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.
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