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.
No comments:
Post a Comment