Bankruptcy in Hobart - Will I lose my house if I go bankrupt?

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.

Bankruptcy in Hobart - Who exactly do I speak to?

Should I consult with my accountant about Bankruptcy?

The answer seems obvious doesn't it: if anybody knows your financial circumstance well in Hobart, It's going to be your accountant. However, the short answer is a resounding No! It's not that your accountant may not have your best interests in mind when it comes to Bankruptcy, it's that his knowledge lie in helping you save you money at tax time, minimising your tax liability and lodging your BAS.

Most accounting degrees will devote hardly any to no time on bankruptcy, it's generally performed as a post graduate specialty program for those who wish to work in the field. Unless your accountant is an insolvency expert, he wouldn't know that a lot about the implications of Bankruptcy, I can assure you insolvency specialists know much about tax returns or BAS in. If you do happen to find an insolvency accounting firm in Hobart, they often tend to be large firms with very nice offices who charge accordingly.

Should I speak to my Solicitor about Bankruptcy?

No! You can speak to your solicitor in Hobart but more than likely it won't do you much good. Solicitors are really good at undertaking things lawyers do, like helping you do your Will and buying your house and trying to keep you out of court if you're lucky. When it relates to Bankruptcy, the specialists in Hobart typically have either a legal or accounting qualifications, and the reason for that is simply that you can't enrol in the post graduate study to become a qualified insolvency practitioner unless you have a law or accounting degree.

Just as there are a couple of insolvency accounting firms, there are very few insolvency legal practices in Australia, and yes if you choose one you will pay a sizable price for their expertise.

Should I speak with a financial counsellor about Bankruptcy?

Yes! There are lots of financial counselling services to assist you with this, they have no hidden agendas and they're a fantastic option for helping you analyze your circumstance when it comes to Bankruptcy. If you find yourself stressing constantly, not sleeping, not eating or over-eating and thinking of money pressures constantly, then get some help.

There are also charitable organizations around Hobart like Lifeline that offer a terrific service. They will be a sounding board if you just need somebody to talk about with you what your options are. Don't let your financial issue destroy your life - ultimately it's just money.

If you wish to learn more about what to do, where to turn and what issues to ask about Bankruptcy, then feel free to contact Bankruptcy Experts Hobart on 1300 795 575, or visit our website: www.bankruptcyexpertsHobart.com.au.

Bankruptcy in Hobart - does it matter if it is voluntary?

When it comes to Bankruptcy Hobart, typically people aren't aware that there may be both voluntary, and involuntary bankruptcy - the two have unique approaches and guidelines.

Involuntary bankruptcy happens when someone you owe money to involves the court to declare you bankrupt. Usually when you get one of these kinds of notices, you have 21 days to pay all the debt. If you don't, then the creditor goes back to the court and asks the court to provide a sequestration order that declares you bankrupt. A trustee is assigned, and then you have 14 days to get the paperwork in then afterwards you are bankrupt.

You can challenge a bankruptcy notice by going to court right after the 21 days have expired and put your case forward, to prevent it going to the next level. Apart from the way you became bankrupt there is in reality no distinction between Involuntary Bankruptcy and or Voluntary Bankruptcy - once you are declared bankrupt, they're administered to in the exact same way.

However, when it concerns Bankruptcy for this, the stress and anxiety, torment and fear that accompanies this method is incredible. If you think you are more than likely to be made bankrupt by someone, get some suggestions and act on that advice. Generally I've found it's always far better to know what you can and can't do before you have an individual bankrupt you. Once you are bankrupt, it's normally far too late.

Voluntary Bankruptcy

On the other hand, when it comes to Bankruptcy, sometimes there are moments that it is the most ideal option. So you may want to ask yourself, 'when should I consider voluntary Bankruptcy?'.

This question is not the very same for each person of course, but more often than not I find that one way you could work it out is to figure out just how long it will take you to pay all of your debts - if its longer than 3 years (the period you are declared bankrupt), then this may serve to help you make that decision, and help you to understand Bankruptcy.

Once, I had an 80 year old pensioner, who spoke to me once regarding * Bankrupcty tell me that her credit card statement calculated how long her debt would take to pay at the rate she was paying off her account, and it was 35 years! Imagine 35 years for one credit card bill.

Credit rating damage can help you think this through. If you move house and fail to remember to pay your $30 phone bill for 6 months more, it's very likely the phone service will default your credit file. That default will sit on your file for 5 years, so for $30 you can have your credit file truly damaged for that period of time - and all of this will impact how you have to approach Bankruptcy.

In many ways, the ease with which companies/credit providers can default your credit file is wrong. The punishment doesn't seem to equal the crime in my book. So if you already have defaults on your credit report for 5 years, bear in mind that bankruptcy is on your credit file for a total 7 years then its erased completely.

So if your credit rating is a big issue in trying to decide whether to enter into a Debt Agreement or Personal Insolvency Agreement or Bankruptcy remember they will all sit on your credit file for a total of 7 years. The biggest variation is that with a DA or PIA you repay the money and nevertheless have it on your file for 7 years.

