Bankruptcy Brisbane is a complicated
process, but I know from meeting with thousands facing the possibility of
bankruptcy over the years, that nothing at all troubles people more than the
thought of losing the family home. Almost everyone is emotionally connected to
their home - it's where the children have grown up, it's where you enjoy life
on a day to day basis.
Will you lose your home if you go bankrupt?
The response is a resounding maybe. (not very helpful, I know) People generally
feel it's an inevitable consequence and a part of Bankruptcy, and consequently
push themselves to the brink of insanity to not lose the family home. But when
it comes to the whole process of Bankruptcy, a key advantage of Debt Agreements
and Personal Insolvency Agreements is you can keep your house. The reason is
simple: you've accepted to pay back the debt you are in.
So how is it possible to keep my Brisbane
house, you ask? It's easier if I explain the basic principle behind the Bankruptcy
process as administered by the trustee, then you'll have a more clear idea.
The responsibility of the bankruptcy
trustee is to firstly comply with the regulation of the bankruptcy act 1966
(it's a very plain read about 600 pages if you are intrigued).
Within that regulatory framework, the
trustee is to help recuperate monies owed to your creditors, that is done in a
bunch of different ways but it mainly comes down to income and assets. The
trustees role is to collect payments beyond your income threshold. The further
role is to sell off any assets that can contribute to paying your debts.
What this seems is that yes the trustee
will sell your house right? Not always. The only reason the trustee will sell
off any asset including your house is to get money to pay back your debts. If
there is no equity on your property then it's pointless to sell your home. This
is happening increasingly since the GFC as house prices in many locations have
been heading south so what you paid 4 years ago may not necessarily reflect the
price today.
A quick tip here if you have a house in
Brisbane and are looking at Bankruptcy: get a professional to help you through
this process, there are lots of variables in these scenarios that need to be
considered.
You might wonder, why would the bank want
bankrupt customers? wouldn't they hope to sell your house and not take the
risk? The bank that has kindly lent you the money for your house is creating
good money every month in interest out of you, month in month out, just as long
as you keep up to date with your monthly payments then the bank wants you in
there at all costs. Essentially however it's not the bank's call if the trustee
establishes that there is ample equity in your house the trustee will force you
and the bank to sell the house.
When you file for bankruptcy you are asked
to write down the value of your house and the amount you owe on the house. A
tip if you are aiming to work out the value of your house: use a registered
valuer as this will offer you peace of mind, don't use your neighbours' gut
feel advice or a real estate agents advice to arrive at this figure. When you
get a valuer out to your house, see to it you tell the valuer to value the
property for a quick sale, see to it you mow the lawn and don't leave the
kitchen in a mess also.
Valuers used to provide two valuations: one
for a quick sale and one for a well marketed non time sensitive sale. Nowadays
that's not the case, but if you meet them and let them know you need to sell
the house in the next 30 days you may control the result. The idea is that you
want a realistic sell now figure.
There are two reasons this valuation
technique is critical to you: one you will certainly have peace of mind
ascertaining the market value of your house, and afterwards you can easily
create your equity position. Second of all, your home may be worth even more
than you thought. Get some guidance before doing this. The number of times I've
met with clients that have sold their family home of 20 years simply to find
out I could of helped them keep it;
unfortunately this happens all too often
When it comes to Bankruptcy and houses,
another serious consideration is ownership, often houses are acquired in joint
names. In other words a couple may be a house 50/50 using both incomes to make
the payments. If one party declares bankruptcy and the other party does not,
the equity is only factored on the 50 % of the property.
When it involves Bankruptcy, this is just
one of probably numerous scenarios that are possible when it comes to the
family home. Bear in mind the non-bankrupt party can buy the bankrupt's part of
the property in bankruptcy also. I have to repeat this but get some advice on
this area of Bankruptcy because it is very tricky and every case is different.
If you would like to learn more about what
to do, where to turn and what questions to ask about Bankruptcy, then feel free
to speak to Fresh Start Solutions Brisbane on 1300 818 575, or visit our
website: www.freshstartsolutions.com.au/bankruptcy-Brisbane
