such as insurance or maintenance), then creditors will expect any such surplus income to be contributed to the IVA throughout the entire term of the IVA. If the property is in negative equity, it is not in the interests of creditors that it be sold. If there is considerable equity in the property then creditors will expect all or a large part of such equity to be realized by sale or remortgage before the end of the term of the IVA, commonly in the fourth or fifth year.
Finally if the property is cost negative i.e. the rental earnings are significantly lower than the mortgage repayments (plus any other legal related costs such as insurance or upkeep), then creditors might require the debtor to sell the property. Following such a sale, the savings made in eliminating the cost negative factor would allow monthly contributions to the IVA to be increased. If the property was in positive equity, any equity realized would be contributed to the IVA. Obviously, if the property was in substantial negative equity, the deficiency following its sale would be claimed as an unsecured debt of the arrangement. This could depress the dividend to such an extent that it would be in the interests of the unsecured creditors to allow the debtor to keep the property, notwithstanding the fact that its retention would be cost negative. However, once the property is no longer in negative equity, creditors might require that it be sold and the savings introduced into the IVA.
Buy to Let in Bankruptcy
The bankrupts estate vests in the trustee immediately on his appointment taking effect or in the case of the official receiver, on his becoming trustee. The trustee can disclaim any onerous property and any property in significant negative equity would be regarded as onerous property.
Property with equity of up to 1,000 - looked at as de minimis - can be purchased back from the trustee for a moderate amount of money. It is not uncommon for the family of a bankrupt to buy such a property on payment of 1 plus the official receivers costs of 211. A recent change in policy by the Insolvency Service means that this buy back will normally not now take place until two years and three months have elapsed since the bankruptcy order was created.
If the equity in the property is in the range of 1,000 to 5,000 then the trustee may try to register a charge on the property rather than seeking to realise this equity by having the property sold, with the risk that the sales price may well not achieve market value and that the equity realized might not cover the cost of sales.
If the equity in the property exceeds 5,000, the trustee may seek to sell the property and to realize the equity for the benefit of creditors and to pay the costs of bankruptcy. The bankruptcy laws deal in great detail with the rights and duties of the trustee and of the bankrupt and with the rights of other parties such as the bankrupts family and of creditors.
Where a bankrupt owns one or more Buy to Let properties it appears that there has been a relatively recent change in the attitude of some trustees to the treatment of such properties. Historically where there was little or no equity in such a property, trustees allowed the bankrupts family to buy back the property and allowed the bankrupt to manage the letting of the property and the servicing of the mortgage. Any surplus income thus generated would constitute part of the bankrupts disposable income and be subject to an income payments order. Thus the trustee would receive payments from the bankrupt for up to three years.
More recently, it appears that a small number of trustees try to assume control of such Buy to Let properties and to assume all responsibility for them: receive all rental income; pay the mortgage and all associated insurance & maintenance costs; deal with all rental and tenant issues and take all the regular decisions regarding the properties. If the properties go into significant positive equity in the first three years of the bankruptcy, the trustee would also be in the position to realize the equity prior to the property re-vesting in the bankrupt person. The motivation for this change in approach by trustees is unclear unless they expect to enhance yields for creditors by taking such action. Should you become bankrupt and the trustee is planning to seize control of your Buy to Let properties, you should look to obtain legal advice on this matter.
Filing bankruptcy can be complex and difficult, and it can have lasting effects. You should consider what's involved carefully before deciding if it's the right answer for you. Don't expect bankruptcy to offer you an easy solution to your overspending habits or financial mismanagement. It's intended to relieve you of burdensome debts incurred due to unfortunate circumstances such as medical problems or unemployment.
To file or not to file
How do you know if you should go bankrupt? If your situation is temporary and will change for the better in the near future, you may just need some breathing room. Contact your creditors; they may offer to lower your payments or interest rate under a hardship program. Or perhaps a credit counseling service can help you restructure your debt and get on your feet again. In fact, for bankruptcy filings, credit counseling is a prerequisite.
Then again, you may not see your income going up in the foreseeable future, or maybe you can't cut your living expenses any further.
