The Bankruptcy Code Acknowledges the Validity of the Homestead Exemption

Many times the subject of bankruptcy seems baffling in its complexity. Actually the basic principals of bankruptcy are fairly simple even though the federal statuses on bankruptcy are extensive. The reason that the statutes are so complex is because in as effort at social engineering, the lawmakers want to cover every possible contingency. The very complexity of the Bankruptcy Code gives the lawyers ample opportunity to try to obtain interpretation of the law which best serves their clients interest. This results in extensive litigation and occasionally in interpretations of the Code which were not what legislature intended. This on turn results in additional legislation, which results in additional litigation and on and on. Nevertheless, the underlying principals are not as complex as the Code makes them seem. Here we will discuss the personal nature of bankruptcy.

The concept of bankruptcy is an old one in the English common law. If a person could not pay his debts, his creditors hauled him into court, took all of his assets, and used those assets to satisfy their debts. If the assets were insufficient to satisfy the debts, the debtor was taken from the bankruptcy court to debtors' prison. Since this is a rather extreme remedy, Article 1 Section 8 of the U.S. Constitution gives the Congress the right to establish "?.uniform Laws on the subject of Bankruptcies throughout the United States."

As the popularity of debtors' prison declined, the concept of giving the debtor a fresh start became one of the primary purposes of the bankruptcy process. It is important to remember that a bankruptcy is a personal action which at time of discharge gives the petitioner (formerly the debtor) a fresh start. The property owned by the petitioner does not get the fresh start, the individual does.

The fact that bankruptcy is a personal action may shed some light on the effect of a homestead exemption in a bankruptcy proceeding. The bankruptcy code acknowledges the validity of homestead exemption. A homestead exemption is a personal exemption which, in an effort to preserve a person's home, protects a certain amount of an individual's equity in the homestead property. State law determines the extent and effect of a homestead exemption. Thus, if state law says that a person can declare a homestead up to $45,000 and if there is less than $45,000 equity in the property, that equity in the property is protected by the homestead exemption. This principal operates without regard to the Federal Bankruptcy Code.

By John E. Roush, Broker-Owner Atrium Real Estate Investments. John is a full-time real estate agent specializing in real estate investment and real estate investment education. To contact John send all correspondence to Johnr@investorloft.com

© 2005 http://www.InvestorLoft.com

---

Reduce Your Debt With These 5 Tips

It's never pleasant to realize that you're in financial hot... Read More

Future Secured? Oh Really?

A headline for a retirement annuities flyer declares "Future Secured!"... Read More

Repair Bad Credit Yourself

In March 2005, the U.S. financial services industry succeeded in... Read More

Help to Get Out of Debt

Debt Help is the stepping stone to debt elimination and... Read More

New Bankruptcy Law ? Targeting the Wrong People?

Last April, President Bush enthusiastically signed into law the oddly-named... Read More

Christian Debt Consolidation ? Feel Comfortable About Managing Your Debt

Many Christians feel uncomfortable with the notion of being in... Read More

Budget the Luxuries First!

Strictly speaking, his advice was preceded by another Heinlein maxim... Read More

Help for the Single Mother with Managing Credit and Debt

Today's consumers benefit drastically from the usefulness of credit. Credit... Read More

Is It Possible to Be Sued For My Debts?

It is possible for creditors and third-party collection agencies to... Read More

New Bankruptcy Legislation May Make it Harder to Find an Attorney

The recently passed Bankruptcy Abuse prevention and Consumer Protection Act... Read More

Tips For Saving Money

Still living from pay to pay? Or envying those great... Read More

The Debt Free Lifestyle

Many people have been taught that you cannot get ahead... Read More

Debt Getting You Down? - Make a List!

Debt is not much fun and when faced with it,... Read More

Assess Your Financial Attitude and Eliminate Your Debt Forever

Want to know if your attitude towards your finances is... Read More

Turning Bad Debts into Good Debts through Investing Fundamentals

If you've ever earned enough money to put some aside,... Read More

What the Mail on Sunday Said

Anyone considering Bankruptcy may have experienced fear after reading an... Read More

New Bankruptcy Law ? Where?s the Consumer Protection?

On April 20, 2005, President Bush signed into law the... Read More

What Does A Bankruptcy Trustee Do?

Once you file bankruptcy a court appointed bankruptcy trustee will... Read More

What Are The Benefits and Consequences Of Getting Rid Of Debt The Easy Way

We have all experienced getting so far in debt we... Read More

Out of Credit Card Debt - Without Filing Bankruptcy

To be out of credit card debt is your dream... Read More

Bankruptcy 101

Bankruptcy still remains a mystery in the eyes of many... Read More

Life After Debt ? Strategies for Dealing with Problem Debt

Honorably and ethically rid yourself of burdensome debts using the... Read More

Eliminating Credit Card Debt

The overwhelming task of eliminating your debts can often seem... Read More

Mandatory Credit Counseling for Those Considering Bankruptcy

Most Americans are aware of the sweeping changes in U.S.... Read More

Learn The Five Key Debt Reduction Steps You Must Take Immediately!

Step 1. The purpose of this first step is to... Read More

What is Debt Settlement?

Debt settlement is the process of negotiating with your creditors... Read More

Credit Repair - Understanding The Basics

What is Credit?Credit means that you are using someone else's... Read More

How to Avoid Bankruptcy

Bankruptcy is a legal way to offer folks with high... Read More

Drowning in Debt? Tips and Tricks for Getting Out of Hot Water with Creditors

Do you, like millions of other Americans, feel like you're... Read More

What is Debt Settlement and How Does it Work?

Debt settlement involves negotiating with a creditor or creditors to... Read More

The Bankruptcy Code Acknowledges the Validity of the Homestead Exemption

Many times the subject of bankruptcy seems baffling in its... Read More

Bankruptcy Reform

There are some new bankruptcy laws going into effect before... Read More

The Road to Debt Relief

Living with debt is not something someone hopes for, but... Read More