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What does nature of debtor's interest in property mean on a Chapter 7 bankruptcy petition?
When you complete a Chapter 7 bankruptcy petition, you
must list all of your real property interests on a form called Schedule A. On Schedule A, for each piece of property you own, you must list the "nature of your interest in the
property." Read on to learn more about what this means and the different types of ownership interests.
For more information how bankruptcy affects your property,
visit our topic area on Your
Property in Chapter 7 Bankruptcy.
On Schedule A, this question simply asks you to list the
type of ownership interest you have in a property. Some of the most common
property interests include:
Fee simple. A fee simple
interest essentially means that you own the property outright (even if there is
a mortgage on it). It is typically the most common type of ownership interest.
If you have a fee simple interest, it means you have the right to transfer the
property, pass it on to your heirs, or make changes to it during your lifetime.
Life estate. A life estate is a
type of ownership interest where you have the right to use and occupy the
property during your lifetime. But you are not allowed to sell, transfer, or leave
the property to your heirs. Upon your death, your ownership interest terminates
and the property passes according to the terms of the trust, will, or other document
that created the life estate.
Future interest. A future
interest exists if you have a right to own the property at some point in the future.
For example, if a person has a life estate in the property but it passes to you
after his or her death, then you have a future interest. But keep in mind that
just because you are listed in a person’s will or revocable trust doesn’t mean
that you have a future interest because that person can change his or her mind
and disinherit you.
Contingent interest. If you don’t
have a right to own the property unless a particular condition is satisfied
first, then you likely have a contingent interest. This type of property
interest is contingent because it is not guaranteed. If the condition is not
satisfied, the property will pass to a different person.
Lienholder. If you have a
security interest in the property such as a mortgage, judgment, or other type
of lien, then you have an ownership interest in that property as a lienholder.
Easement holder. An easement
exists if you have a limited right to use someone else’s property for a
specific purpose (such as to cross it to access a road).
of appointment. If
you have the power or authority to decide who will receive someone else’s
property, then you have a power of appointment in that property.
by: Baran Bulkat, Attorney
Chapter 7 Bankruptcy
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Using a Bankruptcy Lawyer
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The Automatic Stay
The Bankruptcy Trustee
Bankruptcy's Meeting of Creditors
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