Bankruptcy Wollongong is a complicated
process, but I know from meeting with thousands facing the chance of bankruptcy
over the years, that nothing at all worries people more than the idea of losing
the family house. Almost every person is on an emotional level connected to
their home - it's where the children have grown, it's where you enjoy 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
feel that it's an inevitable consequence and a part of Bankruptcy, and hence
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 perk 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 Wollongong
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 image.
The duty of the bankruptcy trustee is to
firstly comply with the regulation of the bankruptcy act 1966 (it's a very
plain read about 600 pages if you are interested).
Within that regulatory framework, the
trustee is to help recover monies owed to your creditors, that is done in a
bunch of diverse 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 repaying 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 much more since the GFC as house prices in
many areas 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
Wollongong and are looking at Bankruptcy: get a skilled professional to help
you through this process, there are plenty of variables in these scenarios that
should be considered.
You might wonder, why would the bank want
bankrupt clients? wouldn't they want 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, as long as you
keep up to date with your fees then the bank desires you in there at all costs.
Essentially 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 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 give you peace of mind, don't use your neighbours' gut feel
tips or a real estate agents advice to reach this figure. When you get a valuer
out to your property, make certain 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 sway the result. The idea is that you
want a sound sell now figure.
There are two main reasons this valuation
system is critical to you: one you will likely have peace of mind ascertaining
the market value of your house, then afterwards you can easily create your
equity position. Second of all, your property may be worth even more than you
thought. Get some advice before doing this. The number of times I've seen
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, often 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 doesn't, the equity
is only factored on the 50 % of the property.
When it comes to Bankruptcy, this is just
one of potentially numerous 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 home in bankruptcy also. I need to repeat this but get some help on this
area of Bankruptcy because it is very tricky and every single case is
different.
If you wish 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 Wollongong on 1300 795 575, or visit our website:
www.bankruptcyexpertsWollongong.com.au.
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