Bankruptcy Darwin is a difficult to
understand process, but I know from meeting with thousands facing the prospect
of bankruptcy over the years, that virtually nothing troubles people more than
the notion 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 take pleasure in life on a day to day basis.
Will you lose your home if you go bankrupt?
The reply is a resounding maybe. (not very helpful, I know) People typically
believe it's an inevitable consequence and a part of Bankruptcy, and because of
this 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 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 idea behind the Bankruptcy
process as administered by the trustee, then you'll have a clearer image.
The duty 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 serious).
Within that regulatory framework, the
trustee is to help recuperate monies owed to your creditors, that is
accomplished 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 any assets that can contribute to repaying
your debts.
What this seems is that yes the trustee
will sell your house right? Not normally. 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 much more 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 word of advice here if you have a
house in Darwin and are looking at Bankruptcy: get a professional 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 clients? wouldn't they need 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, just as long as you
keep up to date with your fees then the bank wants you in there at all costs.
Ultimately however it's not the bank's call if the trustee figures out 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 aiming 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
recommendations or a real estate agents advice to get to this figure. When you
get a valuer out to your home, make certain you tell the valuer to value the
property for a quick sale, make sure 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. 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
sound sell now figure.
There are two reasons this valuation
process is critical to you: one you will likely have peace of mind ascertaining
the market value of your house, and then you can easily create your equity
position. The second thing is, your home may be really worth even more than you
thought. Get some advice 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 major consideration is ownership, often houses are acquired 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 to Bankruptcy, this is just
one of probably numerous scenarios that are likely when it relates to the
family home. Bear in mind the non-bankrupt party can buy the bankrupt's part of
the house in bankruptcy also. I need to repeat this but get some assistance on
this area of Bankruptcy because it is very tricky and each and every case is
different.
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 with Bankruptcy Advice Darwin on 1300 879 867, or visit our website:
www.bankruptcy-advice.com.au/darwin
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