Wednesday, July 18, 2018

Losing your house: Just how much do you know about Bankruptcy in Adelaide?


The biggest question people have when they come to our company regarding Bankruptcy is literally 'Can I manage to keep my house?' and sometimes the answer is yes, you can keep your house.



The only reason you can be forced to sell your family home if you declare bankruptcy is actually due to the fact that you have a great deal of equity in the home that it is considered an asset. Please go over these basic hypothetical case studies below to get your head around Bankruptcy and how it affects houses in Australia. Remember If you need to know more about Bankruptcy and houses feel free to consult with us here at Fresh Start Solutions Adelaide on 1300 818 575, or go to our website: www.freshstartsolutions.com.au/bankruptcy-adelaide.com.au

Case Study 1. (Mike & Sue Smith)

5 years ago Mike and Sue bought a house in a mining town for $450,000. At this time the mining boom was keeping all the property prices nice and high. Now they are needing to look at Bankruptcy given that they have massive debts of $80,000 on top of their mortgage and credit card and tax debt.

They really want to keep their house but wonder if they can, they know that house prices if anything have gone down in the area in the last 5 years so to be safe they think that their home is still only worth $450,000 after all these years, to make sure they searched www.realestate.com.au/ sold section of the website to see what other houses in the streets close by have sold for lately.

Unfortunately they have not paid any principal of the home loan over the last 5 years, mainly just interest, so they still owe $450,000.

Current House Value = $450,000.
Current Mortgage Value = $450,000.
Net Equity Value = $0.

Because there is no equity in this property the trustee will not ask Mike and Sue to sell their home when they go bankrupt, as long as they keep up the mortgage payments then all will be well for these people for the 3 years they are in bankruptcy.

At the end of the bankruptcy period of time the trustee will write to them and ask if they wish to take over ownership of their house again and as long as it has not grown in price over the 3 years they have been bankrupt they will be asked to make an offer to have their house back. This is typically somewhere between $3,000 and $5,000 to cover the legal costs of changing the land title deed etc.
Now let's have a look at a slightly different example of Bankruptcy and houses.

Case Study 2. (Bill & Michelle Johnson)

2 years ago Bill and Michelle purchased a townhouse in a wonderful suburb of Adelaide for $850,000 they tipped in $50,000 as a deposit and now the townhouse two years later is worth $900,000.

Current House Value = $900,000.
Current Mortgage Value = $800,000.
Net Equity Value = $100,000.

Because of a recent business downfall Bill is about $240,000 in debt. Michelle who does work in banking has a separate job and no other debt except for the mortgage. Bill cannot pay his debts and so he is considering Bankruptcy. Michelle is concerned that she too may need to declare bankruptcy or be pushed into it thanks to the house loan.

Within this particular case the trustee is required to access or get their hands on Bill's part of the equity which is $50,000 less selling costs. They might do this in a few ways; 1. Make them sell the home. 2. Invite Michelle to buy Bills half of the equity. 3. leave them in the home - but It's very unlikely with this case that the trustee would be happy to leave Bill and Michelle in the house because there is just too much equity.

So Michelle may be capable to purchase Bill's share of the equity by coming up with $50,000 and buying out Bills' half and from that moment its now 100 % Michelle's house.

Property and Bankruptcy in Australia is confusing and demanding, these two case studies above are just the tip of the iceberg as far as your options in Adelaide are concerned. If you need to know more about Bankruptcy and houses feel free to call us here at Fresh Start Solutions Adelaide on 1300 818 575, or head to our website: www.freshstartsolutions.com.au/bankruptcy-adelaide.com.au.

Tuesday, July 25, 2017

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

Sunday, May 21, 2017

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.

Wednesday, January 11, 2017

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 .

Tuesday, November 15, 2016

Bankruptcy in Adelaide - Who exactly do I talk to?


Should I talk to my accountant about Bankruptcy?

The answer seems clear doesn't it: if anybody knows your financial situation well in Adelaide, It's going to be your accountant. However, the short answer is a definite No! It's not that your accountant doesn't have your best interests in mind when it comes to Bankruptcy, it's that his proficiency lie in helping you save you money at tax time, reducing your tax liability and lodging your BAS.

