Thursday, January 19, 2017

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


Bankruptcy Bundaberg is a complex process, but I know from meeting with thousands facing the chance of bankruptcy over the years, that almost nothing troubles people more than the notion of losing the family home. Almost every person is emotionally connected to their home - it's where the kids have grown up, it's where you appreciate life on a day to day base.



Will you lose your home if you go bankrupt? The answer is a resounding maybe. (not very helpful, I know) People typically assume 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 benefit 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 Bundaberg 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 clearer picture.

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

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

What this seems 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 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 word of advice here if you have a house in Bundaberg and are looking at Bankruptcy: get a skilled professional to help you through this process, there are a lot of variables in these scenarios that have to be considered.

You might wonder, why would the bank want bankrupt clients? wouldn't they hope to sell your house and not take the risk? The bank that has nicely lent you the money for your house is making good money every month in interest out of you, month in month out, provided that you keep up to date with your payments 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 plenty 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 write down the value of your house and the amount you owe on the house. A tip if you are attempting to work out the value of your house: use a registered valuer as this will provide you peace of mind, don't use your neighbours' gut feel suggestions or a real estate agents advice to arrive at 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, ensure you mow the lawn and don't leave the kitchen in a mess also.

Valuers used to provide two valuations: one for a quick sale and one for a well marketed non time sensitive sale. Nowadays 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 sway the result. The idea is that you want a sensible sell now figure.

There are two reasons this valuation technique is critical to you: one you will definitely have peace of mind ascertaining the market value of your house, then afterwards you can easily build your equity position. Secondly, your home may be really worth a lot more than you thought. Get some tips before doing this. The amount of times I've met 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 comes to Bankruptcy and houses, another major consideration is ownership, in most cases houses are bought in joint names. Simply put 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 relates to Bankruptcy, this is just one of likely hundreds of scenarios that are possible when it comes down to the family home. Bear in mind the non-bankrupt party can buy the bankrupt's portion of the home in bankruptcy also. I should repeat this but get some information on this area of Bankruptcy because it is very tricky and each and every case is different.

If you want to learn more about what to do, where to turn and what questions to ask about Bankruptcy, then feel free to speak to Bankruptcy Experts Bundaberg on 1300 795 575, or visit our website: www.bankruptcyexpertsBundaberg.com.au.

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