Bankruptcy Hobart is a challenging
process, but I know from meeting with thousands facing the possibility of
bankruptcy over the years, that pretty much nothing troubles people more than
the thought of losing the family home or apartment. Almost everybody is psychologically
connected to their home - it's where the children have grown up, it's where you
appreciate life on a day to day base.
Will you lose your house if you go
bankrupt? The answer is a resounding maybe. (not very helpful, I know) People
generally believe 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 perk of Debt
Agreements and Personal Insolvency Agreements is you can keep your house. The
reason is simple: you've accepted 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 principle behind the Bankruptcy
process as administered by the trustee, then you'll have a more clear picture.
The responsibility 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 executed in a
bunch of various 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 fixing your debts.
What this sounds like 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 repay your debts.
If there is no equity in your home then it's pointless to sell your home. This
is happening much 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 word of advice here if you have a
house in Hobart and are looking at Bankruptcy: get an expert to help you
through this process, there are a number of variables in these scenarios that
have to be considered.
You might wonder, why would the bank want
bankrupt clients? wouldn't they want to sell your house and not take the risk?
The bank that has kindly lent you the money for your house is making good money
every month in interest out of you, month in month out, provided you keep up to
date with your monthly payments then the bank really wants you in there at all
costs. Ultimately however it's not the bank's call if the trustee establishes
that there is plenty 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 note the value of your house and the amount of money you owe on the house. A
tip if you are attempting 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 advice or a real estate agents advice to come to this figure. When you get
a valuer out to your home, ensure that 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 delicate sale. These days
that's not the case, but if you meet them and tell them you need to sell your
home in the next 30 days you may control the result. The idea is that you want
a sensible sell now figure.
There are two main reasons this valuation
process is critical to you: one you may have peace of mind ascertaining the
market value of your house, and afterwards you can easily create your equity
position. Secondly, your home may be worth far more than you thought. Get some
suggestions before doing this. The number of times I've met clients that have
sold their family home of 20 years simply to learn I could of helped them keep
it; unfortunately this happens all too often
When it comes to Bankruptcy and houses,
another main consideration is ownership, often houses are acquired 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 likely numerous scenarios that are possible when it relates to the
family home. Bear in mind the non-bankrupt party can buy the bankrupt's part of
the property in bankruptcy also. I have to repeat this but get some guidance on
this area of Bankruptcy because it is very tricky and every case is different.
If you really want to learn more about what
to do, where to turn and what questions to ask about Bankruptcy, then feel free
to call Fresh Start Solutions Hobart on 1300 818 575, or visit our website:
www.freshstartsolutions.com.au/bankruptcy-Hobart
