Bankruptcy Newcastle is a difficult to
understand process, but I know from meeting with thousands facing the prospect
of bankruptcy over the years, that not a thing troubles people more than the
notion of losing the family home. Almost everyone is on an emotional level
connected to their home - it's where the kids have grown, it's where you enjoy
life on a day to day basis.
Will you lose your house if you go
bankrupt? The reply is a resounding maybe. (not very helpful, I know) People
typically believe 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 strength 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 Newcastle
house, you ask? It's easier if I explain the basic guideline behind the Bankruptcy
process as administered by the trustee, then you'll have a clearer image.
The responsibility 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 recover monies owed to your creditors, that is accomplished in a
bunch of diverse ways but it mainly comes down to income and assets. The
trustees role is to collect payments over your income threshold. The other role
is to sell off any assets that can contribute to paying your debts.
What this seems 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 on your property then it's pointless to sell your home. This
is happening increasingly since the GFC as house prices in many regions have
been heading south so what you paid 4 years ago may not necessarily reflect the
price today.
A quick word of advice here if you have a
house in Newcastle 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 have to be considered.
You might wonder, why would the bank want
bankrupt customers? wouldn't they want to sell your house and not take the
risk? The bank that has generously lent you the money for your house is making
good money every month in interest out of you, month in month out, as long as
you keep up to date with your monthly 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 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 mark the value of your house and the quantity 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
tips or a real estate agents advice to reach this figure. When you get a valuer
out to your home, make certain 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 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 control the result. The idea is that you
want a sensible sell now figure.
There are two main reasons this valuation
system is critical to you: one you will certainly have peace of mind
ascertaining the market value of your house, then afterwards you can easily
develop your equity position. Second of all, your house may be worth so much
more than you thought. Get some advice before carrying this out. The number of
times I've seen clients that have sold their family home of 20 years just to
discover I could of helped them keep it; unfortunately this happens all too
often
When it concerns Bankruptcy and houses,
another big 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 possibly 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 property in bankruptcy also. I should repeat this but get some
assistance 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 Bankruptcy Experts Newcastle on 1300 795 575, or visit our website:
www.bankruptcyexpertsNewcastle.com.au.
