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.
