Bankruptcy Darwin is a complicated
process, but I know from meeting with thousands facing the possibility of
bankruptcy over the years, that nothing worries people more than the notion of
losing the family house. Almost every person is sentimentally 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 house if you go
bankrupt? The solution is a resounding maybe. (not very useful, I know) People
typically believe 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 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 Darwin
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 more clear picture.
The job of the bankruptcy trustee is to
firstly comply with the regulation of the bankruptcy act 1966 (it's a very dry
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 beyond your income threshold. The other
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 always. The only reason the trustee
will sell any asset including your house is to get money to pay back your
debts. If there is no equity in your house 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
necessarily reflect the price today.
A quick tip here if you have a house in
Darwin and are looking at Bankruptcy: get a qualified professional to help you
through this process, there are loads of variables in these scenarios that have
to be considered.
You might wonder, why would the bank want
bankrupt customers? 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 creating
good money every month in interest out of you, month in month out, provided you
keep up to date with your payments then the bank really wants you in there at
all costs. Essentially however it's not the bank's call if the trustee
establishes that there is a lot 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 mark the value of your house and the quantity 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
suggestions 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 provide two valuations: one
for a quick sale and one for a well marketed non time delicate 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 sound sell now figure.
There are two reasons this valuation
technique is critical to you: one you may have peace of mind ascertaining the
market value of your house, and afterwards you can easily establish your equity
position. Secondly, your property may be really worth far more than you
thought. Get some suggestions before carrying this out. The number of times
I've met clients that have sold their family home of 20 years just to figure
out 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, often 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 does not, 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 possible when it comes to
the family home. Bear in mind the non-bankrupt party can buy the bankrupt's
part of the property in bankruptcy also. I should repeat this but get some
advice 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 talk to Fresh Start Solutions Darwin on 1300 818 575, or visit our website:
www.freshstartsolutions.com.au/bankruptcy-Darwin
