Bankruptcy Rockingham
is a difficult process, but I know from meeting with thousands facing the
possibility of bankruptcy over the years, that not much worries people more
than the thought of losing the family home or apartment. Almost everyone is on
an emotional level connected to their home - it's where the kids have grown up,
it's where you appreciate life on a day to day basis.
Will you lose
your house if you go bankrupt? The solution is a resounding maybe. (not very
helpful, I know) People typically assume it's an inevitable consequence and a
part of Bankruptcy, and as a result 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 Rockingham 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 idea.
The duty 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 intrigued).
Within that
regulatory framework, the trustee is to help recover monies owed to your
creditors, that is carried out 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 further role is to sell off any assets that can
contribute to fixing your debts.
What this seems
is that yes the trustee will sell your house right? Not normally. 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 house then it's pointless
to sell your home. This is happening increasingly since the GFC as house prices
in many locations have been heading south so what you paid 4 years ago may not
always reflect the price today.
A quick word of
advice here if you have a house in Rockingham 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 customers? wouldn't they need to sell
your house and not take the risk? The bank that has kindly lent you the money
for your house is generating good money every month in interest out of you,
month in month out, just as long as you keep up to date with your repayments then
the bank desires you in there at all costs. Ultimately however it's not the
bank's call if the trustee decides that there is a lot 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 put 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 offer you peace of mind, don't
use your neighbours' gut feel suggestions or a real estate agents advice to get
to this figure. When you get a valuer out to your property, make sure you tell
the valuer to value the property for a quick sale, see to it you mow the lawn
and don't leave the kitchen in a mess also.
Valuers used to
give two valuations: one for a quick sale and one for a well marketed non time
delicate sale. These days 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 life-like sell now figure.
There are two
main reasons this valuation technique is critical to you: one you will
certainly have peace of mind ascertaining the market value of your house, and
afterwards you can easily build your equity position. Second of all, your
property may be worth much more than you thought. Get some guidance before
carrying this out. The number of times I've seen clients that have sold their
family home of 20 years simply to find out I could of helped them keep it;
unfortunately this happens all too often
When it concerns
Bankruptcy and houses, another major consideration is ownership, in many 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 relates
to Bankruptcy, this is just one of probably 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 house in bankruptcy also. I have to repeat this
but get some information on this area of Bankruptcy because it is very tricky
and every 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 call Bankruptcy Rockingham on 1300 795 575, or visit our
website: bankruptcyexpertsrockingham.com.au.