Losing your house: How much do you know of Bankruptcy in Tablelands?
Easily the most significant issue many have with Bankruptcy is without a doubt ‘Will I manage to retain my home?’ and it can be complicated, but sometimes it is achievable.
The only reason where you will be obliged to sell your family house when you declare insolvency is if you have equity in the home so that it is thought as an asset. But how does this work? What is equity? Just how much equity makes it an asset? We receive the concerns constantly about Bankruptcy. So here are a few instances to show you how all of it works and help you understand Bankruptcy. Remember if you want to know more regarding Bankruptcy and houses do not hesitate to get in touch with us here at Bankruptcy Experts Tablelands on 1300 795 575, or check out our website: www.bankruptcyexpertstablelands.com.au
Case Study 1. (Tanya & Matt).
5 years ago Matt and Tanya bought a house in a mining town, they moved there for work during the mining boom therefore prices were higher, and life appeared great. Having said that recently the work has dried up, prices have gone down and their debt has just kept growing. Now they are needing to look at Bankruptcy due to significant liabilities and home mortgage.
They bought the house for $450,000, and they have $80,000 in other unpaid debts.
They really wish to keep their home but wonder if they could. They know that house prices, if anything, have gone down in the town in the last 5 years so to be safe they think that their house is at present only worth $450,000 after all these years. To make sure they browsed www.realestate.com.au sold section of the website to see what other properties in the streets nearby have sold for lately.
Over the past 5 years they have solely been repaying the interest, so they currently owe the original $450,000.
Current House Value = $450,000.
Current Mortgage Value = $450,000.
Net Equity Value = $0.
Because there is no equity in this specific residential property the trustee will not ask Tanya and Matt to sell their home when they go bankrupt, as long as they keep up the mortgage repayments then all will be well for them for the 3 years they remain in personal bankruptcy.
By the end of the insolvency period of time the trustee will contact them and ask if they want to take control of ownership of their property again and provided that it has not increased in price over the 3 years they have been insolvent they will be asked to make an offer to get their home back. This is typically somewhere between $3,000 and $5,000 to cover the legal costs of changing the land title deed etc. This was a rather simple example to show how a house may be considered by a trustee when there is no equity involved.
Case Study 2. (Bill & Michelle Johnson).
2 years ago Bill and Michelle bought a townhouse in a nice suburb of Tablelands 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 issue Bill is about $240,000 in debt. Michelle who carries out work in banking has a different job and no other financial debts besides the home loan. Bill can not pay out his debts so he is taking a look at Bankruptcy. Michelle is worried that she too may have to file for bankruptcy or be driven into it as a result of the house loan.
In this particular instance the trustee is required to access or get their hands on Bill’s half of the equity which is $50,000 less marketing fees. These professionals could do this in a couple of ways; 1. Have them sell off the house. 2. Ask Michelle to buy Bills half of the equity. 3. keep them in the home – but it’s very improbable with this scenario that the trustee will be happy to keep Bill and Michelle in the home as there is just too much equity.
So Michelle might have the capability to buy Bill’s share of the equity by coming up with $50,000 and buying out Bills’ fifty percent and from that time its now 100 % Michelle’s property.
Property and Bankruptcy in Australia is confusing and complicated. These two examples above are simply the tip of the iceberg as far as your options in Tablelands are concerned. If you must know more about Bankruptcy and houses don’t hesitate to contact us here at Bankruptcy Experts Tablelands on 1300 795 575, or take a look at our website: www.bankruptcyexpertstablelands.com.au.