Perhaps your pleas to restructure your debt have fallen on deaf ears or the relief you've been offered isn't enough to help. Maybe now it's time to consider bankruptcy.Personal bankruptcy in general
There are two types of personal bankruptcy, Chapter 7 and Chapter 13. Under Chapter 7, assets are sold to pay creditors and the debt that's left is discharged. If you file under Chapter 13, on the other hand, you probably won't have to sell assets, but all of your disposable income will go to pay creditors for a specified period of time, most likely five years.
Each chapter has its own rules regarding what assets you can keep (so-called exempt property) and what debts you can be discharge (some debts, such as student loans, are nondischargeable), among other things.
How Chapter 7 works
Generally, Chapter 7 is a liquidation proceeding with the court determining what property, if any, you have to sell to pay your debts.
By law, you get to keep certain exempt property.
There are federal bankruptcy exemptions and each state has its own exemptions. Depending on the state in which you live, you may be able to choose between the federal or state exemptions, or you may have to use your state's exemptions. Exemptions generally include specific amounts for your home, car, jewelry, tools of trade, household goods and furnishings, and retirement savings.Property that is not exempt may be sold to repay your creditors (at least in part). Unsecured debts that remain unpaid are then discharged, with certain exceptions such as tax debts, student loans, domestic support payments, and debts resulting from fraud or driving while intoxicated.
If you go bankrupt against a secured debt, such as a mortgage or a car loan, the collateral securing the debt--the house or the car--will either revert to the lender or be sold with the proceeds going to the lender as at least a partial satisfaction of that secured debt.
How Chapter 13 works
Under Chapter 13, often referred to as wage earner's bankruptcy, you aren't required to sell assets to satisfy creditors. Instead, your debts are reorganized under a plan and you repay them, fully or partially, over a three-year or five-year period with your disposable income (money you have left over after meeting your normal monthly living expenses). If you complete the plan successfully, unsecured debts that remain unpaid are then discharged, with certain exceptions.
Chapter 13 is often used to forestall and ultimately prevent foreclosure on real property, such as your home. To accomplish this, you would have to continue to make your regular monthly payments directly to the mortgage lender, plus you make separate catch up payments on overdue amounts according to a schedule spelled out in the Chapter 13 plan. If you complete the repayment schedule successfully, your mortgage would again be considered up to date.
Determining whether to file under Chapter 7 or Chapter 13
An income eligibility test will be applied to all Chapter 7 petitions; if your income is above the median income level in your state, and you're capable of repaying a specified portion of your unsecured debt, you'll be required to file under Chapter 13.
Life after bankruptcy
A bankruptcy notation will appear on your credit report for 10 years. It's a serious blemish that can affect you in many ways. Aside from the difficulty it will cause when you try to get new credit, insurance companies may correlate your ability to pay your debts with your ability to make premium payments. As a result, a bankruptcy notation on your credit report may make it difficult (and more expensive) to get certain types of insurance. What's more, an employer may take your credit history into account when deciding to hire or promote you.
Of course, you'll be able to get credit again, but you may have to pay higher interest rates or provide a cosigner or collateral to get started. Getting new credit will help you establish a new track record. But be careful; you won't be able to declare bankruptcy again for several years.
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Buy to Let - IVA or Bankruptcy?
During the real-estate boom which preceded these tough economic times lots of individuals throughout the uk began to dip their toes in the real estate market in the expectation of growing equity over a period of several years in the hope and expectation that this most likely give them a good profit on their investments. Purchase a house at a not too expensive price, let it out for just a few years with the rental income covering the mortgage repayments and then sell it on, pocketing the profits. As a consequence the boom extended to what has become labeled as the Buy to Let sector. The idea was simple enough. Any individual or a couple with a reasonable disposable income obtain a house and let it out to tenants. Mortgage loans of up to 100% were easy to find and also rents were buoyant. In practice the rental income was anticipated to more than cover the monthly mortgage payments. The property was expected to add to in price with each coming year and in time the sale of the property would probably provide an excellent little gain, even allowing for capital gains tax. And why stop at one property? If the idea worked with one investment, why not go for two, six, twenty, a hundred or even more properties?
