Bankruptcy Australia, So what is the Deal with Debts?

Exactly what Debts are removed if I go Bankrupt?

The quick answer is that when it comes to Bankruptcy most debts are wiped, and I have included a summary below for you to look at.

But, simply put some of the exceptions are Centrelink Debts, Child Support, Court fines (like speeding fines) as well as any debts arising from uninsured Motor-vehicle claims and educational debts which include HECS or FEE-HELP. These debts are not cleared away 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 absolute 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 erased 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 could be wiped but the asset has to be sold or returned. This is just one facet that, when it comes to Bankruptcy, it is necessary to get professional help - like that offered at Bankruptcy Advice Australia.

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 receive some advice because it is not always so basic. Feel free to call us here at Bankruptcy Advice Australia if you have any type of questions on 1300 879 867. Or feel free to check out our website: www.bankruptcy-advice.com.au/Australia.com.au

What about my business or Company debts?

In some cases when it involves Bankruptcy we can assist you with your business debts, call us concerning this first. Remember bankruptcy applies to an individual not companies, trusts or businesses. Typically you may have to liquidate a company to deal with the debt this way. When it comes to Bankruptcy, it can be a complicated area, so remember there are implications for a business owner such as insolvent trading. At Bankruptcy Advice Australia we specialise in business and personal debts so call us here at Bankruptcy Advice Australia if you have any questions regarding Bankruptcy on 1300 879 867. Or feel free to head to our website: www.bankruptcy-advice.com.au/Australia.com.au

Bankruptcy Australia, So what is the Deal with Debts?

Exactly what Debts are erased if I go Bankrupt?

The basic answer is that when it comes to Bankruptcy most debts are wiped, and I have included a compendium below for you to look at.

But, put simply some of the exceptions are Centrelink Debts, Child Support, Court fines (like speeding fines) as well as 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 genuine 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 erased 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 secured debts can be wiped but the asset will need to be sold or returned. This is just one component that, when it comes to Bankruptcy, it is necessary to get professional advice - like that you can find at Bankruptcy Experts.

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

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

What about my business or Company debts?

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

Bankruptcy, Will I lose my Superannuation?

Bankruptcy in Australia can be convoluted and perplexing. A question we normally get asked here at Bankruptcy Experts Australia is 'what happens to my super if I file for Bankruptcy'? The reply for most is simple, if your super is simply in a regulated fund or industry fund like Sunsuper or Host Plus then nothing happens; your super is 100 % safe when it involves Bankruptcy.

What if I have a Self Managed Super Fund?

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

Remember Bankruptcy Experts Australia is not suggesting this post is the whole story, if you have any questions feel free to call us on 1300 795 575. No matter if you call us or another person it does not matter, just please don't walk into bankruptcy blind when it comes to your SMSF actually we advise you find both legal and financial advice before proceeding with any of the actions proposed in this article.

What is a Disqualified Person?

First and foremost, if you are considering Bankruptcy, you can not be a part of a SMSF. Why? Because if you are dealing with bankruptcy, you will be classified as a 'disqualified person'. And a disqualified person 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 will need to also be the individual trustees. The role of trustee sets a lot of legal rules, and if you are in this role I would highly encourage you to become knowledgeable about them all-- including 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 quite harmful to a SMSF and as you can assume the process of Bankruptcy for a SMSF is rather convoluted.

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

So what takes effect 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 have to consider your whole structure and make certain it is meeting the basic conditions, including things like having a new trustee that is not suffering from issues with Bankruptcy. The Australian Tax office will supply you a 6 month 'grace period' to get this done before you face penalties. And bear 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 continuously keeping the ATO informed of what is happening. This indicates you will need to let them know that you have a bankruptcy issue 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.

During 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 for some free advice on 1300 795 575.

What if I have a single member fund?

If you are a single member fund, then you will need to appoint a new director, and it will then end up being 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 remove 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 want to roll everything into a managed fund. If both members are entering bankruptcy, then they would definitely need to sell all assets at once and transfer the liquid assets to the managed fund.

From this you can notice how when it comes to Bankruptcy, even when one single member is dealing with issues, it can affect the very existence of an SMSF. If you are already facing this trouble yourself, or with a partner in a SMSF, please seek financial advice to make certain you are satisfying the ATO requirements.

A simple solution ...

As I proposed earlier, a basic solution to your SMSF situation is to put your super back into a normal regulated managed fund before bankruptcy and save yourself all the problems outlined above. Bankruptcy is never easy, but getting proper advice is the best first step. If you want to discuss your possibilities further, give us a call at Bankruptcy Experts or visit our website: www.bankruptcyexperts.com.au or just give us a call on 1300 795 575.

Bankruptcy in Australia - Will I lose my home if I go bankrupt?

Bankruptcy Australia is a tricky process, but I know from meeting with thousands facing the possibility of bankruptcy over the years, that not much worries people more than the idea of losing the family home. Almost everyone is sentimentally connected to their home - it's where the children have grown up, it's where you take pleasure in life on a day to day base.

Will you lose your house if you go bankrupt? The response is a resounding maybe. (not very helpful, I know) People typically presume it's an inevitable consequence and a part of Bankruptcy, and therefore push themselves to the brink of insanity to not lose the family home. But when it comes to the whole process of Bankruptcy, a key strength 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 Australia house, you ask? It's easier if I explain the basic theory behind the Bankruptcy process as administered by the trustee, then you'll have a clearer idea.

The role of the bankruptcy trustee is to firstly comply with the regulation of the bankruptcy act 1966 (it's a very dull read about 600 pages if you are curious).

Within that regulatory framework, the trustee is to help recuperate monies owed to your creditors, that is executed in a bunch of different ways but it mainly comes down to income and assets. The trustees role is to collect payments beyond your income threshold. The other role is to sell off any assets that can contribute to repaying your debts.

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

A quick word of advice here if you have a house in Australia and are looking at Bankruptcy: get an expert to help you through this process, there are loads of variables in these scenarios that have 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 generating good money every month in interest out of you, month in month out, so long as you keep up to date with your fees then the bank wants you in there at all costs. Ultimately however it's not the bank's call if the trustee decides that there is loads 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 mark the value of your house and the amount you owe on the house. A tip if you are attempting 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 advice or a real estate agents advice to get to this figure. When you get a valuer out to your house, see to it you tell the valuer to value the property for a quick sale, make sure 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. Nowadays that's not the case, but if you meet them and tell them you need to sell your home in the next 30 days you may sway the result. The idea is that you want a sensible sell now figure.

There are two main reasons this valuation system is critical to you: one you may have peace of mind ascertaining the market value of your house, and after that you can easily develop your equity position. Second of all, your home may be worth a lot more than you thought. Get some advice before doing this. The amount of times I've met clients that have sold their family home of 20 years only to discover I could of helped them keep it; unfortunately this happens all too often

When it comes to Bankruptcy and houses, another primary consideration is ownership, often 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 relates to Bankruptcy, this is just one of possibly numerous scenarios that are possible when it comes to the family home. Bear in mind the non-bankrupt party can buy the bankrupt's part of the property in bankruptcy also. I need to repeat this but get some help on this area of Bankruptcy because it is very tricky and every case is different.

If you would like to learn more about what to do, where to turn and what questions to ask about Bankruptcy, then feel free to speak to Bankruptcy Experts Australia on 1300 795 575, or visit our website: www.bankruptcyexperts.com.au.