Losing your house: Just how much do you know of Going Bankrupt in Perth?

The greatest concern a lot of people have when they come to our company about Going Bankrupt is undoubtedly ‘Can I manage to keep my house?’ and sometimes the truth is yes, you can keep your house.

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The only reason you may be driven to sell your family home when you declare bankruptcy is because you have a lot of equity in the house that it is considered an asset. Please go through these simple hypothetical case studies below to get your head around Going Bankrupt and how it impacts houses in Australia. Remember If you want to know more regarding Going Bankrupt and houses feel free to contact us here at Bankruptcy Experts Perth on 1300 795 575, or check out our website: http://www.bankruptcyexpertsPerth.com.au

Case Study 1. (Mike & Sue Smith)

5 years ago Mike and Sue bought 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 Going Bankrupt because they have huge debts of $80,000 on top of their mortgage and credit card and tax debt.

They really want 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 home is still only worth $450,000 after all these years, to make sure they searched http://www.realestate.com.au/ sold section of the website to see what other houses in the streets close by have sold for 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 property the trustee will not ask Mike and Sue to sell their house when they go bankrupt, as long as they keep up the mortgage payments then all will be well for them for the 3 years they are in bankruptcy.

At the end of the bankruptcy period of time the trustee will write to them and ask if they want to take over ownership of their house again and as long as it has not increased 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 usually somewhere between $3,000 and $5,000 to cover the legal costs of changing the land title deed etc.

Now let’s look at a slightly different example of Going Bankrupt and houses.

Case Study 2. (Bill & Michelle Johnson)

2 years ago Bill and Michelle purchased a townhouse in a wonderful suburb of Perth 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 problem Bill is about $240,000 in debt. Michelle who works in banking has a separate job and no other debt aside from the mortgage. Bill cannot pay his debts and so he is reviewing Going Bankrupt. Michelle is concerned that she too may need to file for bankruptcy or be pushed into it due to the house loan.

With 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. Have 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 in 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 have the opportunity 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 Going Bankrupt in Australia is confusing and complicated, these two case studies above are just the tip of the iceberg as far as your options in Perth are concerned. If you need to know more about Going Bankrupt and houses feel free to consult with us here at Bankruptcy Experts Perth on 1300 795 575, or go to our website: http://www.bankruptcyexpertsPerth.com.au

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Going Bankrupt Perth, What is the Deal with Debts?

Going Bankrupt Perth, What is the Deal with Debts?

Which Debts are erased if I go Bankrupt?

The easy answer is that when it involves Going Bankrupt most debts are wiped, and I have added a chart below for you to look at.

But, simply put 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 wiped out 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 actual security affixed 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 removed if I file for bankruptcy?

Yes. If you have a car loan for $40,000 you can have that debt cleared away if you simply hand back 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 can be wiped but the asset must be sold or returned. This is just one element that, when it comes to Going Bankrupt, it is important to get professional help – like that available at Bankruptcy Experts Perth.

What about my Tax Debts with the ATO can they be erased If I go bankrupt?

Yes they can, both business and personal debts owing to the ATO can be erased with bankruptcy. If you have a business with any type of debts find some advice because it is not always so easy. Feel free to call us right here over at Bankruptcy Experts Perth if you have any questions on 1300 795 575. Or feel free to check out our website: http://www.bankruptcyexpertsPerth.com.au

What about my business or Company debts?

In some cases when it involves Going Bankrupt we can assist you with your business debts, call us concerning this first. Remember bankruptcy applies to an individual not companies, trusts or businesses. Normally you may have to liquidate a company to deal with the debt that way. And when it comes to Going Bankrupt, it can be a complicated area, so remember there are implications for a business owner such as insolvent trading. At Bankruptcy Experts Perth we specialise in business and personal debts so give us a call here at Bankruptcy Experts Perth if you have any questions about Going Bankrupt on 1300 795 575. Or feel free to visit our website: http://www.bankruptcyexpertsPerth.com.au

Going Bankrupt, Will I lose my Superannuation?

Going Bankrupt, Will I lose my Superannuation?

Going Bankrupt  Australia can be involved and difficult to understand. A question we usually get asked here over at Bankruptcy Experts Perth is ‘what happens to my super if I file for Bankruptcy’? The reply for most is straightforward, if your super is actually in a regulated fund or industry fund like Sunsuper or Host Plus then very little happens; your super is 100 % safe when it involves Going Bankrupt.