Most accounting degrees will put in hardly any to no time on bankruptcy, it's generally performed as a post graduate speciality program for those who intend to work in the field. Unless your accountant is an insolvency specialist, he would not know that a lot about the effects of Bankruptcy, I can assure you insolvency specialists know much about tax returns or BAS in. If you do happen to find an insolvency accounting firm in Adelaide, they tend to be large firms with very nice offices who charge accordingly.

Should I talk to my Solicitor about Bankruptcy?

No! You can speak with your solicitor in Adelaide but more than likely it won't do you much good. Solicitors are certainly good at carrying out things lawyers do, like helping you do your Will and buying your house and keeping you out of court if you're lucky. When it comes to Bankruptcy, the specialists in Adelaide usually have either a legal or accounting experience, and the main reason for that is simply that you can't enrol in the post graduate study to become a qualified insolvency practitioner unless you have a law or accounting degree.
Just like there are a couple of insolvency accounting firms, there are very few insolvency legal practices in Australia, and yes if you choose one you will pay a sizeable price for their expertise.

Should I speak with a financial counsellor about Bankruptcy?

Yes! There are lots of financial counselling services to aid you with this, they have no hidden agendas and they're a superb option for really helping you analyze your situation when it comes to Bankruptcy. If you end up stressing constantly, not sleeping, not eating or over-eating and thinking of money pressures regularly, then get some help.

There are also charitable organizations around Adelaide like Lifeline that offer a remarkable service. They will be a sounding board if you just need a person to discuss with you what your options are. Don't let your financial issue destroy your life - in the end it's just money.

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

Sunday, August 7, 2016

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


When people in Adelaide come to me wanting to talk about Bankruptcy, they are always filled with questions. The internet has plenty of information, but far too much of it is baffling or contradicts itself, so I make it my mission to try and make things more clear. One of the very most simple troubles is 'Will I lose my business if I declare bankruptcy?' The short answer is no. If you are a manager of a company any shape or size you can keep your business if you wish to. In Adelaide, businesses that eventually become insolvent have a few options for instance liquidation, voluntary administration and so on. It's individuals who go bankrupt not businesses.

Bankruptcy is a complex area so get some reliable advice on this one if you have a business. Generally speaking, the debts in a business and personal debts go hand in hand when a business owner declares bankruptcy. There are a few vital implications for directors of companies when it pertains to Bankruptcy in Adelaide: A bankrupt can not be a director of a company, so if you have a pty ltd company you definitely will need to retire as a director as soon as you're bankrupt.

A restriction that applies when you are generally bankrupt as a business owner is that you may be in your very own business as a sole trader only. Certainly there are things you must reveal as a part of that but generally you can still run your business. For some business owners, bankruptcy affects their ability to run the business because of the licensing issues. For example, if you run a building company, your license will be suspended once you're bankrupt and consequently you can not trade without that license, so make sure you are asking the ideal questions when it comes to licenses and Bankruptcy in Adelaide.

But if your business is not impacted directly by such issues, then you'll will need to restructure the way you run your business. There are considerations when and if you go bankrupt as a business owner: you can not rack up heaps of debt in your company, then go bankrupt then open the doors the next day like not a thing had happened. There are laws in place to stop what is called phoenix companies growing out of the ashes of an old company.
Having said that, it's just a matter of speaking with the right people about Bankruptcy. In this situation you may think you need a liquidator for your business, and you could be right, but remember that every liquidator is unique and have their own motives. Liquidators make money from your liquidation - heaps of money - so exactly what advice do you think you will get?

When it comes to Bankruptcy, I think that giving generic advice in this area is potentially perilous as it can have very substantial implications for directors and business owners. This is because it is one of those cases where what the right guidance for one business owner is the inappropriate advice for the other. There are some fundamentals however, that you may benefit from. There is no restriction to the size of the business you run even though you are bankrupt. You can employ staff. You can constantly deal with your vendors under certain conditions, the main one being you will need to meet the payment terms agreed upon.


So when it comes to Bankruptcy, don't get overly worried about what you can and can't do as a business owner, just get the appropriate advice ... If you would like to learn more about what to do, exactly where to turn and what questions to ask about Bankruptcy, then feel free to get in touch with Fresh Start Solutions Adelaide on 1300 818 575, or visit our website: .freshstartsolutions.com.au/bankruptcy-Adelaide

Sunday, July 3, 2016

Bankruptcy in Adelaide - does it matter if it is voluntary?


