Losing your house: Just how much do you understand about Going Bankrupt in Alice Springs?

The biggest concern people have when they come to our business about Going Bankrupt is normally ‘Can I keep my house?’ and sometimes the truth is yes, you can manage to keep your house.

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The only reason you are going to be compelled to sell your family home when you declare bankruptcy is actually because you have a lot of equity in the home that it is considered an asset. Please go through these basic hypothetical case studies below to get your head around Going Bankrupt and how it affects houses in Australia. Remember If you want to know more about Going Bankrupt and houses feel free to get in touch with us here at Bankruptcy Experts Alice Springs on 1300 795 575, or visit our website: http://www.bankruptcyexpertsAliceSprings.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 helping keep all the property prices nice and high. Now they are needing to look at Going Bankrupt given that they have massive 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 currently 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 homes in the streets nearby have sold for lately.

Having said that 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 house 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 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 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 typically somewhere between $3,000 and $5,000 to cover the legal costs of altering the land title deed etc.

Now let’s take a 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 lovely suburb of Alice Springs 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 except for the mortgage. Bill cannot pay his debts so he is looking into Going Bankrupt. Michelle is bothered that she too may need to file for bankruptcy or be driven into it as a result of the house loan.

Within this particular case the trustee is required to access or get their hands on Bill’s half of the equity which is $50,000 less selling costs. They can 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 chance 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 demanding, these two case studies above are just the tip of the iceberg as far as your options in Alice Springs are concerned. If you need to know more about Going Bankrupt and houses feel free to consult with us here at Bankruptcy Experts Alice Springs on 1300 795 575, or visit our website: http://www.bankruptcyexpertsAliceSprings.com.au.

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Going Bankrupt Alice Springs, So what is the Deal with Debts?

Going Bankrupt Alice Springs, So what is the Deal with Debts?

So what Debts are cleared away if I go Bankrupt?

The simple 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) alongside any debts arising from uninsured Motor-vehicle claims and educational debts like HECS or FEE-HELP. These debts are not cleared away when you file for bankruptcy.

What about Secured Debts?

A secured debt is a vehicle loan or a home loan; it is a debt that has some genuine security linked to it. So as an 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 cleared away if I file for bankruptcy?

Yes. If you have a car loan for $40,000 you can have that debt wiped out 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 may be wiped but the asset has to be sold or returned. This is just one part that, when it comes to Going Bankrupt, it is important to get professional advice – like that offered at Bankruptcy Experts Alice Springs.

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

Yes they can, both business and personal debts owing to the ATO can be eliminated with bankruptcy. If you have a business with any form of debts find some advice because it is not always so simple. Feel free to call us here over at Bankruptcy Experts Alice Springs if you have any questions on 1300 795 575. Or feel free to explore our website: http://www.bankruptcyexpertsAliceSprings.com.au

What about my business or Company debts?

Sometimes when it involves Going Bankrupt we can assist you with your business debts, call us about this first. Remember bankruptcy applies to an individual not companies, trusts or businesses. Usually you may need 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 Alice Springs we specialise in business and personal debts so contact us here at Bankruptcy Experts Alice Springs if you have any questions about Going Bankrupt on 1300 795 575. Or feel free to explore our website: http://www.bankruptcyexpertsAliceSprings.com.au

Going Bankrupt, Will I lose my Superannuation?

Going Bankrupt, Will I lose my Superannuation?

Going Bankrupt Australia can be complicated and difficult to understand. A question we commonly get asked here at Bankruptcy Experts Alice Springs is ‘what happens to my super if I apply for Bankruptcy’? The answer for most is easy, if your super is normally in a regulated fund or industry fund like Sunsuper or Host Plus then nothing at all 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, take into account the growing number of members of Self-Managed Super Funds (“SMSFs”) lately; the ATO tells us it has expanded Australia-wide from 758,589 in 2009 to 1,011,689 in 2014. So what happens to these Superfunds when it comes to Going Bankrupt?

