Bankruptcy Brisbane is a confusing
process, but I know from meeting with thousands facing the possibility of
bankruptcy over the years, that not a thing worries people more than the
thought of losing the family house. Almost everybody is psychologically connected
to their home - it's where the kids have grown, it's where you take pleasure in
life on a day to day base.
Will you lose your home 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 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 Brisbane
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 clearer idea.
The function of the bankruptcy trustee is
to firstly follow the regulation of the bankruptcy act 1966 (it's a very plain
read about 600 pages if you are curious).
Within that regulatory framework, the
trustee is to help recover monies owed to your creditors, that is accomplished
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 other 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 always. The only reason the trustee will sell
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 much more since the GFC as house prices in many regions have been
heading south so what you paid 4 years ago may not necessarily reflect the
price today.
A quick word of advice here if you have a
house in Brisbane and are looking at Bankruptcy: get a qualified professional
to help you through this process, there are plenty of variables in these
scenarios that have to be considered.
You might wonder, why would the bank want
bankrupt clients? wouldn't they prefer to sell your house and not take the
risk? The bank that has kindly lent you the money for your house is earning
good money every month in interest out of you, month in month out, provided
that you keep up to date with your monthly payments then the bank wants you in
there at all costs. Ultimately however it's not the bank's call if the trustee
decides that there is a lot 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 quantity you owe on the
house. A tip if you are attempting 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 come to this
figure. When you get a valuer out to your property, make sure 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 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 sway 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 can have peace of mind ascertaining the
market value of your house, and afterwards you can easily establish your equity
position. The second thing is, your house may be really worth far more than you
thought. Get some suggestions before doing this. The amount of times I've met
clients that have sold their family home of 20 years only to figure out I could
of helped them keep it; unfortunately this happens all too often
When it comes to Bankruptcy and houses,
another primary consideration is ownership, in most cases houses are acquired
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 likely hundreds of 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 need to repeat this but get some guidance on this
area of Bankruptcy because it is very tricky and every case is different.
If you want to learn more about what to do,
where to turn and what questions to ask about Bankruptcy, then feel free to
reach out to Bankruptcy Experts Brisbane on 1300 795 575, or visit our website:
www.bankruptcyexpertsBrisbane.com.au.
