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.
