Bankruptcy Perth, So what is the Deal with Debts?

Just what Debts are erased if I go Bankrupt?

The practical answer is that when it concerns Bankruptcy most debts are wiped, and I have provided a chart below for you to look at.

But, simply put some of the exceptions are Centrelink Debts, Child Support, Court fines (like speeding fines) and also any debts arising from uninsured Motor-vehicle claims and educational debts which include HECS or FEE-HELP. These debts are not cleared away when you file for bankruptcy.

What about Secured Debts?

 A secured debt is a vehicle loan or a home loan; it is a debt that has some actual security attached to it. So as an example if you buy a new car for $40,000 dollars the security for that car is the actual car itself.

So, can my secured debts be cleared away if I file for bankruptcy?

 Yes. If you have a car loan for $40,000 you can have that debt wiped out if you simply return the car. So the lesson is that you cannot have your cake and eat it too (so to speak), so yes all of your secured debts could be wiped but the asset has to be sold or returned. This is just one facet that, when it comes to Bankruptcy, it is important to get professional advice - like that available at Fresh Start Solutions Perth.

What about my Tax Debts with the ATO can they be erased If I go bankrupt?

 Yes they can, both business and personal debts owing to the ATO can be eliminated with bankruptcy. If you have a business with any kind of debts get some advice because it is not always so basic. Feel free to call us here over at Fresh Start Solutions Perth if you have any type of questions on 1300 818 575. Or feel free to visit our website: www.freshstartsolutions.com.au/bankruptcy-Perth.com.au

What about my business or Company debts?

 Sometimes when it concerns Bankruptcy we can aid you with your business debts, call us about this first. Remember bankruptcy applies to an individual not companies, trusts or businesses. Typically you may need to liquidate a company to deal with the debt that way. When it comes to Bankruptcy, it can be a complicated area, so remember there are implications for a business owner such as insolvent trading. At Fresh Start Solutions Perth we specialise in business and personal debts so give us a call here at Fresh Start Solutions Perth if you have any questions regarding Bankruptcy on 1300 818 575. Or feel free to head to our website: www.freshstartsolutions.com.au/bankruptcy-Perth.com.au

Bankruptcy, Will I lose my Superannuation?

Bankruptcy in Australia can be complicated and perplexing. A question we typically get asked here over at Fresh Start Solutions Perth is 'what happens to my super if I file for Bankruptcy'? The answer for most is straightforward, if your super is simply in a regulated fund or industry fund like Sunsuper or Host Plus then very little happens; your super is 100 % safe when it comes down to Bankruptcy.

What if I have a Self Managed Super Fund?

This is a growing concern, think of the developing number of members of Self-Managed Super Funds ("SMSFs") in the last few years; the ATO tells us it has increased Australia-wide from 758,589 in 2009 to 1,011,689 in 2014. So what happens to these Superfunds when it comes to Bankruptcy?

Remember Fresh Start Solutions Perth is not proposing this article is the complete story, if you have any questions feel free to contact us on 1300 818 575. Regardless if you call us or another person it doesn't matter, just please don't walk into bankruptcy blind when it comes to your SMSF in truth we encourage you seek both legal and financial advice before proceeding with any of the actions suggested in this article.

What is a Disqualified Person?

First and foremost, if you are thinking about Bankruptcy, you can not be a part of a SMSF. Why? Because if you are confronting bankruptcy, you will be identified as a 'disqualified person'. And a disqualified person cannot operate as an Individual Trustee. This poses a problem since usually most of the SMSFs are just 2 people, which means each of these members must also be the individual trustees. The job of trustee poses a lot of legal rules, and if you are in this role I would highly recommend you to become familiar with them all-- for example the fact that you can not 'know or suspect' that one of you are bankrupt. So you can see how an individual bankruptcy can be quite harmful to a SMSF and as you can assume the process of Bankruptcy for a SMSF is rather convoluted.

How much time do I have so as to restructure my SMSF Fund once I'm bankrupt?

So what comes to pass if one of the members of an SMSF does enter Bankruptcy?