When it comes to Bankruptcy Adelaide, usually people aren't aware that there can be both voluntary, and involuntary bankruptcy - both have different approaches and rules.

Involuntary bankruptcy occurs when somebody you owe money to applies to the court to declare you bankrupt. Commonly when you get one of these notices, you have normally 21 days to pay all the debt. If you don't, then the creditor goes back to the court and asks the court to provide a sequestration order that declares you bankrupt. A trustee is selected, and then you have 14 days to get the documentation in and afterwards you are bankrupt.

You can challenge a bankruptcy notice by going to court following the 21 days have expired and put your case forward, to stop it going to the next level. Apart from the way you became bankrupt there is in fact no distinction between Involuntary Bankruptcy and or Voluntary Bankruptcy - once you are declared bankrupt, they're managed to in the exact same way.

However, when it comes to Bankruptcy for this, the stress and anxiety, torment and fear that accompanies this method is incredible. If you think you are more than likely to be made bankrupt by someone, get some help and act on that advice. Generally I've found it's always more effective to know what you can and can't do before you have a person bankrupt you. Once you are bankrupt, it's usually far too late.

Voluntary Bankruptcy

Alternatively, when it comes to Bankruptcy, sometimes there are moments that it is the best option. So you may have to ask yourself, 'when should I consider voluntary Bankruptcy?'.

This question is not the very same for each person of course, but basically I find that one way you could work it out is to figure out just how long it will take you to pay every one of your debts - if its longer than 3 years (the period you are declared bankrupt), then this may really help you make that decision, and help you to understand Bankruptcy.

Once, I had an 80 year old pensioner, who came to me once regarding * Bankrupcty tell me that her credit card statement calculated how long her debt would take to pay at the level she was paying her account, and it was 35 years! Imagine 35 years for one credit card bill.
Credit rating damage can really help you think this through. If you move house and overlook to pay your $30 phone bill for 6 months more, it's very likely the phone service will default your credit file. That default will remain on your file for 5 years, so for $30 you can have your credit file very seriously damaged for that period of time - and all of this will impact how you have to approach Bankruptcy.

In many ways, the ease with which companies/credit providers can default your credit file is unjust. The punishment doesn't seem to equate to the crime in my book. So if you actually have defaults on your credit report for 5 years, remember that bankruptcy is on your credit file for a total 7 years then its wiped off completely.

So if your credit rating is a big detail in trying to decide whether to take part in a Debt Agreement or Personal Insolvency Agreement or Bankruptcy remember they will all sit on your credit file for a total of 7 years. The biggest difference is that with a DA or PIA you pay back the money and still have it on your file for 7 years.

Bankruptcy

I have mentioned the word a few times now, but when it comes down to it, Bankruptcy is the biggest part, and the element most people are afraid of when they come to me to discuss their financial situation and Bankruptcy. The other side of crime and punishment equation is bankruptcy, and in this specific country the provisions are very generous: you can go bankrupt owing millions of dollars and after 3 years it's all over with no strings attached. As compared to countries like the United States, our bankruptcy laws are extremely generous.
I don't pretend to know why that is but a few hundred years ago debtors went to prison. These days I suppose the government finds that the sooner it can get you back on your feet working and paying tax, the better. It makes more sense than locking you up which in turn costs the taxpayer anyway.

Bankruptcy wipes all of your debts including ATO debts with the exception of a few things:

·         Centrelink Debts, Court Fines like parking and speeding fines.
·         HECS or Fee Help loans.
·         Money to pay for a car accident if the car was not actually insured.

There is a lot more that can be said about doing this and Bankruptcy in general but the objective of this blog was to help you decide between a few possible options. When getting some advice, always remember that there are always possibilities when it comes to Bankruptcy in Adelaide, so do some investigation, and Good luck!


If you would like to learn more about just what to do, where to turn and what questions to ask about Bankruptcy, then don't hesitate to speak to Fresh Start Solutions Adelaide on 1300 818 575, or visit our website: freshstartsolutions.com.au/bankruptcy-Adelaide