Bankruptcy Adelaide, Just what is the Deal with Debts?

Precisely what Debts are wiped out if I go Bankrupt?

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

But, simply put some of the exceptions are Centrelink Debts, Child Support, Court fines (like speeding fines) and any debts arising from uninsured Motor-vehicle claims and educational debts which include HECS or FEE-HELP. These debts are not cleared away 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 genuine security affixed 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 removed if I file for bankruptcy?

Yes. If you have a car loan for $40,000 you can have that debt removed 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 facet that, when it comes to Bankruptcy, it is essential to get professional help - like that provided at Bankruptcy Experts Adelaide.

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

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

What about my business or Company debts?

In some cases when it involves Bankruptcy we can aid you with your business debts, call us concerning this first. Remember bankruptcy applies to an individual not companies, trusts or businesses. Normally you may need to liquidate a company to deal with the debt this way. And 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 Experts Adelaide we specialise in business and personal debts so give us a call here at Bankruptcy Experts Adelaide if you have any questions regarding Bankruptcy on 1300 795 575. Or feel free to go to our website: www.bankruptcyexpertsadelaide.com.au

Bankruptcy, Will I lose my Superannuation?

Bankruptcy in Australia can be complicated and difficult to understand. A question we often get asked here at Bankruptcy Experts Adelaide is 'what happens to my super if I apply for Bankruptcy'? The answer for most is straightforward, if your super is usually in a regulated fund or industry fund like Sunsuper or Host Plus then absolutely nothing 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 account the evolving number of members of Self-Managed Super Funds ("SMSFs") in the last few years; the ATO tells us it has grown Australia-wide from 758,589 in 2009 to 1,011,689 in 2014. So what happens to these Superfunds when it comes down to Bankruptcy?

Remember Bankruptcy Experts Adelaide is not suggesting this short article is the entire story, if you have any questions feel free to consult with us on 1300 795 575. Regardless if you call us or somebody else it does not matter, just please don't walk into bankruptcy blind when it comes to your SMSF in fact we encourage you get both legal and financial advice before proceeding with any of the actions indicated in this article.

What is a Disqualified Person?

First and foremost, if you are taking into account Bankruptcy, you can not be a part of a SMSF. Why? Because if you are going up against bankruptcy, you will be grouped as a 'disqualified person'. And a disqualified individual cannot operate as an Individual Trustee. This poses a problem because usually most of the SMSFs are just 2 people, which means the two of these members must also be the individual trustees. The position of trustee sets a lot of legal rules, and if you are in this position I would highly urge you to be familiar with them all-- for example the fact that you can not 'know or suspect' that one of you are bankrupt. So you can notice how an individual bankruptcy can be rather harmful to a SMSF and as you can imagine the process of Bankruptcy for a SMSF is rather convoluted.

How much time do I have to restructure my SMSF Fund after I'm bankrupt?

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

For starters, the SMSF will need to be restructured. This means that you will want to consider your whole structure and make sure it is meeting the basic conditions, including things like having a new trustee that is not dealing with issues with Bankruptcy. The Australian Tax office will offer you a 6 month 'grace period' to get this done before you face penalties. And consider, sometimes the most ideal plan would be to simply roll the fund into an industry or corporate fund.

Beyond these large scale restructuring 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 indicates you have 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 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.

In the course of that 6 month period you will need to remove the Bankrupt from the SMSF-- including their property and assets. Remember if you are uncertain call Bankruptcy Experts Adelaide for some free advice on 1300 795 575.

What if I use a single member fund?

If you are a single member fund, then you will need to appoint a new director, and it will then end up being 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 take away the property and halve the proceeds. They would then have to decide if they choose to remain as a single member SMSF, or if they want to roll all of it into a managed fund. If both members are entering bankruptcy, then they would need to sell all assets at once and transfer the liquid assets to the managed fund.

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

A simple solution ...

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

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

Bankruptcy Adelaide is a difficult process, but I know from meeting with thousands facing the likelihood of bankruptcy over the years, that nothing at all troubles people more than the idea of losing the family home. Almost every person is on an emotional level connected to their home - it's where the kids have grown up, it's where you take pleasure in life on a day to day base.

Will you lose your home if you go bankrupt? The solution is a resounding maybe. (not very useful, I know) People generally think 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 agreed to pay back the debt you are in.

So how is it possible to keep my Adelaide house, you ask? It's easier if I explain the basic principle behind the Bankruptcy process as administered by the trustee, then you'll have a more clear idea.

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

Within that regulatory framework, the trustee is to help recuperate monies owed to your creditors, that is executed in a bunch of various ways but it mainly comes down to income and assets. The trustees role is to collect payments beyond your income threshold. The other role is to sell off any assets that can contribute to fixing 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 pay back your debts. If there is no equity in your home then it's pointless to sell your home. This is happening increasingly more since the GFC as house prices in many locations have been heading south so what you paid 4 years ago may not automatically reflect the price today.

A quick word of advice here if you have a house in Adelaide and are looking at Bankruptcy: get a specialist to help you through this process, there are plenty of variables in these scenarios that should be considered.

You might wonder, why would the bank want bankrupt clients? wouldn't they need 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 repayments then the bank desires you in there at all costs. Ultimately however it's not the bank's call if the trustee determines that there is lots 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 jot down the value of your house and the portion 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 tips or a real estate agents advice to come to this figure. When you get a valuer out to your property, ensure that 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 give 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 realistic sell now figure.

There are two main 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 then you can easily set up your equity position. Second of all, your house may be really worth a lot more than you thought. Get some assistance before doing this. The amount of times I've met with clients that have sold their family home of 20 years just to find out I could of helped them keep it; unfortunately this happens all too often

When it comes to Bankruptcy and houses, another major consideration is ownership, in many cases houses are bought in joint names. In other words 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 concerns Bankruptcy, this is just one of probably numerous scenarios that are likely when it relates to the family home. Bear in mind the non-bankrupt party can buy the bankrupt's part of the house in bankruptcy also. I should repeat this but get some advice on this area of Bankruptcy because it is very tricky and every case is different.

If you really 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 Adelaide on 1300 795 575, or visit our website: www.bankruptcyexpertsAdelaide.com.au.