Bankruptcy Hobart, What is the Deal with Debts?

Which Debts are wiped out if I go Bankrupt?

The straightforward answer is that when it involves Bankruptcy most debts are wiped, and I have provided a chart below for you to look at.

But, simply put some of the exceptions are Centrelink Debts, Child Support, Court fines (like speeding fines) along with any debts arising from uninsured Motor-vehicle claims and educational debts for example, HECS or FEE-HELP. These debts are not removed when you file for bankruptcy.

What about Secured Debts?

A secured debt is a car loan or a home loan; it is a debt that has some real security connected to it. So for instance if you buy a new car for $40,000 dollars the security for that car is the actual car itself.

So, can my secured debts be removed if I file for bankruptcy?

Yes. If you have a car loan for $40,000 you can have that debt eliminated if you simply hand back the car. So the lesson is that you cannot have your cake and eat it too (so to speak), so yes all of your secured debts may be wiped but the asset will need to be sold or returned. This is just one component that, when it comes to Bankruptcy, it is essential to get professional assistance - like that readily available at Bankruptcy Advice Hobart.

What about my Tax Debts with the ATO can they be cleared away If I go bankrupt?

Yes they can, both business and personal debts owing to the ATO can be cleared away with bankruptcy. If you have a business with any kind of debts receive some advice because it is not always so simple. Feel free to call us here over at Bankruptcy Advice Hobart if you have any type of questions on 1300 879 867. Or feel free to visit our website: www.bankruptcy-advice.com.au/Hobart.com.au

What about my business or Company debts?

In some cases when it involves Bankruptcy we can aid you with your business debts, call us concerning this first. Remember bankruptcy applies to an individual not companies, trusts or businesses. Typically you may have to liquidate a company to deal with the debt that way. And when it comes to Bankruptcy, it can be a confusing area, so remember there are implications for a business owner such as insolvent trading. At Bankruptcy Advice Hobart we specialise in business and personal debts so contact us here at Bankruptcy Advice Hobart if you have any questions regarding Bankruptcy on 1300 879 867. Or feel free to go to our website: www.bankruptcy-advice.com.au/Hobart.com.au

Bankruptcy, Will I lose my Superannuation?

Bankruptcy in Australia can be involved and perplexing. A question we usually get asked here at Bankruptcy Advice Hobart is 'what happens to my super if I apply for Bankruptcy'? The answer for most is straightforward, if your super is normally in a regulated fund or industry fund like Sunsuper or Host Plus then absolutely nothing happens; your super is 100 % safe when it comes to Bankruptcy.

What if I have a Self Managed Super Fund?

This is a growing concern, consider the evolving number of members of Self-Managed Super Funds ("SMSFs") in recent years; the ATO tells us it has grown Australia-wide from 758,589 in 2009 to 1,011,689 in 2014. So what happens to these Superfunds when it comes down to Bankruptcy?

Remember Bankruptcy Advice Hobart is not suggesting this article is the whole story, if you have any questions feel free to call us on 13a00 879 867. Whether or not you call us or somebody else it doesn't matter, just please don't walk into bankruptcy blind when it comes to your SMSF in fact we advise you get both legal and financial advice before proceeding with any of the actions suggested in this article.

What is a Disqualified Person?

First and foremost, if you are considering Bankruptcy, you can not be a part of a SMSF. Why? Because if you are coping with bankruptcy, you will be grouped as a 'disqualified person'. And a disqualified individual cannot operate as an Individual Trustee. This poses a problem since usually most of the SMSFs are just 2 people, which means each of these members have to also be the individual trustees. The role of trustee presents a lot of legal rules, and if you are in this position I would highly encourage you to end up being aware of them all-- including the fact that you can not 'know or suspect' that one of you are bankrupt. So you can notice how an individual bankruptcy can be very harmful to a SMSF and as you can assume the process of Bankruptcy for a SMSF is rather convoluted.

How long do I have to restructure my SMSF Fund after I'm bankrupt?

So what takes place if one of the members of an SMSF does enter Bankruptcy?

