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.
