Bankruptcy in Northern Rivers is a difficult procedure, but I realise from meeting with thousands encountering the chance of bankruptcy throughout the years that the most terrifying aspect is the distress of losing the family residence.
Practically everyone is on an emotional level connected to their home – it’s where the children have grown, it’s the place you sleep, eat, relax and built it from a house to a home. So it is scary to think that something like bankruptcy can move in and take all of that away from you.
So, Could you lose your home if you go bankrupt?
My answer is ‘possibly’– I understand it is not an useful reply, but it will really based on your specific conditions. People usually think that losing your house is unavoidable and just an additional part of Bankruptcy– but don’t make yourself crazy just yet, as there may be hope.
So how does personal bankruptcy view my house?
The very first thing to comprehend is that houses are considered as assets– but no two houses will be the same. What you need to comprehend is that whenever it concerns Bankruptcy, they appoint a trustee to oversee the process. Their task is to make sure that they can settle as much of your financial obligations with your asset. This is completed through equity– and if there is no equity in your home then there is no real benefit to selling it.
Trustees not selling houses is happening significantly more ever since the GFC as house prices in many areas have been going south so what you paid 4 years ago may not automatically reflect the price today.
But the most significant part with Northern Rivers and Bankruptcy is that you definitely ought to get a specialist to help you with this process, there are a number of factors in these scenarios that should be taken into consideration.
As an example, if you have no equity in your home you need to think about your home loan. With loans, you are basically just a customer of the financial institution and they will similarly have a preference– do they want to get your house back, or do they prefer you to keep the home loan? You might expect that they would want to just take your home to avoid the risk, but honestly banks are run as a business, and if these guys can leave you with a mortgage to keep making money off you, they generally will provided that you keep up to date with your monthly payments. But it is still up to the trustee to determine that there is lots of equity in your property the trustee will force you and the bank to sell your home.
What is my home worth?
Often with Bankruptcy it is difficult to know what your house is really worth– yes, you may have an idea if you were selling off your house, but the way that this is determined in bankruptcy is generally different. When you file for insolvency you will need to note down the value of the house, and the amount of money that you owe– and you can figure this out by using a valuer. Doing this is going to be much more accurate than applying your ‘gut feel’ or a real estate agent. The other important factor is that you will need to ask your valuer for two prices– one for a Quick Sale, and one for a non-time sensitive sale. This will certainly give you 2 realistic numbers that can assist you to properly value the residential property and understand its worth even when you are being pressured to sell promptly.
When it comes to Bankruptcy and houses, another major factor to consider is ownership, in most cases homes are purchased in joint names. In other words a couple may have bought a house 50/50 using both salaries to make the payments. If one party declares insolvency and the other party does not, the equity is only factored on the 50 % of the property. With Bankruptcy, this is just one of probably numerous circumstances that are probable when it is in regards to the family home. Bear in mind the non-bankrupt party can buy the bankrupt’s part of the home in bankruptcy also. I must repeat this but get some recommendations on this area of Bankruptcy considering that it is very tricky and every scenario is varied.
If you genuinely wish to find out more about what to do, where to turn and what questions to ask about Bankruptcy, then don’t hesitate to talk to Bankruptcy Experts Northern Rovers on 1300 795 575, or visit our website: www.bankruptcyexpertsnorthernrivers.com.au.