For starters, the SMSF will have to be reorganized. This means that you will need to consider your overall structure and make sure it is meeting the basic conditions, including having a new trustee that is not dealing with issues with Bankruptcy. The Australian Tax office will offer you a 6 month 'grace period' to get this done before you face penalties. And keep in mind, sometimes the most ideal plan would be to simply roll the fund into an industry or corporate fund.

Beyond these large scale restructuring issues, there is a lot of paperwork to deal with too, and you need to be frequently keeping the ATO informed of what is happening. This indicates you will need to let them know that you have a bankruptcy problem with your current trustee, that they are being removed as soon as possible know who the new trustee/director is. The Bankrupt will also have to inform the ATO using the form NAT 3036 (Found on the ATO website) and they must also notify ASIC of their resignation.

Through that 6 month period you will need to remove the Bankrupt from the SMSF-- including their property and assets. Remember if you are not exactly sure call Bankruptcy Advice Hobart for some free advice on 1300 879 867.

What if I have a single member fund?

If you are a single member fund, then you will need to appoint a new director, and it will then be their duty to oversee the sale and relocation of assets into a managed fund. If there are two or more members, than the bankrupt member will have to resign and the other member will remove the property and halve the proceeds. They would then need to decide if they choose to remain as a single member SMSF, or if they intend to roll all of it into a managed fund. If both members are entering bankruptcy, then they would need to sell all assets right away and move the liquid assets to the managed fund.

From this you can notice how when it comes to Bankruptcy, even when one single member is dealing with issues, it can affect the very existence of an SMSF. If you are at this point facing this problem yourself, or with a partner in a SMSF, please seek financial advice to make certain you are meeting the ATO requirements.

A simple solution ...

As I recommended earlier, a straightforward solution to your SMSF situation is to put your super back into a normal regulated managed fund prior to bankruptcy and save yourself all the headaches outlined above. Bankruptcy is never easy, but receiving proper advice is the best initial step. If you want to discuss your possibilities further, give us a call at Bankruptcy Advice Hobart or visit our website: www.bankruptcy-advice.com.au/Hobart.com.au or just call us on 1300 879 867.

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

Bankruptcy Hobart is a complicated process, but I know from meeting with thousands facing the prospect of bankruptcy over the years, that absolutely nothing concerns people more than the notion of losing the family house. Almost every person is on an emotional level connected to their home - it's where the kids have grown up, it's where you appreciate life on a day to day basis.

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 consequently 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 benefit 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 idea.

The responsibility of the bankruptcy trustee is to firstly abide by the regulation of the bankruptcy act 1966 (it's a very boring 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 distinct ways but it mainly comes down to income and assets. The trustees role is to collect payments over your income threshold. The further role is to sell 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 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 increasingly more since the GFC as house prices in many areas have been heading south so what you paid 4 years ago may not always reflect the price today.

A quick tip here if you have a house in Hobart and are looking at Bankruptcy: get a specialist to help you through this process, there are a lot of variables in these scenarios that need to be considered.

You might wonder, why would the bank want bankrupt clients? wouldn't they choose 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 that you keep up to date with your monthly payments then the bank really wants you in there at all costs. Essentially however it's not the bank's call if the trustee figures out that there is ample 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 amount 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, ensure that you tell the valuer to value the property for a quick sale, make sure 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 the house in the next 30 days you may sway the result. The idea is that you want a sound sell now figure.

There are two main reasons this valuation process is critical to you: one you will definitely have peace of mind ascertaining the market value of your house, and then you can easily establish your equity position. Secondly, your property may be really worth far more than you thought. Get some tips before doing this. 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 notable consideration is ownership, often houses are purchased in joint names. Simply put 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 down to Bankruptcy, this is just one of possibly 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 portion of the house in bankruptcy also. I have to repeat this but get some advice on this area of Bankruptcy because it is very tricky and every case is different.

If you need to learn more about what to do, where to turn and what questions to ask about Bankruptcy, then feel free to get in touch with Bankruptcy Advice Hobart on 1300 879 867, or visit our website: www.bankruptcy-advice.com.au/Hobart.