Bankruptcy Hobart is a challenging
process, but I know from meeting with thousands facing the prospect of
bankruptcy over the years, that absolutely nothing concerns people more than
the idea of losing the family home or apartment. Almost everyone is emotionally
connected to their home - it's where the children have grown up, it's where you
take pleasure in life on a day to day base.
Will you lose your house if you go
bankrupt? The response is a resounding maybe. (not very useful, I know) People
typically imagine 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 advantage 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 Hobart
house, you ask? It's easier if I explain the basic concept behind the Bankruptcy
process as administered by the trustee, then you'll have a more clear picture.
The job of the bankruptcy trustee is to
firstly abide by the regulation of the bankruptcy act 1966 (it's a very dull
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 carried out
in a bunch of assorted ways but it mainly comes down to income and assets. The
trustees role is to collect payments beyond your income threshold. The further
role is to sell off any assets that can contribute to fixing your debts.
What this sounds like is that yes the
trustee will sell your house right? Not necessarily. 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 locations have been heading south so what you paid 4 years ago may not
automatically reflect the price today.
A quick word of advice here if you have a
house in Hobart and are looking at Bankruptcy: get a skilled professional 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 like to sell your house and not take the
risk? The bank that has nicely 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 payments then the bank desires you in there at
all costs. Essentially however it's not the bank's call if the trustee
establishes 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 make a note of the value of your house and the amount of money you owe on
the house. A tip if you are aiming 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 recommendations or a real estate agents advice to come to
this figure. When you get a valuer out to your property, ensure that you tell
the valuer to value the property for a quick sale, ensure 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 let them know you need to sell
your home in the next 30 days you may sway the result. The idea is that you
want a sensible sell now figure.
There are two reasons this valuation system
is critical to you: one you will certainly have peace of mind ascertaining the
market value of your house, and after that you can easily build your equity
position. Second of all, your property may be really worth a lot more than you
thought. Get some assistance before carrying this out. The amount of times I've
seen clients that have sold their family home of 20 years only 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 many cases houses are acquired in
joint names. In other words 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 comes to Bankruptcy, this is just
one of potentially hundreds of scenarios that are likely when it comes to the
family home. Bear in mind the non-bankrupt party can buy the bankrupt's part of
the house in bankruptcy also. I should repeat this but get some assistance on
this area of Bankruptcy because it is very tricky and every single case is
different.
If you wish to learn more about what to do,
where to turn and what questions to ask about Bankruptcy, then feel free to
call Bankruptcy Experts Hobart on 1300 795 575, or visit our website:
www.bankruptcyexpertsHobart.com.au.