What on earth could go wrong? Two things could and did. The incessant rise in house prices slowed up and in the end began to go the other way as property sales volumes and purchase prices tumbled. All the interest in rental properties started to reduce and rental money coming in started to go down. Unexpectedly those people who went into the Buy to Let sector found that they were unable to turn back the process comfortably. Given that sales of real-estate fell as a consequence did selling prices. And so did lease incomes. mortgage payments on some houses began to exceed the rental income and in some cases renting properties at any reasonable level of rental income turned out to be impossible. The spectre of negative equity turned out to be a reality for many people in the sector. Selling properties at a loss was a generally unappealing option. Many people retained on to their Buy to Let properties for too long hoping against hope that the real estate market would improve but it simply got much worse. In due course many many of these people discovered that they were insolvent and that their disposable earnings were not sufficient to bridge the difference between their mortgage repayments and their lease income. Thus their home loan payments began to fall into arrears and they began to search for solutions to their financial difficulties.
Due to the fact selling the houses would bring about shortfalls debtors found that their choices were limited to petitioning for Bankruptcy (BCY) or entering into an Individual Voluntary Arrangement (IVA). Picking the right option to pick relied largely on each individuals circumstances. The primary factor to be considered in an IVA is the disposition of the creditors and in BCY the attitude of the Official Receiver and/or of the Trustee.
Buy to Let in an IVA
When it comes to proposing an IVA, the Buy to Let property ought to be considered from two points of views - the net cost to the debtor of keeping the property and the equity therein. When the debtor have several or indeed many such properties, then each property normally has to be treated as a stand alone and on its own merits, so to speak.
If a property is cost neutral i.e. the rental income is totally consumed by the home loan payments (plus any other legitimate associated outlays such as insurance or maintenance) with no significant surplus or deficit arising then creditors are only interested in whether or not there may be any equity available in and recoverable from the property. Unsecured creditors will not force the debtor to dispose of a property which is in negative equity since any shortfall arising would most likely then be introduced into the IVA and probably have the effect of lowering the dividend for all creditors. If on the other hand the property has a large amount of positive equity then creditors will expect all such equity or a large part of it to be introduced into the IVA. Thus the property in question might have to be sold or the equity addressed by some other way such as the contribution of third party funds or remortgage.
If the property is cost positive and yields considerable net income i.e. the lease income exceeds the home loan payments (plus any other genuine relevant costs such as insurance or maintenance), then creditors will expect any such surplus income to be contributed to the IVA throughout the entire term of the IVA. If the property is in negative equity, it is not in the interests of creditors that it be sold. If there is considerable equity in the property then creditors will expect all or a large part of such equity to be realized by sale or remortgage before the end of the term of the IVA, commonly in the fourth or fifth year.
Finally if the property is cost negative i.e. the rental earnings are significantly lower than the mortgage repayments (plus any other legal related costs such as insurance or upkeep), then creditors might require the debtor to sell the property. Following such a sale, the savings made in eliminating the cost negative factor would allow monthly contributions to the IVA to be increased. If the property was in positive equity, any equity realized would be contributed to the IVA. Obviously, if the property was in substantial negative equity, the deficiency following its sale would be claimed as an unsecured debt of the arrangement. This could depress the dividend to such an extent that it would be in the interests of the unsecured creditors to allow the debtor to keep the property, notwithstanding the fact that its retention would be cost negative. However, once the property is no longer in negative equity, creditors might require that it be sold and the savings introduced into the IVA.
Buy to Let in Bankruptcy
The bankrupts estate vests in the trustee immediately on his appointment taking effect or in the case of the official receiver, on his becoming trustee. The trustee can disclaim any onerous property and any property in significant negative equity would be regarded as onerous property.
Property with equity of up to 1,000 - looked at as de minimis - can be purchased back from the trustee for a moderate amount of money. It is not uncommon for the family of a bankrupt to buy such a property on payment of 1 plus the official receivers costs of 211. A recent change in policy by the Insolvency Service means that this buy back will normally not now take place until two years and three months have elapsed since the bankruptcy order was created.
If the equity in the property is in the range of 1,000 to 5,000 then the trustee may try to register a charge on the property rather than seeking to realise this equity by having the property sold, with the risk that the sales price may well not achieve market value and that the equity realized might not cover the cost of sales.
If the equity in the property exceeds 5,000, the trustee may seek to sell the property and to realize the equity for the benefit of creditors and to pay the costs of bankruptcy. The bankruptcy laws deal in great detail with the rights and duties of the trustee and of the bankrupt and with the rights of other parties such as the bankrupts family and of creditors.
