Bankruptcy Canberra, So what is the Deal with Debts?

What Debts are removed if I go Bankrupt?

The basic answer is that when it concerns Bankruptcy most debts are wiped, and I have included a summary below for you to look at.

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

What about Secured Debts?

A secured debt is a vehicle loan or a home loan; it is a debt that has some genuine security affixed to it. So for instance if you buy a new car for $40,000 dollars the security for this car is the actual car itself.

So, can my secured debts be removed 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 might be wiped but the asset has to be sold or returned. This is just one element that, when it comes to Bankruptcy, it is vital to get professional advice - like that offered at Bankruptcy Advice Canberra.

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

Yes they can, both business and personal debts owing to the ATO can be eliminated with bankruptcy. If you have a business with any type of debts find some advice because it is not always so easy. Feel free to call us here over at Bankruptcy Advice Canberra if you have any questions on 1300 879 867. Or feel free to check out our website: www.bankruptcy-advice.com.au/Canberra.com.au

What about my business or Company debts?

In some cases when it involves Bankruptcy we can assist you with your business debts, call us concerning this first. Remember bankruptcy applies to an individual not companies, trusts or businesses. Typically you may have to liquidate a company to deal with the debt this way. When it comes to Bankruptcy, it can be a complicated area, so remember there are implications for a business owner such as insolvent trading. At Bankruptcy Advice Canberra we specialise in business and personal debts so give us a call here at Bankruptcy Advice Canberra if you have any questions about Bankruptcy on 1300 879 867. Or feel free to visit our website: www.bankruptcy-advice.com.au/Canberra.com.au

Bankruptcy, Will I lose my Superannuation?

Bankruptcy Australia can be convoluted and confusing. A question we often get asked here over at Bankruptcy Advice Canberra is 'what happens to my super if I apply for Bankruptcy'? The solution for most is straightforward, if your super is 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, look at the increasing number of members of Self-Managed Super Funds ("SMSFs") in 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 comes to Bankruptcy?

Remember Bankruptcy Advice Canberra is not implying this post is the complete story, if you have any questions feel free to contact us on 1300 879 867. Whether or not you call us or another person it doesn't matter, just please don't walk into bankruptcy blind when it comes to your SMSF actually we highly recommend you find both legal and financial advice before proceeding with any of the actions recommended in this article.

What is a Disqualified Person?

First and foremost, if you are considering Bankruptcy, you can not be a part of a SMSF. Why? Because if you are dealing with bankruptcy, you will be grouped as a 'disqualified person'. And a disqualified individual cannot operate as an Individual Trustee. This poses a problem due to the fact that usually most of the SMSFs are just 2 people, which means both of these members will need to also be the individual trustees. The duty of trustee poses a lot of legal rules, and if you are in this role I would highly urge you to become aware of them all-- including 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 rather detrimental to a SMSF and as you can assume the process of Bankruptcy for a SMSF is rather convoluted.

How long do I have to restructure my SMSF Fund once I'm bankrupt?

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

For starters, the SMSF will have to be reorganized. This means that you will want to consider your overall structure and make sure it is meeting the basic conditions, including 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 bear in mind, sometimes the most suitable 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 constantly keeping the ATO informed of what is happening. This means you ought to let them know that you have a bankruptcy concern with your current trustee, that they are being removed as soon as possible know who the new trustee/director is. The Bankrupt will also need to inform the ATO using the form NAT 3036 (Found on the ATO website) and they need to also notify ASIC of their resignation.

Through 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 Advice Canberra for some free advice on 1300 879 867.

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 be their obligation 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 it all into a managed fund. If both members are entering bankruptcy, then they will need to sell all assets promptly and transfer the liquid assets to the managed fund.

From this you can notice how when it comes to Bankruptcy, even if one single member is running into issues, it can affect the very existence of an SMSF. If you are at the moment facing this matter yourself, or with a partner in a SMSF, please seek financial advice to make sure you are fulfilling the ATO requirements.

A simple solution ...

As I recommended earlier, a basic solution to your SMSF problem is to put your super back into a normal regulated managed fund prior to bankruptcy and save yourself all the headaches outlined above. Bankruptcy is never easy, but receiving proper advice is the best 1st step. If you want to discuss your possibilities further, give us a call at Bankruptcy Advice Canberra or visit our website: www.bankruptcy-advice.com.au/Canberra.com.au or just call us on 1300 879 867.

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

Bankruptcy Canberra is a confusing process, but I know from meeting with thousands facing the possibility of bankruptcy over the years, that nothing troubles people more than the idea of losing the family home or apartment. Almost everybody is on an emotional level connected to their home - it's where the kids have grown, it's where you enjoy life on a day to day base.

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

The function of the bankruptcy trustee is to firstly agree to the regulation of the bankruptcy act 1966 (it's a very plain read about 600 pages if you are wondering).

Within that regulatory framework, the trustee is to help recover monies owed to your creditors, that is executed in a bunch of distinct ways but it mainly comes down to income and assets. The trustees role is to collect payments over your income threshold. The further role is to sell any assets that can contribute to fixing your debts.

What this resembles is that yes the trustee will sell your house right? Not normally. 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 in your house then it's pointless to sell your home. This is happening more and more since the GFC as house prices in many regions have been heading south so what you paid 4 years ago may not automatically reflect the price today.

A quick tip here if you have a house in Canberra and are looking at Bankruptcy: get a professional to help you through this process, there are loads 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, so long as you keep up to date with your payments then the bank wants you in there at all costs. Ultimately however it's not the bank's call if the trustee figures out 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 list the value of your house and the quantity 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 offer you peace of mind, don't use your neighbours' gut feel recommendations or a real estate agents advice to get to this figure. When you get a valuer out to your home, 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 give two valuations: one for a quick sale and one for a well marketed non time delicate sale. Nowadays that's not the case, but if you meet them and tell them 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 main reasons this valuation technique is critical to you: one you will have peace of mind ascertaining the market value of your house, and after that you can easily set up your equity position. Secondly, your house may be worth so much more than you thought. Get some assistance before doing this. The amount of times I've seen clients that have sold their family home of 20 years simply to learn I could of helped them keep it; unfortunately this happens all too often

When it comes to Bankruptcy and houses, another significant consideration is ownership, often houses are bought 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 does not, the equity is only factored on the 50 % of the property.

When it comes down to Bankruptcy, this is just one of possibly numerous scenarios that are likely when it comes down 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 advice on this area of Bankruptcy because it is very tricky and every case is different.

If you need to learn more about what to do, where to turn and what questions to ask about Bankruptcy, then feel free to talk to Bankruptcy Advice Canberra on 1300 879 867, or visit our website: www.bankruptcy-advice.com.au/Canberra