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
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