Bankruptcy Lismore, So what is the Deal with Debts?

Just what Debts are cleared away if I go Bankrupt?

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

But, put simply 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 eliminated 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 absolute security connected to it. So for example 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 erased if I file for bankruptcy?

Yes. If you have a car loan for $40,000 you can have that debt wiped out if you simply return 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 might be wiped but the asset has to be sold or returned. This is just one part that, when it comes to Bankruptcy, it is vital to get professional help - like that provided at Bankruptcy Experts Lismore.

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 removed with bankruptcy. If you have a business with any type of debts receive some advice because it is not always so self-explanatory. Feel free to call us here at Bankruptcy Experts Lismore if you have any questions on 1300 795 575. Or feel free to head to our website: www.bankruptcyexpertsLismore.com.au

What about my business or Company debts?

In some cases when it involves Bankruptcy we can help you with your business debts, call us about this first. Remember bankruptcy applies to an individual not companies, trusts or businesses. Typically you may need to liquidate a company to deal with the debt this way. When it comes to Bankruptcy, it can be a complicated area, so remember there are implications for a business owner such as insolvent trading. At Bankruptcy Experts Lismore we specialise in business and personal debts so contact us here at Bankruptcy Experts Lismore if you have any questions regarding Bankruptcy on 1300 795 575. Or feel free to explore our website: www.bankruptcyexpertsLismore.com.au

Bankruptcy, Will I lose my Superannuation?

Bankruptcy in Australia can be convoluted and confusing. A question we often get asked here over at Bankruptcy Experts Lismore is 'what happens to my super if I declare Bankruptcy'? The solution for most is easy, if your super is simply in a regulated fund or industry fund like Sunsuper or Host Plus then very little happens; your super is 100 % safe when it involves Bankruptcy.

What if I have a Self Managed Super Fund?

This is a growing concern, take into consideration the expanding number of members of Self-Managed Super Funds ("SMSFs") lately; the ATO tells us it has expanded Australia-wide from 758,589 in 2009 to 1,011,689 in 2014. So what happens to these Superfunds when it comes to Bankruptcy?

Remember Bankruptcy Experts Lismore is not implying this post is the complete story, if you have any questions feel free to call us on 1300 795 575. No matter if you call us or someone else it does not matter, just please don't walk into bankruptcy blind when it comes to your SMSF actually we encourage you look for both legal and financial advice before proceeding with any of the actions indicated 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 being confronted by bankruptcy, you will be labeled as a 'disqualified person'. And a disqualified individual cannot operate as an Individual Trustee. This poses a problem due to the fact that usually most of the SMSFs are just 2 people, which means both of these members will need to also be the individual trustees. The duty of trustee poses a lot of legal rules, and if you are in this position I would highly urge you to end up being aware of them all-- for example 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 quite detrimental to a SMSF and as you can assume the process of Bankruptcy for a SMSF is rather convoluted.

How much time do I have so as to restructure my SMSF Fund after I'm bankrupt?

So what transpires 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 want to consider your entire structure and make certain it is meeting the basic conditions, involving having a new trustee that is not experiencing 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 very best plan would be to simply roll the fund into an industry or corporate fund.

Beyond these large scale reorganizing 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 suggests you have to let them know that you have a bankruptcy issue 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 need to also notify ASIC of their resignation.

In the course of that 6 month period you will need to remove the Bankrupt from the SMSF-- including their property and assets. Remember if you are uncertain call Bankruptcy Experts Lismore for some free advice on 1300 795 575.

What if I use a single member fund?

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

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

A simple solution ...

As I recommended earlier, a simple solution to your SMSF situation is to put your super back into a normal regulated managed fund before bankruptcy and save yourself all the frustrations outlined above. Bankruptcy is never easy, but finding proper advice is the best first step. If you want to discuss your possibilities further, give us a call at Bankruptcy Experts Lismore or visit our website: www.bankruptcyexpertsLismore.com.au or just give us a call on 1300 795 575.

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

Bankruptcy Lismore is a confusing process, but I know from meeting with thousands facing the possibility of bankruptcy over the years, that virtually nothing worries people more than the notion of losing the family home or apartment. Almost everybody is on an emotional level connected to their home - it's where the children have grown up, it's where you enjoy life on a day to day basis.

Will you lose your home if you go bankrupt? The reply is a resounding maybe. (not very helpful, I know) People generally think 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 perk of Debt Agreements and Personal Insolvency Agreements is you can keep your house. The reason is simple: you've agreed to pay back the debt you are in.

So how is it possible to keep my Lismore 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 picture.

The role of the bankruptcy trustee is to firstly follow the regulation of the bankruptcy act 1966 (it's a very boring read about 600 pages if you are interested).

Within that regulatory framework, the trustee is to help recuperate monies owed to your creditors, that is done in a bunch of assorted 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 off any assets that can contribute to paying back your debts.

What this seems 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 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 automatically reflect the price today.

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

You might wonder, why would the bank want bankrupt clients? wouldn't they prefer to sell your house and not take the risk? The bank that has generously lent you the money for your house is generating good money every month in interest out of you, month in month out, so long as you keep up to date with your payments then the bank really wants you in there at all costs. Essentially 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 make a note of the value of your house and the quantity 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 provide you peace of mind, don't use your neighbours' gut feel suggestions or a real estate agents advice to get to this figure. When you get a valuer out to your property, make certain 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 give 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 life-like sell now figure.

There are two main reasons this valuation system is critical to you: one you will definitely have peace of mind ascertaining the market value of your house, and then you can easily build your equity position. Second of all, your home may be really worth much more than you thought. Get some advice before doing this. The amount of times I've seen clients that have sold their family home of 20 years only to find out I could of helped them keep it; unfortunately this happens all too often

When it comes to Bankruptcy and houses, another primary consideration is ownership, often houses are acquired in joint names. In other words 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 to Bankruptcy, this is just one of likely numerous scenarios that are possible 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 help on this area of Bankruptcy because it is very tricky and each 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 speak to Bankruptcy Experts Lismore on 1300 795 575, or visit our website: www.bankruptcyexpertsLismore.com.au.