Bankruptcy Adelaide, Just what is the Deal with Debts?

Precisely what Debts are wiped out if I go Bankrupt?

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

But, put simply some of the exceptions are Centrelink Debts, Child Support, Court fines (like speeding fines) and even any debts arising from uninsured Motor-vehicle claims and educational debts like HECS or FEE-HELP. These debts are not wiped out 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 real security affixed to it. So as an example 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 cleared away if I file for bankruptcy?

Yes. If you have a car loan for $40,000 you can have that debt eliminated if you simply return 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 may be wiped but the asset will need to be sold or returned. This is just one element that, when it comes to Bankruptcy, it is essential to get professional help - like that provided at Fresh Start Solutions Adelaide.

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

Yes they can, both business and personal debts owing to the ATO can be wiped out with bankruptcy. If you have a business with any sort of debts receive some advice because it is not always so basic. Feel free to call us right here at Fresh Start Solutions Adelaide if you have any questions on 1300 818 575. Or feel free to check out our website: www.freshstartsolutions.com.au/bankruptcy-adelaide.com.au

What about my business or Company debts?

Sometimes when it concerns Bankruptcy we can assist you with your business debts, call us about this first. Remember bankruptcy applies to an individual not companies, trusts or businesses. Usually you may need to liquidate a company to deal with the debt that 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 Fresh Start Solutions Adelaide we specialise in business and personal debts so contact us here at Fresh Start Solutions Adelaide if you have any questions about Bankruptcy on 1300 818 575. Or feel free to check out our website: www.freshstartsolutions.com.au/bankruptcy-adelaide.com.au

Bankruptcy, Will I lose my Superannuation?

Bankruptcy in Australia can be involved and perplexing. A question we typically get asked here over at Fresh Start Solutions Adelaide is 'what happens to my super if I apply for Bankruptcy'? The reply for most is simple, if your super is simply in a regulated fund or industry fund like Sunsuper or Host Plus then very little happens; your super is 100 % safe when it comes down 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 recent 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 down to Bankruptcy?

Remember Fresh Start Solutions Adelaide is not implying this short article is the entire story, if you have any questions feel free to call us on 1300 818 575. Whether or not you call us or someone else it doesn't matter, just please don't walk into bankruptcy blind when it comes to your SMSF indeed we advise you look for both legal and financial advice before proceeding with any of the actions proposed 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 confronting bankruptcy, you will be grouped as a 'disqualified person'. And a disqualified person cannot operate as an Individual Trustee. This poses a problem since usually most of the SMSFs are just 2 people, which means each of these members must also be the individual trustees. The duty of trustee presents a lot of legal rules, and if you are in this position I would highly urge you to get aware of them all-- for example 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 quite destructive 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 develops 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 have to consider your extensive structure and ensure that it is meeting the basic conditions, involving having a new trustee that is not having issues with Bankruptcy. The Australian Tax office will supply you a 6 month 'grace period' to get this done before you face penalties. And keep in mind, 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 frequently keeping the ATO informed of what is happening. This suggests you will need 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 have to inform the ATO using the form NAT 3036 (Found on the ATO website) and they will 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 Fresh Start Solutions Adelaide for some free advice on 1300 818 575.

What if I have 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 responsibility to oversee the sale and relocation of assets into a managed fund. If there are two or more members, than the bankrupt member will have to resign and the other member will clear away the property and halve the proceeds. They would then need to decide if they want to remain as a single member SMSF, or if they need to roll everything into a managed fund. If both members are entering bankruptcy, then they would definitely need to sell all assets promptly and move the liquid assets to the managed fund.

From this you can see how when it comes to Bankruptcy, even though one single member is running into issues, it can affect the very existence of an SMSF. If you are at the moment facing this problem 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 straightforward solution to your SMSF situation 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 first step. If you want to discuss your possibilities further, give us a call at Fresh Start Solutions Adelaide or visit our website: www.freshstartsolutions.com.au/bankruptcy-Adelaide.com.au or just call us on 1300 818 575.

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

Bankruptcy Adelaide is a complicated process, but I know from meeting with thousands facing the prospect of bankruptcy over the years, that not much worries people more than the idea of losing the family home or apartment. Almost everyone is on an emotional level connected to their home - it's where the kids have grown up, it's where you appreciate life on a day to day basis.

Will you lose your house 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 as a result 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 perk 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 idea behind the Bankruptcy process as administered by the trustee, then you'll have a clearer picture.

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

Within that regulatory framework, the trustee is to help recuperate monies owed to your creditors, that is accomplished in a bunch of assorted ways but it mainly comes down to income and assets. The trustees role is to collect payments over and above your income threshold. The other role is to sell off any assets that can contribute to paying back your debts.

What this resembles is that yes the trustee will sell your house right? Not necessarily. The only reason the trustee will sell any asset including your house is to get money to repay your debts. If there is no equity in your house then it's pointless to sell your home. This is happening much more since the GFC as house prices in many areas 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 Adelaide and are looking at Bankruptcy: get a specialist to help you through this process, there are a number of variables in these scenarios that have to be considered.

You might wonder, why would the bank want bankrupt clients? wouldn't they want to sell your house and not take the risk? The bank that has nicely 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 monthly payments then the bank really wants you in there at all costs. Essentially however it's not the bank's call if the trustee decides 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 make a note of the value of your house and the amount of money 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 come to this figure. When you get a valuer out to your home, ensure that 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. These days that's not the case, but if you meet them and let them know you need to sell the house in the next 30 days you may control the result. The idea is that you want a reasonable sell now figure.

There are two main reasons this valuation process is critical to you: one you may have peace of mind ascertaining the market value of your house, then afterwards you can easily build your equity position. Second of all, your property may be really worth much more than you thought. Get some guidance before doing this. The amount of times I've seen clients that have sold their family home of 20 years only to find out I could of helped them keep it; unfortunately this happens all too often

When it concerns Bankruptcy and houses, another serious consideration is ownership, in most cases houses are purchased 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 comes down to Bankruptcy, this is just one of potentially numerous scenarios that are likely when it comes to the family home. Bear in mind the non-bankrupt party can buy the bankrupt's portion of the property in bankruptcy also. I need to repeat this but get some assistance on this area of Bankruptcy because it is very tricky and every case is different.

If you wish to learn more about what to do, where to turn and what questions to ask about Bankruptcy, then feel free to talk to Fresh Start Solutions Adelaide on 1300 818 575, or visit our website: www.freshstartsolutions.com.au/bankruptcy-Adelaide .