Bankruptcy Sunshine Coast is a tricky
process, but I know from meeting with thousands facing the likelihood of
bankruptcy over the years, that not a thing concerns people more than the idea
of losing the family home or apartment. Almost every person is psychologically
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 reply is a resounding maybe. (not very useful, I know) People generally
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 advantage 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 Sunshine
Coast 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 more clear image.
The function of the bankruptcy trustee is
to firstly agree to the regulation of the bankruptcy act 1966 (it's a very dull
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 done in a
bunch of various 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 off any assets that can contribute to paying your debts.
What this seems like is that yes the
trustee will sell your house right? Not necessarily. The only reason the
trustee will sell off any asset including your house is to get money to pay
back your debts. If there is no equity on your property then it's pointless to
sell your home. This is happening increasingly since the GFC as house prices in
many locations have been heading south so what you paid 4 years ago may not
always reflect the price today.
A quick tip here if you have a house in
Sunshine Coast and are looking at Bankruptcy: get an expert to help you through
this process, there are plenty of variables in these scenarios that have to be
considered.
You might wonder, why would the bank want
bankrupt customers? wouldn't they like to sell your house and not take the
risk? The bank that has generously lent you the money for your house is
generating good money every month in interest out of you, month in month out,
just as long as 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 figures out 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 write down the value of your house and the amount 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 get to this figure. When
you get a valuer out to your house, ensure you tell the valuer to value the
property for a quick sale, make certain 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 tell them you need to sell the
house in the next 30 days you may sway the result. The idea is that you want a
practical sell now figure.
There are two main reasons this valuation
process is critical to you: one you can have peace of mind ascertaining the
market value of your house, and afterwards you can easily create your equity
position. Secondly, your house may be really worth even more than you thought.
Get some tips before doing this. The number of times I've met with clients that
have sold their family home of 20 years just to learn I could of helped them
keep it; unfortunately this happens all too often
When it comes to Bankruptcy and houses,
another main consideration is ownership, in most 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
doesn't, the equity is only factored on the 50 % of the property.
When it comes down to Bankruptcy, this is
just one of possibly hundreds of scenarios that are likely when it comes down
to the family home. Bear in mind the non-bankrupt party can buy the bankrupt's
part of the house in bankruptcy also. I have to repeat this but get some
assistance on this area of Bankruptcy because it is very tricky and every
single case is different.
If you need to learn more about what to do,
where to turn and what questions to ask about Bankruptcy, then feel free to
speak to Bankruptcy Advice Sunshine Coast on 1300 879 867, or visit our
website: www.bankruptcy-advice.com.au/SunshineCoast.
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