Bankruptcy Cairns is a difficult to
understand process, but I know from meeting with thousands facing the
possibility of bankruptcy over the years, that nothing at all concerns people
more than the thought of losing the family house. Almost everyone is psychologically
connected to their home - it's where the kids have grown, it's where you take
pleasure in life on a day to day base.
Will you lose your house if you go
bankrupt? The solution is a resounding maybe. (not very helpful, I know) People
generally believe it's an inevitable consequence and a part of Bankruptcy, and
hence 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 accepted to pay back the debt you are in.
So how is it possible to keep my Cairns
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 clearer idea.
The purpose of the bankruptcy trustee is to
firstly comply with the regulation of the bankruptcy act 1966 (it's a very dull
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 executed in a
bunch of various ways but it mainly comes down to income and assets. The
trustees role is to collect payments beyond 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 necessarily. The only reason the trustee will
sell 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 much more since the GFC as house prices in many regions have been
heading south so what you paid 4 years ago may not really reflect the price
today.
A quick word of advice here if you have a
house in Cairns and are looking at Bankruptcy: get a professional to help you
through this process, there are lots of variables in these scenarios that have
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 kindly lent you the money for your house is creating
good money every month in interest out of you, month in month out, provided
that you keep up to date with your repayments then the bank really wants you in
there at all costs. Ultimately however it's not the bank's call if the trustee
determines 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 put down 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 give you peace of mind, don't use your
neighbours' gut feel recommendations or a real estate agents advice to reach
this figure. When you get a valuer out to your house, 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 provide two valuations: one
for a quick sale and one for a well marketed non time sensitive sale. These
days that's not the case, but if you meet them and let them know you need to
sell the house in the next 30 days you may control the result. The idea is that
you want a sensible sell now figure.
There are two reasons this valuation
process is critical to you: one you will definitely have peace of mind
ascertaining the market value of your house, and afterwards you can easily set
up your equity position. The second thing is, your house may be really worth
much more than you thought. Get some suggestions before doing this. The amount
of times I've seen clients that have sold their family home of 20 years just to
find out I could of helped them keep it; unfortunately this happens all too
often
When it comes to Bankruptcy and houses,
another notable 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 involves Bankruptcy, this is just
one of probably hundreds of 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 home in bankruptcy also. I have to repeat this but get some advice on this
area of Bankruptcy because it is very tricky and each and every case is
different.
If you would like to learn more about what to
do, where to turn and what questions to ask about Bankruptcy, then feel free to
call Bankruptcy Experts Cairns on 1300 795 575, or visit our website:
www.bankruptcyexpertsCairns.com.au.
