Bankruptcy Gladstone is a complicated
process, but I know from meeting with thousands facing the chance of bankruptcy
over the years, that nothing at all troubles people more than the thought of
losing the family house. Almost everybody is sentimentally connected to their
home - it's where the children have grown up, it's where you enjoy life on a
day to day base.
Will you lose your house if you go
bankrupt? The answer is a resounding maybe. (not very helpful, I know) People
generally feel that it's an inevitable consequence and a part of Bankruptcy,
and consequently 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
strength of Debt Agreements and Personal Insolvency Agreements is you can keep
your house. The reason is simple: you've accepted to pay back the debt you are
in.
So how is it possible to keep my Gladstone
house, you ask? It's easier if I explain the basic concept behind the Bankruptcy
process as administered by the trustee, then you'll have a clearer idea.
The function of the bankruptcy trustee is
to firstly agree to the regulation of the bankruptcy act 1966 (it's a very dry
read about 600 pages if you are interested).
Within that regulatory framework, the
trustee is to help recuperate monies owed to your creditors, that is done in a
bunch of different 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 your debts.
What this sounds like 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 home then it's pointless to sell your
home. This is happening more and more since the GFC as house prices in many
regions have been heading south so what you paid 4 years ago may not always
reflect the price today.
A quick word of advice here if you have a
house in Gladstone and are looking at Bankruptcy: get a professional to help
you through this process, there are a lot of variables in these scenarios that
need to be considered.
You might wonder, why would the bank want
bankrupt customers? wouldn't they prefer to sell your house and not take the
risk? The bank that has kindly lent you the money for your house is creating
good money every month in interest out of you, month in month out, provided
that you keep up to date with your fees 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 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 jot down the value of your house and the quantity you owe on the house. A
tip if you are aiming to work out the value of your house: use a registered
valuer as this will give you peace of mind, don't use your neighbours' gut feel
recommendations or a real estate agents advice to arrive at this figure. When
you get a valuer out to your property, 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 sensitive sale. Nowadays
that's not the case, but if you meet them and let them know you need to sell
your home in the next 30 days you may control the result. The idea is that you
want a life-like 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 develop your equity
position. Secondly, your house may be worth so much more than you thought. Get
some guidance before carrying this out. The number of times I've met with
clients that have sold their family home of 20 years simply to discover I could
of helped them keep it; unfortunately this happens all too often
When it comes to Bankruptcy and houses,
another significant consideration is ownership, in many cases houses are
purchased 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 doesn't, the equity is only factored on the 50 % of the property.
When it comes down to Bankruptcy, this is
just one of probably numerous scenarios that are possible when it relates to
the family home. Bear in mind the non-bankrupt party can buy the bankrupt's
portion of the house in bankruptcy also. I should repeat this but get some help
on this area of Bankruptcy because it is very tricky and each and every case is
different.
If you really want to learn more about what
to do, where to turn and what questions to ask about Bankruptcy, then feel free
to speak with Bankruptcy Experts Gladstone on 1300 795 575, or visit our
website: www.bankruptcyexpertsGladstone.com.au.
