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 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.