For starters, the SMSF will have to be restructured. This means that you will need to consider your whole structure and ensure that it is meeting the basic conditions, including things like having a new trustee that is not experiencing issues with Bankruptcy. The Australian Tax office will supply you a 6 month 'grace period' to get this done before you face penalties. And keep in mind, sometimes the best plan would be to simply roll the fund into an industry or corporate fund.

Beyond these large scale restructuring issues, there is a lot of paperwork to deal with too, and you need to be continuously keeping the ATO informed of what is happening. This means you ought to let them know that you have a bankruptcy issue with your current trustee, that they are being removed as soon as possible know who the new trustee/director is. The Bankrupt will also have to inform the ATO using the form NAT 3036 (Found on the ATO website) and they need to also notify ASIC of their resignation.

In the course of that 6 month period you will need to remove the Bankrupt from the SMSF-- including their property and assets. Remember if you are unsure call Fresh Start Solutions Perth for some free advice on 1300 818 575.

What if I have a single member fund?

If you are a single member fund, then you will need to appoint a new director, and it will then become their responsibility to oversee the sale and relocation of assets into a managed fund. If there are two or more members, than the bankrupt member will need to resign and the other member will clear away the property and halve the proceeds. They would then need to decide if they choose to remain as a single member SMSF, or if they want to roll it all into a managed fund. If both members are entering bankruptcy, then they would definitely need to sell all assets as soon as possible and transfer the liquid assets to the managed fund.

From that you can see how when it comes to Bankruptcy, even if one single member is running into issues, it can affect the very existence of an SMSF. If you are actually facing this matter yourself, or with a partner in a SMSF, please seek financial advice to make sure you are fulfilling the ATO requirements.

A simple solution ...

As I suggested earlier, a basic solution to your SMSF situation is to put your super back into a normal regulated managed fund before bankruptcy and save yourself all the problems outlined above. Bankruptcy is never easy, but finding proper advice is the best first step. If you want to discuss your options further, call us at Fresh Start Solutions Perth or visit our website: www.freshstartsolutions.com.au/bankruptcy-Perth.com.au or just give us a call on 1300 818 575.

Bankruptcy in Perth - Will I lose my house if I go bankrupt?

Bankruptcy Perth is a difficult process, but I know from meeting with thousands facing the prospect of bankruptcy over the years, that not much worries people more than the notion of losing the family house. Almost everybody is psychologically connected to their home - it's where the children have grown, it's where you enjoy life on a day to day basis.

Will you lose your home if you go bankrupt? The reply is a resounding maybe. (not very useful, I know) People typically think 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 benefit 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 Perth house, you ask? It's easier if I explain the basic principle behind the Bankruptcy process as administered by the trustee, then you'll have a clearer idea.

The purpose of the bankruptcy trustee is to firstly abide by the regulation of the bankruptcy act 1966 (it's a very dry read about 600 pages if you are curious).

Within that regulatory framework, the trustee is to help recover monies owed to your creditors, that is executed 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 other role is to sell 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 any asset including your house is to get money to repay your debts. If there is no equity in your house then it's pointless to sell your home. This is happening more and more since the GFC as house prices in many locations have been heading south so what you paid 4 years ago may not really reflect the price today.

A quick word of advice here if you have a house in Perth and are looking at Bankruptcy: get an expert to help you through this process, there are loads of variables in these scenarios that need to be considered.

You might wonder, why would the bank want bankrupt customers? wouldn't they choose 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 repayments then the bank really wants you in there at all costs. Ultimately however it's not the bank's call if the trustee figures out that there is loads 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 document the value of your house and the portion 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 tips or a real estate agents advice to get to 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 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 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 realistic sell now figure.

There are two reasons this valuation technique is critical to you: one you will definitely have peace of mind ascertaining the market value of your house, then afterwards you can easily set up your equity position. Second of all, your home may be really worth even more than you thought. Get some assistance before doing this. The amount of times I've seen clients that have sold their family home of 20 years just 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, in most cases houses are bought in joint names. To puts it simply 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 concerns 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 portion of the house in bankruptcy also. I have 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 want to learn more about what to do, where to turn and what questions to ask about Bankruptcy, then feel free to contact Fresh Start Solutions Perth on 1300 818 575, or visit our website: www.freshstartsolutions.com.au/bankruptcy-Perth