Going Bankrupt in Alice Springs – Will I lose my home if I go bankrupt?

lose-my-home-if-i-go-bankrupt

Going Bankrupt Alice Springs is a confusing process, but I know from meeting with thousands facing the likelihood of bankruptcy over the years, that almost nothing concerns people more than the thought of losing the family home or apartment. Almost every person is psychologically 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 house if you go bankrupt? The answer is a resounding maybe. (not very useful, I know) People typically presume it’s an inevitable consequence and a part of Going Bankrupt, 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 Going Bankrupt, a key perk of Debt Agreements and Personal Insolvency Agreements is you can keep your house. The reason is simple: you’ve accepted to pay back the debt you are in.

So how is it possible to keep my Alice Springs house, you ask? It’s easier if I explain the basic idea behind the Going Bankrupt process as administered by the trustee, then you’ll have a more clear idea.

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

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

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

A quick tip here if you have a house in Alice Springs and are looking at Going Bankrupt: get a qualified professional to help you through this process, there are loads of variables in these scenarios that need to be considered.

You might wonder, why would the bank want bankrupt clients? wouldn’t they want to sell your house and not take the risk? The bank that has generously lent you the money for your house is making good money every month in interest out of you, month in month out, provided you keep up to date with your payments then the bank wants you in there at all costs. Essentially however it’s not the bank’s call if the trustee figures out that there is plenty 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 portion 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 property, 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 offer two valuations: one for a quick sale and one for a well marketed non time delicate sale. These days that’s not the case, but if you meet them and tell them you need to sell the house in the next 30 days you may sway the result. The idea is that you want a practical sell now figure.

There are two main reasons this valuation system is critical to you: one you will have peace of mind ascertaining the market value of your house, and afterwards you can easily build your equity position. The second thing is, your property may be worth even more than you thought. Get some assistance before doing this. The number of times I’ve met clients that have sold their family home of 20 years just to find out I could of helped them keep it; unfortunately this happens all too often

When it concerns Going Bankrupt and houses, another major consideration is ownership, in many cases 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 doesn’t, the equity is only factored on the 50 % of the property.

When it comes down to Going Bankrupt, this is just one of possibly hundreds of scenarios that are likely 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 have to repeat this but get some advice on this area of Going Bankrupt because it is very tricky and every case is different.

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 reach out to Bankruptcy Experts Alice Springs on 1300 795 575, or visit our website:bankruptcyexpertsAliceSprings.com.au.