Bankruptcy Perth is a difficult to understand process, but I know from meeting with thousands facing the likelihood of bankruptcy over the years, that not a thing troubles people more than the notion of losing the family house. Almost everyone is sentimentally connected to their home - it's where the children have grown, it's where you take pleasure in life on a day to day basis.
Will you lose your house 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 therefore 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 more clear image.
The function 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 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 off any assets that can contribute to paying back your debts.
What this sounds like is that yes the trustee will sell your house right? Not always. 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 in your home then it's pointless to sell your home. This is happening increasingly more since the GFC as house prices in many regions have been heading south so what you paid 4 years ago may not actually reflect the price today.
A quick tip here if you have a house in Perth and are looking at Bankruptcy: get an expert to help you through this process, there are a number of variables in these scenarios that need to be considered.
You might wonder, why would the bank want bankrupt clients? 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 making good money every month in interest out of you, month in month out, provided that you keep up to date with your fees then the bank really wants you in there at all costs. Essentially however it's not the bank's call if the trustee determines that there is lots 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 jot down the value of your house and the amount of money 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 provide you peace of mind, don't use your neighbours' gut feel tips or a real estate agents advice to come to this figure. When you get a valuer out to your house, 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 offer two valuations: one for a quick sale and one for a well marketed non time sensitive sale. These days that's not the case, but if you meet them and let them know you need to sell the house in the next 30 days you may control the result. The idea is that you want a real sell now figure.
There are two reasons this valuation technique is critical to you: one you can have peace of mind ascertaining the market value of your house, and then you can easily create your equity position. Second of all, your house may be worth so much more than you thought. Get some guidance before doing this. The amount of times I've seen 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 notable consideration is ownership, in many cases houses are acquired 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 does not, the equity is only factored on the 50 % of the property.
When it involves Bankruptcy, this is just one of potentially 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 portion of the house in bankruptcy also. I need to repeat this but get some information on this area of Bankruptcy because it is very tricky and each and every case is different.
If you need 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 Perth on 1300 795 575, or visit our website: www.bankruptcyexpertsPerth.com.au.