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What if I have a Self Managed Super Fund?

This is a growing concern, consider the growing number of members of Self-Managed Super Funds (“SMSFs”) lately; the ATO tells us it has grown Australia-wide from 758,589 in 2009 to 1,011,689 in 2014. So what happens to these Superfunds when it involves Going Bankrupt?

Remember Bankruptcy Experts Perth is not implying this post is the entire story, if you have any questions feel free to call us on 1300 795 575. Whether you call us or someone else it doesn’t matter, just please don’t walk into bankruptcy blind when it comes to your SMSF in fact we advise you find 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 taking into account Going Bankrupt, you can not be a part of a SMSF. Why? Because if you are dealing with bankruptcy, you will be grouped as a ‘disqualified person’. And a disqualified individual cannot operate as an Individual Trustee. This poses a problem since usually most of the SMSFs are just 2 people, which means each of these members must also be the individual trustees. The position of trustee poses a lot of legal rules, and if you are in this role I would highly encourage you to become familiar with them all– including the fact that you can not ‘know or suspect’ that one of you are bankrupt. So you can see how an individual bankruptcy can be quite damaging to a SMSF and as you can imagine the process of Going Bankrupt for a SMSF is rather convoluted.

How long do I have so as to restructure my SMSF Fund once I’m bankrupt?

So what takes place if one of the members of an SMSF does enter Bankruptcy?

For starters, the SMSF will need to be restructured. This means that you will need to consider your complete structure and make certain it is meeting the basic conditions, including having a new trustee that is not experiencing issues with Bankruptcy. The Australian Tax office will supply you a 6 month ‘grace period’ to get this done before you face penalties. And keep in mind, sometimes the most ideal 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 indicates you ought to let them know that you have a bankruptcy problem with your current trustee, that they are being removed as soon as possible know who the new trustee/director is. The Bankrupt will also need to inform the ATO using the form NAT 3036 (Found on the ATO website) and they will need to also notify ASIC of their resignation.

Through that 6 month period you will need to remove the Bankrupt from the SMSF– including their property and assets. Remember if you are not sure call Bankruptcy Experts Perth 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 end up being their responsibility to oversee the sale and transfer of assets into a managed fund. If there are two or more members, than the bankrupt member will have to resign and the other member will remove the property and halve the proceeds. They would then have to decide if they wish to remain as a single member SMSF, or if they want to roll all of it into a managed fund. If both members are entering bankruptcy, then they will need to sell all assets promptly and transfer the liquid assets to the managed fund.

From that you can notice how when it comes to Going Bankrupt, even when one single member is running into issues, it can affect the very existence of an SMSF. If you are already facing this concern yourself, or with a partner in a SMSF, please seek financial advice to make sure you are meeting the ATO requirements.

A simple solution …

As I recommended earlier, a simple solution to your SMSF issue is to put your super back into a normal regulated managed fund prior to bankruptcy and save yourself all the frustrations outlined above. Going Bankrupt is never easy, but finding proper advice is the best 1st step. If you want to discuss your options further, give us a call at Bankruptcy Experts Perth or visit our website: http://www.bankruptcyexpertsPerth.com.au or just call us on 1300 795 575.

Going Bankrupt in Perth – Will I lose my house if I go bankrupt?

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Going Bankrupt Perth is a difficult to understand process, but I know from meeting with thousands facing the likelihood of bankruptcy over the years, that not a thing troubles people more than the notion of losing the family house. Almost everyone is sentimentally connected to their home – it’s where the children have grown, it’s where you take pleasure in 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 typically feel that it’s an inevitable consequence and a part of Going Bankrupt, and therefore push themselves to the brink of insanity to not lose the family home. But when it comes to the whole process of Going Bankrupt, 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 Perth house, you ask? It’s easier if I explain the basic principle behind the Going Bankrupt process as administered by the trustee, then you’ll have a more clear image.

The function of the bankruptcy trustee is to firstly comply with the regulation of the bankruptcy act 1966 (it’s a very plain read about 600 pages if you are serious).

Within that regulatory framework, the trustee is to help recuperate 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 and above your income threshold. The other role is to sell off any assets that can contribute to paying back your debts.