Where a bankrupt owns one or more Buy to Let properties it appears that there has been a relatively recent change in the attitude of some trustees to the treatment of such properties. Historically where there was little or no equity in such a property, trustees allowed the bankrupts family to buy back the property and allowed the bankrupt to manage the letting of the property and the servicing of the mortgage. Any surplus income thus generated would constitute part of the bankrupts disposable income and be subject to an income payments order. Thus the trustee would receive payments from the bankrupt for up to three years.
More recently, it appears that a small number of trustees try to assume control of such Buy to Let properties and to assume all responsibility for them: receive all rental income; pay the mortgage and all associated insurance & maintenance costs; deal with all rental and tenant issues and take all the regular decisions regarding the properties. If the properties go into significant positive equity in the first three years of the bankruptcy, the trustee would also be in the position to realize the equity prior to the property re-vesting in the bankrupt person. The motivation for this change in approach by trustees is unclear unless they expect to enhance yields for creditors by taking such action. Should you become bankrupt and the trustee is planning to seize control of your Buy to Let properties, you should look to obtain legal advice on this matter.
Filing bankruptcy can be complex and difficult, and it can have lasting effects. You should consider what's involved carefully before deciding if it's the right answer for you. Don't expect bankruptcy to offer you an easy solution to your overspending habits or financial mismanagement. It's intended to relieve you of burdensome debts incurred due to unfortunate circumstances such as medical problems or unemployment.
To file or not to file
How do you know if you should go bankrupt? If your situation is temporary and will change for the better in the near future, you may just need some breathing room. Contact your creditors; they may offer to lower your payments or interest rate under a hardship program. Or perhaps a credit counseling service can help you restructure your debt and get on your feet again. In fact, for bankruptcy filings, credit counseling is a prerequisite.
Then again, you may not see your income going up in the foreseeable future, or maybe you can't cut your living expenses any further.
Perhaps your pleas to restructure your debt have fallen on deaf ears or the relief you've been offered isn't enough to help. Maybe now it's time to consider bankruptcy.Personal bankruptcy in general
There are two types of personal bankruptcy, Chapter 7 and Chapter 13. Under Chapter 7, assets are sold to pay creditors and the debt that's left is discharged. If you file under Chapter 13, on the other hand, you probably won't have to sell assets, but all of your disposable income will go to pay creditors for a specified period of time, most likely five years.
Each chapter has its own rules regarding what assets you can keep (so-called exempt property) and what debts you can be discharge (some debts, such as student loans, are nondischargeable), among other things.
How Chapter 7 works
Generally, Chapter 7 is a liquidation proceeding with the court determining what property, if any, you have to sell to pay your debts.
By law, you get to keep certain exempt property.
There are federal bankruptcy exemptions and each state has its own exemptions. Depending on the state in which you live, you may be able to choose between the federal or state exemptions, or you may have to use your state's exemptions. Exemptions generally include specific amounts for your home, car, jewelry, tools of trade, household goods and furnishings, and retirement savings.Property that is not exempt may be sold to repay your creditors (at least in part). Unsecured debts that remain unpaid are then discharged, with certain exceptions such as tax debts, student loans, domestic support payments, and debts resulting from fraud or driving while intoxicated.
If you go bankrupt against a secured debt, such as a mortgage or a car loan, the collateral securing the debt--the house or the car--will either revert to the lender or be sold with the proceeds going to the lender as at least a partial satisfaction of that secured debt.
How Chapter 13 works
Under Chapter 13, often referred to as wage earner's bankruptcy, you aren't required to sell assets to satisfy creditors. Instead, your debts are reorganized under a plan and you repay them, fully or partially, over a three-year or five-year period with your disposable income (money you have left over after meeting your normal monthly living expenses). If you complete the plan successfully, unsecured debts that remain unpaid are then discharged, with certain exceptions.
Chapter 13 is often used to forestall and ultimately prevent foreclosure on real property, such as your home. To accomplish this, you would have to continue to make your regular monthly payments directly to the mortgage lender, plus you make separate catch up payments on overdue amounts according to a schedule spelled out in the Chapter 13 plan. If you complete the repayment schedule successfully, your mortgage would again be considered up to date.