Remember Bankruptcy Experts Alice Springs is not suggesting this article is the complete 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 indeed we highly recommend you obtain 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 considering Going Bankrupt, you can not be a part of a SMSF. Why? Because if you are being confronted by bankruptcy, you will be classified as a ‘disqualified person’. And a disqualified individual cannot operate as an Individual Trustee. This poses a problem due to the fact that usually most of the SMSFs are just 2 people, which means both of these members have to also be the individual trustees. The position of trustee causes a lot of legal rules, and if you are in this position I would highly urge you to become aware of them all– for example the fact that you can not ‘know or suspect’ that one of you are bankrupt. So you can notice how an individual bankruptcy can be rather damaging to a SMSF and as you can assume the process of Going Bankrupt for a SMSF is rather convoluted.

How long do I have to restructure my SMSF Fund after I’m bankrupt?

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

For starters, the SMSF will have to be reorganized. This means that you will need to consider your over-all structure and ensure it is meeting the basic conditions, including having a new trustee that is not experiencing issues with Bankruptcy. The Australian Tax office will provide you a 6 month ‘grace period’ to get this done before you face penalties. And keep in mind, sometimes the best plan would be to simply roll the fund into an industry or corporate fund.

Beyond these large scale restructuring issues, there is a lot of paperwork to deal with too, and you need to be constantly keeping the ATO informed of what is happening. This suggests you need 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 must also notify ASIC of their resignation.

Over that 6 month period you will need to remove the Bankrupt from the SMSF– including their property and assets. Remember if you are uncertain call Bankruptcy Experts Alice Springs 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 need to appoint a new director, and it will then become their duty to oversee the sale and relocation 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 take away the property and halve the proceeds. They would then have to decide if they choose to remain as a single member SMSF, or if they need to roll it all into a managed fund. If both members are entering bankruptcy, then they would definitely need to sell all assets as soon as possible and transfer the liquid assets to the managed fund.

From this you can notice how when it comes to Going Bankrupt, even though one single member is dealing with issues, it can affect the very existence of an SMSF. If you are right now facing this matter yourself, or with a partner in a SMSF, please seek financial advice to make sure you are satisfying the ATO requirements.

A simple solution …

As I suggested earlier, a basic 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 problems outlined above. Going Bankrupt is never easy, but receiving proper advice is the best initial step. If you want to discuss your possibilities further, contact us at Bankruptcy Experts Alice Springs or visit our website: http://www.bankruptcyexpertsAliceSprings.com.au or just give us a call on 1300 795 575.

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.

Going Bankrupt in Alice Springs – Who do I talk to?

Should I talk to my accountant about Going Bankrupt?

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The answer seems obvious doesn’t it: if anybody knows your financial situation well in Alice Springs, It’s going to be your accountant. However, the short answer is a resounding No! It’s not that your accountant doesn’t have your best interests at heart 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 spend hardly any to no time on bankruptcy, it’s generally carried out as a post graduate speciality program for those who wish to work in the field. Unless your accountant is an insolvency expert, he won’t know that a lot about the implications of Going Bankrupt, I can assure you insolvency specialists know much about tax returns or BAS in. If you do manage to find an insolvency accounting firm in Alice Springs, they often tend to be large firms with very nice offices who charge accordingly.

Should I chat with my Solicitor about Going Bankrupt?

No! You can speak to your solicitor in Alice Springs but more than likely it won’t do you much good. Solicitors are really good at undertaking things lawyers do, like helping you do your Will and buying your house and trying to keep you out of court if you’re lucky. When it comes to Going Bankrupt, the specialists in Alice Springs often tend to have either a legal or accounting qualifications, and the main 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 like there are a handful of insolvency accounting firms, there are very few insolvency legal practices in Australia, and yes if you find one you will pay an ample price for their expertise.

Should I speak with a financial counsellor about Going Bankrupt?

Yes! There are plenty of financial counselling services to assist you with this, they have no hidden agendas and they’re a terrific option for really helping you think through your circumstance 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 at all times, then get some help.

There are also charitable organizations around Alice Springs like Lifeline that offer a remarkable service. They will be a sounding board if you just need somebody to go over with you what your choices are. Don’t let your financial trouble destroy your life – ultimately it’s just money.

