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 .