Determining whether to file under Chapter 7 or Chapter 13
An income eligibility test will be applied to all Chapter 7 petitions; if your income is above the median income level in your state, and you're capable of repaying a specified portion of your unsecured debt, you'll be required to file under Chapter 13.
Life after bankruptcy
A bankruptcy notation will appear on your credit report for 10 years. It's a serious blemish that can affect you in many ways. Aside from the difficulty it will cause when you try to get new credit, insurance companies may correlate your ability to pay your debts with your ability to make premium payments. As a result, a bankruptcy notation on your credit report may make it difficult (and more expensive) to get certain types of insurance. What's more, an employer may take your credit history into account when deciding to hire or promote you.
Of course, you'll be able to get credit again, but you may have to pay higher interest rates or provide a cosigner or collateral to get started. Getting new credit will help you establish a new track record. But be careful; you won't be able to declare bankruptcy again for several years.
During the last two years many people who have never though about bankruptcy before have found it as a necessary step to cope with the consequences of the economical crisis. It's not something that means that you have failed completely anymore. Only during the initial phase of the crisis there was a drastic increase by 34% of persons filing for Chapter 13 bankruptcy as the only possible option to protect personal assets such as households.Why using Chapter 13 bankruptcy in the first place?
Chapter 13 is different from the common Chapter 7 bankruptcy as it allows organizing debt payouts in a way so that the personal assets of the person filing for this type of bankruptcy are not affected or used for paying out debts. Chapter 13 bankruptcy (also referred to as Individual Debt Adjustment) allows the person to kip all his personal belongings and pay out the debts during a specified period of time, usually 3 to 5 years. During this period the debtor is protected from any claims that the creditors may file, which is a very good option if you have some assets you want to protect. Still, such protection comes for a price and it may seem like a small one to pay initially, but in the long run it only gets bigger.
What escapes the attention of those who file for Chapter 13 bankruptcy is that any form of insurance and loans will come at a higher cost than before. And over time these costs will make up the actual price of using this form of financial protection.
Why does bankruptcy affect insurance rates?
When you're getting car insurance quotes or applying for a home loan most insurance and lending institutions will use your credit report in order to assess the risk they are taking by working with you. And your credit report will be severely affected by bankruptcy, persisting for up to 10 years after you've filed for bankruptcy. Your credit rating will drop and it will be much harder for you to find affordable insurance or loans, if any at all.
How will bankruptcy affect my car insurance quotes?
The degree of impact Chapter 13 bankruptcy will have on your insurance rates and quotes depends on how good your credit rating was before you've filed for bankruptcy. If it was good enough, you will typically face a minor increase in insurance rates, and in some cases it may remain the same. However, if you already had problems with your credit record then a bankruptcy entry will certainly force your insurance rates and cost of any types of loans to rise substantially. That is, of course, if the company you got car insurance quotes initially uses credit rating in the process of calculating your rates.
What to do id filing for bankruptcy is the only option?
First of all, make sure to check your payment options with all insurance providers that you've previously paid using a credit card, as through bankruptcy most of your credit lines will be closed. In situation like this it's best to have an insurance provider that doesn't rely on credit ratings when calculating rates. So you may want to take your time and look for home, health and car insurance quotes from providers who make part of this group of insurers. They are not as numerous, but still there are plenty of companies to choose from.
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Question by debra k: i have filed bankruptcy will getting car or home insurance hard to do? Best answer for i have filed bankruptcy will getting car or home insurance hard to do?:
Answer by Herm
yes, also depends how long ago you filled,banks see you has high risk and that means intrest rate will be high
Answer by Belle
It will for about 7 years. Most car loans will be about 12% APR & higher, same for home loans. You can get one or both, if you shop around. There are a lot of companies out there today that will give you a second chance loan. That's a loan for those with bankruptcy or less than ideal credit. Just make sure to ask questions & read everything. Good luck to you!
Answer by Frank Castle
No. Top 3 Answerer in Business & Finance. (Vote for me)
Answer by mcooper06
Read the question people! She is asking about insurance not a loan. It should not impact your insurance whatsoever unless you apply for it with Allstate. Allstate recently made the news by announcing that they would be using credit scores to rate auto and home insurance. I don't think it has caught on in underwriting yet with other companies.
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