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

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

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Basically everyone confronting Going Bankrupt Alice Springs has this concern about their job, and the response to the question is ‘maybe’. The problem with some professions isn’t that you cannot do the job any longer, it’s more an issue of professional bodies or associations that view bankruptcy in a dim light and can make things very difficult for you.

When it comes to Going Bankrupt and employment in Alice Springs, what I would recommend is that you do your very own prep work here, do the research and go through that process first before filing for bankruptcy simply because that may help you make a decision. Take a look at if your occupation is on the list below. If it is, I ‘d get in touch with them personally and clarify your situation. Some associations won’t have a concern with your bankruptcy as long as it wasn’t accompanied by shady or questionable behaviour.

If you are affected by this part of Going Bankrupt and licences, In many 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 list and you’ve talked with them but they won’t budge, then I ‘d recommend you seek some qualified advice. This may be among those rare occasions when I ‘d advise using a Debt Agreement or a Personal Insolvency Agreement.

Remember most of the time you don’t have to exit the business you are employed in; you just will need to work under someone else’s Licence for a time. In the building industry this is especially relevant: if you’re an electrician for example, there is nothing at all stopping you working with another electrician in Alice Springs under their Licence.

Please look at the table below, it handles the license and business side of Going Bankrupt. Its arranged on a state by state premise, and you’ll realize that there’s a listing called “Operating a business.” Please don’t worry if you run your own company. One of the limitations of bankruptcy is you can’t be a director of a business, but all that this truly means is that you have to restructure your business.

Just 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 constraints: you can employ staff and turn over any amount of money. Generally people who run their own business have debts that are business related and it can become very complicated, so it’s best to obtain some skilled advice as opposed to going it alone.

If you would like to learn more about what to do, where to turn and what questions to ask about Going Bankrupt, then feel free to call Bankruptcy Experts Alice Springs on 1300 795 575, or visit our website: http://www.bankruptcyexpertsAlice Springs.com.au.

Going Bankrupt in Alice Springs – 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 Alice Springs come to me trying to speak about Going Bankrupt, they are usually filled with questions. The internet has plenty of information, but far too much of it is baffling or contradicts itself, so I make it my mission to try and make things more clear. One of the most natural worries is ‘Will I lose my business if I declare bankruptcy?’ The quick answer is no. If you are an owner of a business any shape or size you can keep your business if you would like to. In Alice Springs, businesses that eventually become insolvent have a few options such as liquidation, voluntary administration and so on. It’s individuals who go bankrupt not companies.

Going Bankrupt is a complex area so get some reliable advice on this 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 some essential implications for directors of companies when it pertains to Going Bankrupt in Alice Springs: A bankrupt can not be a director of a company, so if you have a pty ltd company you are going to need to resign as a director as soon as you’re bankrupt.

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

Having said that if your business is not impacted directly by such issues, then you’ll will 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 business, then go bankrupt and afterwards open the doors the next day like almost nothing had happened. There are laws in place to avoid what is called phoenix companies popping up out of the ashes of an old business.

Having said that, it’s just an issue of speaking to the best people about Going Bankrupt. Here in this circumstance you may believe you need a liquidator for your business, and you might be right, but bear in mind that every liquidator is unique and have their own motives. Liquidators earn money from your liquidation – heaps of money – so what advice do you think you will get?

When it comes to Going Bankrupt, I believe that giving generic advice in this area is possibly damaging as it can have very serious implications for directors and business owners. This is because it is just one of those cases where what the right guidance for one business owner is the inappropriate advice for the other. There are some basics however, that you may benefit from. There is no reduce to the size of the business you run 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 concerns Going Bankrupt, don’t get extremely uneasy about what you can and can’t do as a business owner, just get the right advice … If you want to learn more about what to do, precisely where to turn and what questions to ask about Going Bankrupt, then feel free to call Bankruptcy Experts Alice Springs on 1300 795 575, or visit our website: bankruptcyexpertsAlice Springs.com.au.