3. Voluntary bankruptcy for individual debtors in other countries.
3.1 The United States of America
The relevant law is in Chapter 7 of the Bankruptcy Code, Title 11 of the United States Code. entitled Liquidation, contemplates an orderly, court-supervised procedure by which a trustee collects the assets of the debtor's estate, reduces them to cash, and makes distributions to creditors, subject to the debtor's right to retain certain exempt property and the rights of secure creditors. To qualify for relief under Chapter 7, the debtor must be an individual, a partnership, or a corporation. 11 U.S.C. § 109(b); 101(41). Relief is available under Chapter 7 irrespective of the amount of the debtor's debts or whether the debtor is solvent or insolvent. However, amendments to the Bankruptcy Code by into the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 require the application of a "means test" to determine whether individual consumer debtors qualify for relief under Chapter 7. If such a debtor's income is in excess of certain thresholds, the debtor may not be eligible for Chapter 7 relief. A Chapter 7 case begins with the debtor filing a petition with the bankruptcy court serving the area where the individual debtor has its principal place of business or principal assets. 28 U.S.C. § 1408. In addition to the petition, the debtor is also required to file with the court schedules of assets and liabilities, a schedule of current income and expenditures, a statement of financial affairs, a schedule of executory contracts and unexpired lease, and a statement of financial affairs. Bankruptcy Rule 1007(b). Currently the courts are required to charge a $245 case filing fee, a $39 miscellaneous administrative fee, and a $15 trustee surcharge (a total of $299).. The filing of a petition under Chapter 7 triggers "automatic stay" against most actions by creditors against the debtor or the debtor's property. 11 U.S.C. §362. A "meeting of creditors" is usually held 20 to 40 days after the petition is filed. Bankruptcy Rule 2003(a). The discharge will be granted to a Chapter 7 debtor relatively early in the case, that is, 60 to 90 days after the date first set for the meeting of creditors. Bankruptcy Rule 4004(c). However, a discharge is available to individual debtors only, not to partnerships or corporations. 11. U. S. C. §727(a)(1). Most claims against an individual are discharged except for alimony and child maintenance and support obligations, certain taxes, debts for certain educational benefit overpayments or loans made or guaranteed by a governmental unit, etc. as specifically listed in § 523 of the Bankruptcy Code.1
3.2 The United Kingdom
If the debtor would like to apply for bankruptcy, first, he needs to complete the following forms: 1. The Petition (Insolvency Rules 1986 form 6.27) - this form is the request to the Court for the debtor to be made bankrupt and includes the reasons for the request 2. The Statement of Affairs (Insolvency Rules 1986 form 6.28) - this form shows all the debtor's assets and all the debtor's debts, including the names and addresses of the creditors and the amount the debtor owes each one. The debtor can get the forms, free of charge, from a local court that deals with bankruptcy and the debtor can also complete the forms on-line or print the forms off at the Insolvency Service's website at: www.insolvency.gov.uk. Once the forms are completed, the debtor needs to print them and take them to court.
The debtors have to pay three fees: (1) The court fee of f-1 50 - in some
circumstances the court may waive this fee; (2) The deposit of £325 towards the costs of
administering bankruptcy; and (3) The fee to swear the statement of affairs. In a county court, no charge is made to swear this affidavit, which is part of the statement of affairs. But in the High Court or before a solicitor there is a £7 charge. Bankruptcy petitions can be presented at the High Court in London, or in a county court that deals with bankruptcy matters. Generally, the debtor should take the petition for bankruptcy to the court that deals with the area where the debtor has lived or traded for the longest period in the previous six months. The court will either hear the petition straight away or arrange a time for the court to consider it.
At the hearing, the court can do one of four things: 1. Stay (delay) the proceedings - often because the court needs further information before it can decide whether to make a bankruptcy order. 2. Dismiss the petition - perhaps because an administration order would be more appropriate. 3. Appoint an insolvency practitioner - if the court thinks an individual voluntary arrangement would be appropriate. This will only be possible if the debtor's assets are more than £4,000; the debtor's unsecured debts are less than £40,000; and the 'debtors have not been bankrupt and a not made an individual voluntary arrangement in the previous five years. If the debtors do not wish to enter into such an arrangement, the debtors should inform court. 4. Make a bankruptcy order.
The debtors will become bankrupt the moment the order is made by the court. The official
receiver, who is a civil servant in the Insolvency Service and an officer of the court, will be responsible for administering the debtor bankruptcy and protecting the debtor assets from the date of the bankruptcy order. He or she will act as the debtor's trustee in bankruptcy unless the court appoints an insolvency practitioner to take this role. The trustee in bankruptcy is responsible for looking after the debtor's financial affairs for period before and during bankruptcy. The official receiver must also report to the court matters which indicate that the debtors may have committed criminal offences Connection with the debtor's bankruptcy.
The debtor will no longer control his or her assets. The debtor can keep e following items unless their individual value is more than the cost of a reasonable replacement : (1) tools, books, vehicles and other items of equipment which he or she needs to use personally in his or her employment, business or vocation; (2) clothing, bedding, furniture, household equipment and other basic items the debtor and his or her family need in the home. The trustee will dispose of the debtor's assets and use the money to pay the fees, costs and expenses of the bankruptcy and then the debtor's creditors. If appointed, the insolvency practitioner's fees for acting as a trustee are also paid from the money raised by selling the debtor's assets. The trustee may apply to the court for an order restoring property to him or her if the debtor disposed of it in a way which was unfair to his or her creditors (for example, if before bankruptcy the debtor had transferred property to a relative for less than its actual worth). The trustee may claim property which the debtor obtains or which passes to the debtor (for example, under a will) while the debtor is bankrupt.
The trustee may apply to court for an Income Payments Order (IPO), which requires the debtor to make contributions towards the bankruptcy debts from the debtor's income. The court will not issue an IPO if it leaves the debtor without enough income to meet the reasonable domestic needs of the debtor and his or her family. If the debtors have an increase or decrease in income, the IPO can be changed. Generally, the debtor will be automatically freed from bankruptcy after a maximum of twelve months. This period will be shorter if the official receiver concludes his enquiries into the debtor's affairs sooner and files a notice in court. The debtor will automatically become free from bankruptcy if the court annuls the bankruptcy order. This would normally be where the debtor's debts and the 'fees and expenses of the bankruptcy proceedings have been paid in full, or where the bankruptcy order should not have been made. However, in some cases the debtor discharge could be suspended. Discharge releases the debtor from most of the debts he or she owed at the date of the bankruptcy order. Exceptions include debts arising from fraud and any claims which cannot be made in the bankruptcy itself. The debtor will only be released from any liability to pay damages for personal injuries to any person if the court thinks fit.2