Bankruptcy

I have mentioned the word a few times now, but when it comes down to it, Bankruptcy is the biggest part, and the element more people are afraid of when they come to me to review their financial situation and Bankruptcy. The other side of crime and punishment equation is bankruptcy, and in this country the provisions are very generous: you can go bankrupt owing millions of dollars and after 3 years it's all finished with no strings attached. Compared to countries like the United States, our bankruptcy laws are very generous.

I don't pretend to know why that is but a couple of hundred years ago debtors went to prison. These days I suppose the government feels the sooner it can get you back on your feet working and paying tax, the better. It makes more sense than locking you up which costs the taxpayer anyway.

Bankruptcy wipes every one of your debts including ATO debts with the exception of a few things:

·         Centrelink Debts, Court Fines like parking and speeding fines.

·         HECS or Fee Help loans.

·         Money to take care of a car accident if the car was not actually insured.

There is a lot more that can be said about this and Bankruptcy in general but the objective of this blog was to help you decide between a few readily available options. When getting some advice, bear in mind that there are always choices when it comes to Bankruptcy in Hobart, so do some study, and Good luck!

If you wish to learn more about precisely what to do, where to turn and what questions to ask about Bankruptcy, then feel free to speak with Bankruptcy Experts Hobart on 1300 795 575, or visit our website: bankruptcyexpertsHobart.com.au.

Bankruptcy in Hobart - Changes to help Small Business and Entrepreneurs

5th February 2016 - By Charles Bosse

Do you appreciate how much Bankruptcy in Hobart is changing? The Australian Government at the end of 2015 proposed some innate changes to the Bankruptcy Laws in Australia. One of the most significant of these is the length of time that a person is bankrupt for. Currently, there is a minimum amount of time that you must stay bankrupt, but, this 3 year period may in fact be reduced down to just 12 months. So if you are inquiring about Bankruptcy, this news may be rather important to you.

Mark Carnegie in the Financial Review on the 7th December 2015 recommended that "the proposed changes to ease the burden of bankruptcy laws didn't go far enough and the government should adopt US-style laws to protect the family home".

These shifts to the issue of Bankruptcy will take 18 months to implement. Mr Carnegie, went on to say in the Financial Review that safeguarding family assets was essential because "banks just terrorise small business and the mental health consequences to society are enormous".

The problem is Australia's bankruptcy laws prevented investors from supporting start-ups, and therefore mentoring had been "driven out of the system".

"They naturally find it very intimidating themselves personally and with their assets at risk in a risky early-stage deal, but with their own money in the deal and a lightened-up provision I think we 'd probably see more willingness. It could be more important than the money.".

Fraudulent Behavior.

The issue surrounding this Bankruptcy issue in Hobart that some come up with is that this modification will only reinforce fraudulent behavior opening pandora's box in a manner of speaking for the unscrupulous to defilement of the bankruptcy system. We have taken a look at the minimum, but on the other side of the matter, The government is not suggesting to change the maximum term of 8 years if it deems a bankrupt has performed in an unethical or fraudulent way, and there are no recommendations to change the repercussions of misrepresenting yourself or financial situation when filing for bankruptcy in Australia.

As an insolvency professional in Hobart, I have a reasonable share of knowledge when it comes to Bankruptcy. And having dealt with thousands of bankruptcy cases in Hobart I have never struck someone abusing the system or acting in an immoral way as to exploit the insolvency laws in Australia. When it comes to Bankruptcy, every week I help a small business owner or entrepreneur undergo the very tough task of bankruptcy, not once have I noticed they are happy about it. The typical small business owner or entrepreneur in Hobart does not start out taking enormous financial risks with the intent to fail. The media loves citing the apparent injustice that will be rampant if these changes occur, what a joke!

A Win for Small Business.

These suggested changes will be good for often the most effective and brightest in Hobart not get tossed out of the game financially for financial decisions often out of their control. Most small business owners I help with Bankruptcy, are hardworking, tax paying, employers keeping this country going.

Truth be told there is a fine line with what the government is trying to do here, since they are trying to balance helping individuals who have made decisions out of their control, and dissuading people from making missteps that land them in trouble and as a result an issue of Bankruptcy. However you also don't want to eliminate the experience and knowledge that business owners have. You surely don't want to shatter people simply because they have had a genuine failure in a large or small start-up enterprise that has not succeeded.

At the major end of town large organized companies have long been criticised for their failure to innovate - lets face it they would be more likely to do so if the risks of insolvency were reduced because directors are concerned they'll be personally responsible in an insolvency arrangement if the new venture doesn't work out.

The government's suggested 'safe haven' changes for directors of companies will allow Australia to more fully explore and innovate, which will make big updates for Bankruptcy. I can not imagine, that these alterations will be detrimental to Australia's economy, in reality these bankruptcy laws will save the tax payer in all areas of health - Especially in the mental health industry because the emotional cost of bankruptcy is enormous. When it comes to Bankruptcy in Hobart not a day goes by where I don't find out the tragic experiences of relationship failures, thoughts of suicide and the list goes on.

Bankruptcy helps save lives, and it could save yours. If you really need some assistance with your debts in Hobart or are just thinking of Bankruptcy, don't hesitate to give us a call here at Bankruptcy Experts Hobart on 1300 795 575, or visit our website: www.bankruptcyexpertshobart.com.au