What this sounds like is that yes the trustee will sell your house right? Not always. The only reason the trustee will sell off any asset including your house is to get money to pay back your debts. If there is no equity in your home then it’s pointless to sell your home. This is happening increasingly more since the GFC as house prices in many regions have been heading south so what you paid 4 years ago may not actually reflect the price today.

A quick tip here if you have a house in Perth and are looking at Going Bankrupt: get an expert to help you through this process, there are a number of variables in these scenarios that need to be considered.

You might wonder, why would the bank want bankrupt clients? wouldn’t they hope to sell your house and not take the risk? The bank that has nicely 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 fees 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 jot down the value of your house and the amount of money 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 provide you peace of mind, don’t use your neighbours’ gut feel tips or a real estate agents advice to come to this figure. When you get a valuer out to your house, make certain 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 offer 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 real sell now figure.

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

When it comes to Going Bankrupt and houses, another notable consideration is ownership, in many cases houses are acquired 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 involves Going Bankrupt, this is just one of potentially hundreds of scenarios that are possible when it comes to the family home. Bear in mind the non-bankrupt party can buy the bankrupt’s portion of the house in bankruptcy also. I need to repeat this but get some information on this area of Going Bankrupt because it is very tricky and each and every case is different.

If you need to learn more about what to do, where to turn and what questions to ask about Going Bankrupt, then feel free to speak to Bankruptcy Experts Perth on 1300 795 575, or visit our website: http://www.bankruptcyexpertsPerth.com.au.

Going Bankrupt in Perth – Who exactly do I talk to?

Should I get in touch with my accountant about Going Bankrupt?

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The answer seems clear doesn’t it: if anyone knows your financial situation well in Perth, It’s going to be your accountant. However, the short answer is a definite No! It’s not that your accountant won’t have your best interests in mind when it comes to Going Bankrupt, it’s that his specialization lie in helping you save you money at tax time, minimising your tax liability and lodging your BAS.

Most accounting degrees will put in hardly any to no time on insolvency, it’s generally carried out as a post graduate speciality course for those who wish to work in the field. Unless your accountant is an insolvency expert, he wouldn’t know that a lot about the effects of Going Bankrupt, I can guarantee you insolvency specialists know much about tax returns or BAS in. If you do manage to find an insolvency accounting firm in Perth, they often tend to be large firms with very nice offices who charge accordingly.

Should I consult with my Solicitor about Going Bankrupt?

No! You can speak to your solicitor in Perth but more than likely it won’t do you much good. Solicitors are certainly good at doing things lawyers do, like assisting you do your Will and buying your house and keeping you out of court if you’re lucky. When it relates to Going Bankrupt, the specialists in Perth tend to have either a legal or accounting experience, and the reason for that is simply that you can’t enrol in the post graduate study to become a qualified insolvency practitioner unless you have a law or accounting degree.

Just as there are few insolvency accounting firms, there are very few insolvency legal practices in Australia, and yes if you choose one you will pay a sizeable price for their expertise.

Should I talk to a financial counsellor about Going Bankrupt?

Yes! There are a lot of financial counselling services that can help you with this, they have no hidden agendas and they’re a great option for letting you think through your situation when it comes to Going Bankrupt. If you find yourself stressing out constantly, not sleeping, not eating or over-eating and thinking of money pressures continuously, then get some help.

There are also charities around Perth like Lifeline that offer a terrific service. They will be a sounding board if you just need a person to review with you what your options are. Don’t let your financial trouble destroy your life – in the end it’s just money.

If you like to learn more about what to do, where to turn and what issues to ask about Going Bankrupt, then feel free to call Bankruptcy Experts Perth on 1300 795 575, or visit our website: .bankruptcyexpertsPerth.com.au.

Going Bankrupt in Perth – Will I lose my job if I go bankrupt?

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Literally everyone experiencing Going Bankrupt Perth has this worry about their job, and the answer to the question is ‘maybe’. The dilemma with some occupations isn’t that you simply cannot do the job any longer, it’s more a trouble of professional bodies or associations that view bankruptcy in a dim light and can make things complicated for you.

When it comes to Going Bankrupt and employment in Perth, what I would propose is that you do your very own homework here, do the research and go through that process first before filing for bankruptcy considering that may help you decide. Check if your profession is on the list below. If it is, I ‘d speak to them directly and explain your situation. Some associations won’t have an issue with your bankruptcy so long as it wasn’t accompanied by shady or questionable behaviour.

