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Former bank boss's financial challenges lead to sale of house

A federal bankruptcy judge in Massachusetts is overseeing the auction of the former dream home of a one-time bank CEO. Multiple bidders have shown interest in the multi-million dollar home; at the request of the bankruptcy trustee, international bidders will be allowed to participate in the auction via telephone.

While the debtors in many personal bankruptcy cases are typical wage-earning middle class people with some modest investments, financial challenges can plague the wealthy as well. Those Massachusetts debtors who file an individual bankruptcy and have assets -- like a second home -- may have to make some tough decisions about what property they can keep.

For example, in a typical Chapter 7 case, a bankruptcy debtor will be allowed to keep some of his or her property by claiming it as "exempt". A debtor may not claim all of her property as exempt, however; the law specifies what property a debtor may continue to own despite bankruptcy.

The debtor must turn over all of his or her other "non-exempt" property to the bankruptcy trustee. The bankruptcy trustee will then distribute that property to the debtor's creditors according to bankruptcy law. As in this case, the trustee may have to sell property like houses, cars, etc. at auction in order to get cash that he or she can provide to creditors.

Massachusetts residents who are thinking about bankruptcy, especially Chapter 7 bankruptcy, need to be aware of whether they will be able to keep their property. Sometimes, a debtor may have legal options for protecting his or her property from being seized and divided up among his or her creditors.

Source: Independent, "Bidding war looms in sale of ex-Anglo boss Drumm's house," Jessica Silver-Greenburg, Sept. 29, 2012

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