Bankruptcy Canberra, So what is the Deal with Debts?

Exactly what Debts are erased if I go Bankrupt?

The practical answer is that when it involves Bankruptcy most debts are wiped, and I have also included a compendium below for you to look at.

But, put simply some of the exceptions are Centrelink Debts, Child Support, Court fines (like speeding fines) as well as any debts arising from uninsured Motor-vehicle claims and educational debts which include HECS or FEE-HELP. These debts are not wiped out when you file for bankruptcy.

What about Secured Debts?

A secured debt is a car loan or a home loan; it is a debt that has some definite security linked to it. So as an example if you buy a new car for $40,000 dollars the security for that car is the actual car itself.

So, can my secured debts be eliminated if I file for bankruptcy?

Yes. If you have a car loan for $40,000 you can have that debt erased if you simply hand back the car. So the lesson is that you cannot have your cake and eat it too (so to speak), so yes all of your secured debts may be wiped but the asset will need to be sold or returned. This is just one component that, when it comes to Bankruptcy, it is necessary to get professional advice - like that offered at Bankruptcy Experts Canberra.

What about my Tax Debts with the ATO can they be removed If I go bankrupt?

Yes they can, both business and personal debts owing to the ATO can be removed with bankruptcy. If you have a business with any kind of debts find some advice because it is not always so basic. Feel free to call us here over at Bankruptcy Experts Canberra if you have any type of questions on 1300 795 575. Or feel free to visit our website: www.bankruptcyexpertsCanberra.com.au

What about my business or Company debts?

Sometimes when it involves Bankruptcy we can really help you with your business debts, call us about this first. Remember bankruptcy applies to an individual not companies, trusts or businesses. Generally you may have to liquidate a company to deal with the debt that way. When it comes to Bankruptcy, it can be a confusing area, so remember there are implications for a business owner such as insolvent trading. At Bankruptcy Experts Canberra we specialise in business and personal debts so give us a call here at Bankruptcy Experts Canberra if you have any questions regarding Bankruptcy on 1300 795 575. Or feel free to visit our website: www.bankruptcyexpertsCanberra.com.au

Bankruptcy, Will I lose my Superannuation?

Bankruptcy in Australia can be complicated and difficult to understand. A question we usually get asked here over at Bankruptcy Experts Canberra is 'what happens to my super if I file for Bankruptcy'? The answer for most is easy, if your super is simply in a regulated fund or industry fund like Sunsuper or Host Plus then very little happens; your super is 100 % safe when it comes to Bankruptcy.

What if I have a Self Managed Super Fund?

This is a growing concern, take into consideration the evolving number of members of Self-Managed Super Funds ("SMSFs") over the last few years; the ATO tells us it has increased Australia-wide from 758,589 in 2009 to 1,011,689 in 2014. So what happens to these Superfunds when it concerns Bankruptcy?

Remember Bankruptcy Experts Canberra is not indicating this article is the whole story, if you have any questions feel free to call us on 1300 795 575. Regardless if you call us or another person it doesn't matter, just please don't walk into bankruptcy blind when it comes to your SMSF in fact we suggest you obtain both legal and financial advice before proceeding with any of the actions proposed in this article.

What is a Disqualified Person?

First and foremost, if you are thinking about Bankruptcy, you can not be a part of a SMSF. Why? Because if you are dealing with bankruptcy, you will be identified as a 'disqualified person'. And a disqualified person cannot operate as an Individual Trustee. This poses a problem since usually most of the SMSFs are just 2 people, which means the two of these members need to also be the individual trustees. The duty of trustee presents a lot of legal rules, and if you are in this position I would highly recommend you to be knowledgeable about them all-- for example the fact that you can not 'know or suspect' that one of you are bankrupt. So you can see how an individual bankruptcy can be very destructive to a SMSF and as you can assume the process of Bankruptcy for a SMSF is rather convoluted.

How much time do I have so as to restructure my SMSF Fund once I'm bankrupt?

So what happens if one of the members of an SMSF does enter Bankruptcy?

For starters, the SMSF will need to be reorganized. This means that you will have to consider your over-all structure and ensure that it is meeting the basic conditions, involving having a new trustee that is not encountering issues with Bankruptcy. The Australian Tax office will offer you a 6 month 'grace period' to get this done before you face penalties. And keep in mind, sometimes the most ideal plan would be to simply roll the fund into an industry or corporate fund.

Beyond these large scale reorganizing issues, there is a lot of paperwork to deal with too, and you need to be continuously keeping the ATO informed of what is happening. This suggests you need to let them know that you have a bankruptcy problem with your current trustee, that they are being removed as soon as possible know who the new trustee/director is. The Bankrupt will also have to inform the ATO using the form NAT 3036 (Found on the ATO website) and they must also notify ASIC of their resignation.

