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




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

Comments

Post a Comment

Popular posts from this blog

Bankruptcy in Parramatta - Who exactly do I talk to?

Image
Should I speak with my accountant about Bankruptcy? The answer seems clear doesn't it: if anyone knows your financial circumstance well in  Parramatta , It's going to be your accountant. However, the short answer is a resounding No! It's not that your accountant does not have your best interests at heart when it comes to Bankruptcy, it's that his expertise lie in helping you save you money at tax time, reducing your tax liability and lodging your BAS. Most accounting degrees will put in very little to no time on bankruptcy, it's generally done as a post graduate specialty program for those who want to work in the field. Unless your accountant is an insolvency expert, he would not know that a lot about the effects of Bankruptcy, 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 Parramatta, they tend to be large firms with very nice offices who charge accordingly. ...
Read more

Bankruptcy Parramatta, What is the Deal with Debts?

Image
So what Debts are eliminated if I go Bankrupt? The basic answer is that when it concerns Bankruptcy most debts are wiped, and I have added a summary below for you to look at. But, put simply some of the exceptions are Centrelink Debts, Child Support, Court fines (like speeding fines) and even any debts arising from uninsured Motor-vehicle claims and educational debts for instance, 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 definite security affixed to it. So for example if you buy a new car for $40,000 dollars the security for this 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 eliminated if you simply return the car. So the lesson is that you cannot have your cake and eat it too (so to speak), so yes all of your secu...
Read more

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

Image
When it comes to Going Bankrupt Parramatta , 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 ...
Read more