Bankruptcy Geraldton is a confusing
process, but I know from meeting with thousands facing the prospect of
bankruptcy over the years, that practically nothing troubles people more than
the notion of losing the family home or apartment. Almost every person is emotionally
connected to their home - it's where the kids have grown up, it's where you
appreciate life on a day to day base.
Will you lose your home if you go bankrupt?
The reply is a resounding maybe. (not very helpful, I know) People generally
feel it's an inevitable consequence and a part of Bankruptcy, and as a result
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 agreed to pay back the debt you are in.
So how is it possible to keep my Geraldton
house, you ask? It's easier if I explain the basic theory behind the Bankruptcy
process as administered by the trustee, then you'll have a clearer idea.
The function of the bankruptcy trustee is
to firstly comply with the regulation of the bankruptcy act 1966 (it's a very
boring read about 600 pages if you are curious).
Within that regulatory framework, the
trustee is to help recover monies owed to your creditors, that is accomplished
in a bunch of different ways but it mainly comes down to income and assets. The
trustees role is to collect payments over your income threshold. The other role
is to sell any assets that can contribute to paying your debts.
What this sounds like is that yes the
trustee will sell your house right? Not necessarily. The only reason the
trustee will sell off 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
locations have been heading south so what you paid 4 years ago may not
necessarily reflect the price today.
A quick word of advice here if you have a
house in Geraldton and are looking at Bankruptcy: get a professional to help
you through this process, there are a number of variables in these scenarios
that have to be considered.
You might wonder, why would the bank want
bankrupt customers? wouldn't they prefer to sell your house and not take the
risk? The bank that has nicely lent you the money for your house is earning
good money every month in interest out of you, month in month out, provided you
keep up to date with your repayments then the bank really wants you in there at
all costs. Essentially however it's not the bank's call if the trustee
establishes that there is loads 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 level you owe on the house. A tip
if you are trying 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 tips
or a real estate agents advice to arrive at this figure. When you get a valuer
out to your home, make sure you tell the valuer to value the property for a
quick sale, make certain 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 sound sell now figure.
There are two reasons this valuation
process is critical to you: one you will have peace of mind ascertaining the
market value of your house, and after that you can easily create your equity
position. Second of all, your property may be worth a lot more than you
thought. Get some assistance before carrying this out. The number of times I've
met 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 serious consideration is ownership, in many cases houses are bought 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 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 part of
the property in bankruptcy also. I need to repeat this but get some information
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 contact Bankruptcy Experts Geraldton on 1300 795 575, or visit our website:
www.bankruptcyexpertsGeraldton.com.au.
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