Over that 6 month period you will need to remove the Bankrupt from the SMSF-- including their property and assets. Remember if you are not exactly sure call Bankruptcy Experts Canberra for some free advice on 1300 795 575.

What if I have a single member fund?

If you are a single member fund, then you will have to appoint a new director, and it will then end up being their duty to oversee the sale and transfer of assets into a managed fund. If there are two or more members, than the bankrupt member will need to resign and the other member will clear away the property and halve the proceeds. They would then want to decide if they wish to remain as a single member SMSF, or if they intend to roll everything into a managed fund. If both members are entering bankruptcy, then they will need to sell all assets as soon as possible and transfer the liquid assets to the managed fund.

From that you can notice how when it comes to Bankruptcy, even when one single member is dealing with issues, it can affect the very existence of an SMSF. If you are currently facing this problem yourself, or with a partner in a SMSF, please seek financial advice to make certain you are satisfying the ATO requirements.

A simple solution ...

As I suggested earlier, a simple solution to your SMSF issue is to put your super back into a normal regulated managed fund prior to bankruptcy and save yourself all the problems outlined above. Bankruptcy is never easy, but receiving proper advice is the best initial step. If you want to discuss your possibilities further, call us at Bankruptcy Experts Canberra or visit our website: www.bankruptcyexpertsCanberra.com.au or just call us on 1300 795 575.

Bankruptcy in Canberra - Will I lose my house if I go bankrupt?

Bankruptcy Canberra is a confusing process, but I know from meeting with thousands facing the chance of bankruptcy over the years, that not much worries people more than the notion of losing the family home. Almost every person is emotionally connected to their home - it's where the children have grown up, it's where you take pleasure in life on a day to day basis.

Will you lose your home if you go bankrupt? The answer is a resounding maybe. (not very useful, I know) People generally imagine it's an inevitable consequence and a part of Bankruptcy, and as a result 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 strength 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 Canberra house, you ask? It's easier if I explain the basic concept behind the Bankruptcy process as administered by the trustee, then you'll have a more clear image.

The job of the bankruptcy trustee is to firstly abide by the regulation of the bankruptcy act 1966 (it's a very dull read about 600 pages if you are serious).

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 over and above your income threshold. The further role is to sell off any assets that can contribute to paying back your debts.

What this sounds like is that yes the trustee will sell your house right? Not always. The only reason the trustee will sell any asset including your house is to get money to repay your debts. If there is no equity on your property then it's pointless to sell your home. This is happening more and more since the GFC as house prices in many areas have been heading south so what you paid 4 years ago may not always reflect the price today.

A quick word of advice here if you have a house in Canberra and are looking at Bankruptcy: get a skilled 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 want to sell your house and not take the risk? The bank that has generously lent you the money for your house is making good money every month in interest out of you, month in month out, just as long as you keep up to date with your repayments then the bank really wants you in there at all costs. Ultimately however it's not the bank's call if the trustee decides that there is plenty of 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 make a note of the value of your house and the level you owe on the house. A tip if you are trying to work out the value of your house: use a registered valuer as this will provide you peace of mind, don't use your neighbours' gut feel suggestions or a real estate agents advice to arrive at this figure. When you get a valuer out to your home, make certain you tell the valuer to value the property for a quick sale, ensure you mow the lawn and don't leave the kitchen in a mess also.

Valuers used to offer two valuations: one for a quick sale and one for a well marketed non time sensitive sale. These days that's not the case, but if you meet them and tell them you need to sell your home in the next 30 days you may control the result. The idea is that you want a real sell now figure.

There are two reasons this valuation system is critical to you: one you are going to have peace of mind ascertaining the market value of your house, and after that you can easily create your equity position. The second thing is, your home may be really worth much more than you thought. Get some guidance before doing this. The amount of times I've met with clients that have sold their family home of 20 years only to find out I could of helped them keep it; unfortunately this happens all too often

When it concerns Bankruptcy and houses, another serious consideration is ownership, in many cases houses are purchased in joint names. Simply put a couple may be a house 50/50 using both incomes to make the payments. If one party declares bankruptcy and the other party doesn't, the equity is only factored on the 50 % of the property.

When it comes to Bankruptcy, this is just one of potentially numerous scenarios that are likely when it comes to the family home. Bear in mind the non-bankrupt party can buy the bankrupt's part of the house in bankruptcy also. I have to repeat this but get some help on this area of Bankruptcy because it is very tricky and each and every case is different.

If you wish to learn more about what to do, where to turn and what questions to ask about Bankruptcy, then feel free to call Bankruptcy Experts Canberra on 1300 795 575, or visit our website: www.bankruptcyexpertsCanberra.com.au.