Losing your house: How much do you understand about Bankruptcy in -Canberra?




The most important question people have when they come to our team regarding Bankruptcy is without a doubt 'Can I manage to keep my house?' and sometimes the answer is yes, you can manage to keep your house.

The only reason you can be driven to sell your family home when you declare bankruptcy is due to the fact that you have so much equity in the home that it is believed an asset. Please read these basic hypothetical case studies below to get your head around Bankruptcy and how it has an effect on houses in Canberra. Remember If you want to know more about Bankruptcy and houses feel free to call us here at Bankruptcy Canberra on 1300 795 575, or visit our website: www.BankruptcyExperts.com.au

Case Study 1. (Mike & Sue Smith).

5 years ago Mike and Sue purchased a house in a mining town for $450,000. At this time the mining boom was keeping all the property prices nice and high. Now they are needing to look at Bankruptcy because they have substantial debts of $80,000 on top of their mortgage and credit card and tax debt.

They really wish to keep their house but wonder if they can, they know that house prices if anything have gone down in the area in the last 5 years so to be safe they think that their house is still only worth $450,000 after all these years, to be sure they searched www.realestate.com.au/ sold section of the website to see what other houses in the streets nearby have sold for fairly recently.

Unfortunately they have not paid any principal of the home loan over the last 5 years, mainly just interest, so they still owe $450,000.

Current House Value = $450,000.
Current Mortgage Value = $450,000.
Net Equity Value = $0.

Because there is no equity in this particular property the trustee will not ask Mike and Sue to sell their property when they go bankrupt, as long as they keep up the mortgage payments then all will be well for these people for the 3 years they are in bankruptcy.

At the end of the bankruptcy time period the trustee will write to them and ask if they want to take over ownership of their house again and so long as it has not grown in price over the 3 years they have been bankrupt they will be asked to make an offer to have their house back. This is normally somewhere between $3,000 and $5,000 to cover the legal costs of modifying the land title deed etc.
Now let's look at a slightly different example of Bankruptcy and houses.

Case Study 2. (Bill & Michelle Johnson).

2 years ago Bill and Michelle bought a townhouse in a wonderful suburb of Canberra for $850,000 they tipped in $50,000 as a deposit and now the townhouse two years later is worth $900,000.

Current House Value = $900,000.
Current Mortgage Value = $800,000.
Net Equity Value = $100,000.

As a result of a recent business failing Bill is about $240,000 in debt. Michelle who does work in banking has a separate job and no other debt apart from the mortgage. Bill cannot pay his debts so he is reviewing Bankruptcy. Michelle is bothered that she too may need to file for bankruptcy or be forced into it thanks to the house loan.

Within this particular case the trustee is required to access or get their hands on Bill's part of the equity which is $50,000 less selling costs. They may do this in a few ways; 1. Make them sell the home. 2. Invite Michelle to buy Bills half of the equity. 3. leave them in the home - but It's very unlikely with this case that the trustee would be happy to leave Bill and Michelle in the house because there is just too much equity.
So Michelle may be able to purchase Bill's share of the equity by coming up with $50,000 and buying out Bills' half and from that moment its now 100 % Michelle's house.

Property and Bankruptcy in Canberra is confusing and demanding, these two case studies above are just the tip of the iceberg as far as your options in Canberra are concerned. If you need to know more about Bankruptcy and houses feel free to consult with us here at Bankruptcy Canberra on 1300 795 575, or go to our website: www.bankruptcy-canberra.com.au


Comments

Post a Comment

Popular posts from this blog

Going Bankrupt in Canberra - does it matter if it is voluntary?

Image
When it comes to Going Bankrupt Canberra , usually people aren't aware that there are both voluntary, and involuntary bankruptcy- both of these have unique methods and guidelines. Involuntary bankruptcy arises when a person you owe money to involves the court to declare you bankrupt. Commonly when you get one of these notices, you have normally 21 days to pay all the debt. If you do not, then the creditor goes back to the court and asks the court to provide a sequestration order that declares you bankrupt. A trustee is selected, and then you have 14 days to get the documentation in and after that you are bankrupt. You can object to a ba nkruptcy notice by going to court shortly after the 21 days have expired and put your case forward, to stop it going to the next level. Apart from the way you became bankrupt there is in reality no distinction between Involuntary Bankruptcy and or Voluntary Bankruptcy - once you are declared bankrupt, they're managed to in the sa
Read more

Bankruptcy in Canberra - Will I lose my home if I go bankrupt?

Image
Bankruptcy in  Canberra  is a tricky process, but I know from meeting with thousands facing the possibility of bankruptcy over the years, that not much worries people more than the idea of losing the family home. Almost everyone is sentimentally connected to their home - it's where the children have grown up, it's where you take pleasure in life on a day to day base. Will you lose your house if you go bankrupt? The response is a resounding maybe. (not very helpful, I know) People typically presume it's an inevitable consequence and a part of Bankruptcy, and therefore 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 strength 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 Canberra house, you ask? It's easier if I explain the basic theory
Read more

Going Bankrupt in Canberra - Will I lose my business if I go bankrupt?

Image
When people in Canberra come to me looking to discuss GoingBankrupt , they are typically packed with questions. The internet has lots of information, but far too much of it is baffling or contradicts itself, so I make it my mission to try and make it clearer. One of the most basic troubles is 'Will I lose my business if I declare bankruptcy?' The brief answer is no. If you are a manager of a business any shape or size you can keep your business if you wish to. In Canberra, businesses that end up being insolvent have a few options for instance, liquidation, voluntary administration and so on. It's individuals who go bankrupt not businesses. Going Bankrupt is a complex area so get some professional advice on this one if you have a business. Generally speaking, the debts in a business and personal debts go hand in hand when a business owner goes bankrupt. There are several crucial implications for directors of companies when it comes to Going Bankrupt in Canberra:
Read more