The main concern a lot of people have when
they come to our business regarding Bankruptcy is normally 'Can I keep my
house?' and in many cases the truth is yes, you can manage to keep your house.
The only reason you are going to be driven
to sell your family home when you declare bankruptcy is due to the fact that
you have a great deal of equity in the house that it is deemed an asset. Please
go through these straightforward hypothetical case studies below to get your
head around Bankruptcy and how it affects houses in Australia. Remember If you
need to know more about Bankruptcy and houses feel free to call us here at
Bankruptcy Experts Gold Coast on 1300 795 575, or visit our website:
www.bankruptcyexpertsGoldCoast.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 helping keep
all the property prices nice and high. Now they are needing to look at Bankruptcy
since 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
currently 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 homes in
the streets nearby have sold for 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 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 as long as it has not increased 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 changing 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 purchased a
townhouse in a nice suburb of Gold Coast 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.
Because of a recent business downfall Bill
is about $240,000 in debt. Michelle who does work in banking has a separate job
and no other debt except for the mortgage. Bill cannot pay his debts so he is
reviewing Bankruptcy. Michelle is concerned that she too may need to file for
bankruptcy or be compelled into it due to the house loan.
In 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 might 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 improbable 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 Bankruptcy in Australia is
challenging and complicated, these two case studies above are just the tip of
the iceberg as far as your options in Gold Coast are concerned. If you need to
know more about Bankruptcy and houses feel free to contact us here at
Bankruptcy Experts Gold Coast on 1300 795 575, or go to our website:
www.bankruptcyexpertsGoldCoast.com.au.
No comments:
Post a Comment