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
