What happens when it is clear that there is not enough money in the estate to cover the debts?
The executor of the estate must make an application to court for an order to manage a bankrupt estate, unless the court gives other instructions.
Do bankruptcy proceedings started against the deceased during his lifetime cease when he dies ?
No ! They will continue, and will apply to his estate.
Can the court rule on any other way of dealing with the estate even if there is no money to pay off the debts ?
Yes, the court has discretion to deal with it in another way and not as a bankrupt estate.
How will an estate that is bankrupt be divided ?
The expenses will be paid in this order:
Can a creditor ask a court for a deceased debtor's estate to be managed under a special bankruptcy process ?
Yes – if a person dies leaving debts and if he were alive the creditor would be entitled to initiate bankruptcy proceedings against him, then the creditor is entitled to ask the court for his estate to be managed this way,too.
When can a court give an order for the management of a deceased person's estate according to the laws of bankruptcy ?
After (a)notice of the application has been sent to the heirs or the executor of the estate (b) proof of the debt and (c) it is clear to the court that there is no reasonable possibility of the deceased's debts being paid by the estate.
Is the court bound to grant an order obliging the deceased's estate to be managed according to the laws of bankruptcy once an application for this is made ?
No ! The court has discretion and if it is shown that this is not justified or advantageous, then it can reject the application, and even order the creditor who applied for it to pay costs.
Is it possible for proceedings concerning the management of a debtor's estate to be transferred from a family or religious court, to a court with jurisdiction to deal with bankruptcy ?
Yes, if the family or religious court dealing with the proceedings sees that there is no way that the debts can be paid from the estate, it can transfer them to the district court which deals with bankruptcy.
What is the significance of a creditor's notice to the heirs/executor of the estate about an application made for the deceased's estate to be managed under the bankruptcy laws ?
Such notice is an announcement of an act of bankruptcy on the part of the estate.
What is the practical implication of a notice being sent out to creditors/executor of the estate about an application to manage the estate according to the laws of bankruptcy ?
From the point that notice is given concerning the filing of the application, no payment or transfer of property from the heirs or the executor of the estate can exempt them of their obligations towards the official receiver, or the trustee in bankruptcy.
Are transfers of property or money from the heirs to a third party before the granting of an order to manage the estate according to the laws of bankruptcy , legally valid ?
Yes, transfers of this kind, made either by the heirs or the executor of the estate, will be legally valid, providing they were made in good faith.
To prove a debt owed to him as part of an application for an order to manage the estate according to bankruptcy laws, must the creditor have a court judgment to this effect ?
No, it is not necessary for him to have a court judgment . It is enough for him to raise claims about there being prime facie evidence concerning the existence of a debt owed to him by the estate.
Must a creditor be owed a certain minimum sum before he is entitled to ask the court to manage the estate according to bankruptcy laws ?
Yes – 65,885 New Israeli Shekels (correct as of June 2005) . Having said this, the court can allow the filing of an application where the debt falls short of this sum, at the request of the creditor, if there are special reasons which it records.
Must the application to manage the estate according to bankruptcy laws be based on an actual act of bankruptcy ?
No ! It is sufficient that the estate is not capable of paying of its debts to the creditors.
If an order is granted for an estate to be managed according to the laws of bankruptcy, does this mean that the estate is bankrupt ?
Not automatically. It restricts the way the estate is managed and sets the legal framework for this.
What is the legal consequence of granting an order to manage the estate according to the laws of bankruptcy ?
That from the moment it is given the instructions of the Bankruptcy Ordinance (New Version) of 1980 about the management of the property of a bankrupt person apply, as they would upon a declaration of bankruptcy under it.
What happens after an order is given for the estate to be managed according to the laws of bankruptcy ?
The debtor's property passes into the hands of the official property receiver, whom becomes the trustee over them. He is entitled to actualize them and divide the proceeds amongst the creditors according to the Bankruptcy Ordinance (New Version) of 1980.
If there is no executor of the estate, what can the heirs do if there is not enough property in it to pay off the debts owed to creditors ?
They must apply to court for permission for the estate to be managed according to the bankruptcy laws, if it does not rule about a different way of paying off estate debts.
What rights do creditors have after the court has given an order for the estate to be managed according to the laws of bankruptcy ?
They have rights in connection with the appointment of a trustee in bankruptcy akin to creditors ' rights in cases of bankruptcy during a person's lifetime.
What place to burial costs of the debtor have in relation to other debts in an estate managed according to the laws of bankruptcy ?
Reasonable burial costs and costs of managing the estate are preferred debts, and are given priority, and paid up in full before any other debt.
What happens if after paying off all the debts on an estate managed according to the laws of bankruptcy, the official property receiver or trustee is left with money ?
If all the debts, and costs of managing the estate, and any interest or linkage due are paid off, and there is still a balance it will go to the deceased's heirs or the executor of the estate, or as ordered by the court.
How will the trustee in bankruptcy act if creditors do not demand dividends or money from the property belonging to a deceased debtor and it is not divided ?
These are to be paid into a bankruptcy account immediately and confirmation of their receipt obtained. This rule also applies to dividends or monies paid according to a compromise or settlement according to the Bankruptcy Ordinance (New Version) of 1980 which are in the trustee's hands and are not requested by the creditors within six months.
Can a creditor ask to get money deposited in a bankruptcy account of the deceased by the official receiver ?
Yes ! A creditor who considers himself entitled to money from the sums deposited in such an account can request it, and the official receiver can transfer it if he considers he is entitled to it.
Can a creditor appeal against the official receiver's decision not to transfer money to him from the special bankruptcy account of the deceased debtor ?
Yes , a creditor who considers himself/herself to be adversely affected by the official receiver's decision, can appeal against it to the district court.
If an order is given by court for a person's estate to be managed according to the rules of bankruptcy does this then mean that the estate is bankrupt ?
No ! The granting of this order puts clear boundaries to the way the estate can be managed , and lays down the legal foundations for this, but does not automatically change it into a bankrupt estate.
What should the heirs do if there is no executor for the estate and not enough money in it to pay off all its debts ?
In this situation the heirs themselves must make an application to court for the estate to be managed according to the laws of bankruptcy, if the court does not decide on another way of dealing with the estate.
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