If you are affected by this part of Going Bankrupt and licences, In most cases you won’t lose your Licence permanently; it just gets suspended for the 3 years of your bankruptcy. If your profession happens to be on the checklist and you’ve spoken with them but they won’t budge, then I ‘d advise you seek some specialist advice. This may be among those rare occasions when I ‘d endorse using a Debt Agreement or a Personal Insolvency Agreement.

Remember in most cases you don’t have to exit the business you are employed in; you just need to work under another’s Licence for a time. In the building sector this is particularly relevant: if you’re an electrician for instance, there is absolutely nothing stopping you working with another electrician in Perth under their Licence.

Please check the table below, it handles the license and company side of Going Bankrupt. Its organised on a state by state premise, and you’ll find that there’s a listing called “Operating a business.” Please don’t stress if you run your own company. Just one of the limitations of bankruptcy is you can’t be a director of a business, but all this actually means is that you need to restructure your business.

Simply for your peace of mind I’ll tell you now that you can still own and run this business as a sole trader. There are no restrictions: you can employ staff and turn over any amount of money. Normally people who run their own business have debts that are business related and it can end up being very complicated, so it’s best to obtain some qualified advice instead of going it alone.

If you want to learn more about what to do, where to turn and what questions to ask about Going Bankrupt, then feel free to talk to Bankruptcy Experts Perth on 1300 795 575, or visit our website: http://www.bankruptcyexpertsPerth.com.au.

Going Bankrupt in Perth – Will I lose my business if I go bankrupt?

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

When people in Perth come to me hoping to discuss Going Bankrupt, they are always full of questions. The internet is full of information, but far too much of it is confusing or contradicts itself, so I make it my mission to try and make things clearer. One of the very most general troubles is ‘Will I lose my business if I declare bankruptcy?’ The quick answer is no. If you are an owner of a company any shape or size you can maintain your business if you wish to. In Perth, businesses that are insolvent have a few options for instance liquidation, voluntary administration and so on. It’s people who go bankrupt not companies.

Going Bankrupt is a complex area so get some reliable advice on this one if you have a business. Generally speaking, the financial debts in a business and personal debts go together when a business owner declares bankruptcy. There are a few crucial implications for directors of companies when it comes to Going Bankrupt in Perth: A bankrupt can not be a director of a company, so if you have a pty ltd company you will need to retire as a director once you’re bankrupt.

A limitation that applies when you are generally bankrupt as a business owner is that you can be in your very own business as a sole trader only. There are things you need to make known as an aspect of that but effectively you can still run your company. For some business owners, bankruptcy affects their ability to run the business because of the licensing issues. For example, if you run a building company, your license will be suspended once you’re bankrupt and consequently you can no longer trade without that license, so make sure you are asking the ideal questions when it comes to licenses and Going Bankrupt in Perth.

However if your business is not impacted directly by such issues, then you’ll need to restructure the way you run your business. There are considerations when and if you go bankrupt as a business owner: you can not acquire heaps of debt in your company, then go bankrupt and afterwards open the doors the next day like not a thing had happened. There are laws in place to avoid what is called phoenix companies appearing out of the ashes of an old business.

Having said that, it’s just a point of talking to the suitable people about Going Bankrupt. Here in this circumstance you may believe you need a liquidator for your company, and you may be right, but keep that in mind every liquidator is different and have their own motives. Liquidators earn money from your liquidation – heaps of money – so just what advice do you think you will get?

When it comes to Going Bankrupt, I believe that giving generic advice in this area is likely damaging as it can have very severe implications for directors and business owners. This is considering that it is one of those cases where what the right advice for one business owner is the wrong advice for the other. There are some basics however, that you may benefit from. There is no limitation to the size of the business you run even though you are bankrupt. You can employ staff. You can continue to deal with your providers under certain conditions, the main one being you will need to meet the payment terms agreed upon.

So when it comes to Going Bankrupt, don’t get too uneasy about what you can and can’t do as a business owner, just get the right advice … If you wish to learn more about what to do, exactly where to turn and what questions to ask about Going Bankrupt, then feel free to contact Bankruptcy Experts Perth on 1300 795 575, or visit our website:.bankruptcyexpertsPerth.com.au.