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socrateaser, Attorney
Category: Bankruptcy Law
Satisfied Customers: 39045
Experience:  Attorney and Real Estate Broker -- Retired (mostly)
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Hi Dwayne - I have a follow up query regarding a debt I am

Customer Question

Hi Dwayne - I have a follow up query regarding a debt I am being pursued for in the UK. Currently 11,000 GBP for mortgage arrears, and soon to be 150,000 GBP for negative equity on the Cypriot property. Do you time to chat?
Submitted: 3 years ago.
Category: Bankruptcy Law
Expert:  Texas Atty replied 3 years ago.

Dwayne B. :

Hi. We talked a few weeks ago about debt collection on this in the US, the possibility of bankruptcy here or the UK, etc. correct?

JACUSTOMER-ptcyjuue- :

Yes that's correct

Dwayne B. :

I can discuss any US issues with you.

JACUSTOMER-ptcyjuue- :

I want to get more clarity of what it takes to declare bankruptcy here in the US - so if they do pursue me with a court order over here, I have clarity over my options

Dwayne B. :

Sure. What can I answer for you?

JACUSTOMER-ptcyjuue- :

I have minimal assets and am currently working, with a take home salary of about $100,000.

JACUSTOMER-ptcyjuue- :

With this, and a debt of 150,000 GBP, I presume I cannot declare bankruptcy

JACUSTOMER-ptcyjuue- :

But would rather be forced to make repayment

Dwayne B. :

No, you could still declare bankruptcy. However, I think you are going to have questions that will require a bankruptcy expert. It would probably be better for me to opt out and send it to that section.

Dwayne B. :

Would you have any objection to that?

Dwayne B. :

I know the general info but the specifics need someone who works with it every day.

JACUSTOMER-ptcyjuue- :

sounds like a good plan

Dwayne B. :

I'll switch it over then. Best wishes on it.

JACUSTOMER-ptcyjuue- :


Expert:  socrateaser replied 3 years ago.


Different contributor here. I cannot use the website "chat" feature. However I have fairly expansive knowledge of U.S. bankruptcy law. Please permit me to assist.


1. What is the nature of the debt (breach of contract, credit card, bad business loan, home mortgage, criminal restitution, income tax liability, etc.)?


2. Have you already been sued, and a judgment issued from a court confirming the debt and its amount?


3. In which U.S. jurisdiction do you currently reside?


4. If you have resided in the jurisdiction for less than three years and four months, then where did you reside previously, and for how long?


5. If you have specific questions, please provide them, so I can narrow the focus and address them specifically.


Thanks in advance.



Customer: replied 3 years ago.



Context: I moved to CA on 12Jan2012 with my wife and son.Previously we lived in the UK. In 2003 I bought a buy2let property in Cyprus. With the financial crisis of '08 the rental income dropped, the mortgage rose and the property went into negative equity. The bank as engaged a debt collection agency in the UK to chase me for the mortgage arrears of 11,000 GBP and I am trying to sell the property, leaving a short fall of 160,000 GBP on the property value, which I am liable for under Cypriot & British Law. Both my wife and I currently work. I make $100,000 after tax. We have signed a post nup and put all our assets in my wife's name - house and cars essentially.





1) Home mortgage - on a buy2let property in Cyprus that has fallen into negative equity and on which I am in arrears on the mortgage (see context above)


2) no - just informed by a debt collection agency for the mortgage arrears


3) CA, San Francisco Bay Area


4) London, UK for 20 yrs


5) My question relates to the fact that if I do not pay the 160,000GBP and there is a court order made in the UK, that gets domesticated in the US - then what are my options? Either if I keep working, drop my income or stop working.




Expert:  socrateaser replied 3 years ago.
Okay, thanks. Here we go:

1. Chapter 7, i.e., liquidation bankruptcy, requires that the debtor must generally be unable to pay between $117 to $195 per month over a 5-year period. Bankr. Code § 707(b)(1)-(2). You clearly are not within that income realm, consequently, Chapter 7 is not an option.

2. Chapter 13, i.e., individual debtor bankruptcy, requires the debtor's total noncontingent, liquidated secured debt must be less than $1,081,400 (and liquidated unsecured debt less than $360,475 for an individual debtor) for an individual debtor and spouse to be eligible for Chapter 13 relief. Bankr. Code § 109(e).

3. If Chapter 13 is not an option, then you must file Chapter 11, which is very similar, though some debts may be discharged in Ch 13 that cannot be discharged in Ch. 11. From what you've described this issue is irrelevant.

4. Assuming Chapter 13 eligibility (a) transferring your assets to your spouse can (and will) be challenged by the bankruptcy trustee, because any asset transfer to an insider (which includes a spouse) that occurs within two years of the filing of the bankruptcy petition is considered fraudulent. Bankr. Code 548(a)(1)(B). Consequently, your transfer of assets to your spouse will not be permitted. They will be subject to the bankruptcy estate.

5. Because of your short time in California, and because your previous residence in the UK is not a "U.S. State," you must use the federal bankruptcy exemptions. See this link for a brief explaination.

6. If your home has equity value greater than $22,975, then the bankruptcy trustee can sell the property to pay your creditors. Bankr. Code 522(d)(1). The exception is where you create a Chapter 13 bankruptcy plan that pays your creditors at least as much as they would have received had you filed for Chapter 7 and liquidated all of your debts.

7. Consequently, what you must do is determine were you to liquidate all of your assets at this time, would their value exceed the debt owed on the Cypress property, after subtracting all of your property exemptions. Note: retirement plan assets, established under U.S. federal law (e.g., 401(k); IRAs (up to $1,245,475)) are exempt in bankruptcy, so these assets do not count against you.

In sum, you need to sit down with a local bankruptcy attorney and "show your [financial] cards," so that you can completely determine if a Chapter 13/11 plan will be capable of discharging a substantial amount of your debt. If not, you may be better off trying to negotiate a settlement with the debt collector, because bankruptcy isn't free (a Chapter 13 will run you about $5,000, assuming no surprises).

If nothing else, the Ch. 13 would stop the debt collector from annoying you further, even if you were to have to confirm a 100% bankruptcy plan (your entire debt over 5 years).

That about covers the issue. If you need a link to a reputable bankruptcy lawyer referral service, please let me know and I will be happy to provide. And, thanks for using!