The most considerable concern numerous people have with Bankruptcy is without a doubt ‘Will I manage to keep my house?’ and it may be complicated, but in some cases it is attainable.
The only reason where you will be obliged to sell your family residence when you declare insolvency is if you have equity in the home so that it is looked as an asset. But exactly how does this work? What is equity? Just how much equity makes it an asset? We get the inquiries all the time about Bankruptcy. So below are a few good examples to demonstrate to you how it all works and help you learn about Bankruptcy. Bear in mind if you wish to know more regarding Bankruptcy and houses do not hesitate to get in touch with us here at Bankruptcy Experts Shellharbour on 1300 795 575, or check out our website: www.bankruptcyexpertsshellharbour.com.au
Case Study 1. (Tanya & Matt).
5 years ago Matt and Tanya purchased a house in a mining town, they relocated there for their job throughout the mining boom and so prices were high, and life appeared good. Having said that recently the work has dried up, prices have gone down and their debt has just kept growing. Now they are having to take a look at Bankruptcy as a result of substantial debts and mortgage.
They bought the home for $450,000, and they have $80,000 in other debts.
They really would like to keep their house but question if they could. They know that house prices, if anything, have dropped in the region in the last 5 years so to be safe they believe that their home is presently only worth $450,000 after all these years. To make sure they searched www.realestate.com.au sold category of the website to see what various other houses in the streets close by have sold for recently.
Over the past 5 years they have solely been repaying the interest, so they currently owe the initial $450,000.
Current House Value = $450,000.
Current Mortgage Value = $450,000.
Net Equity Value = $0.
Because there is no equity within this particular property the trustee will not ask Tanya and Matt to sell their home when they go bankrupt, so long as they maintain the mortgage payments then all will be fine for them for the 3 years they are in insolvency.
By the end of the bankruptcy time period the trustee will write to them and ask if they wish to take control of ownership of their property again and provided that it has not grown in price over the 3 years they have been insolvent they will be requested to make an offer to get their home back. This is typically somewhere between $3,000 and $5,000 to pay for the legal fees of modifying the land title deed etc. This was a rather simple sample 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 residential area of Shellharbour for $850,000. They tipped in $50,000 as a deposit and now the townhouse two years later is valued at $900,000.
Current House Value = $900,000.
Current Mortgage Value = $800,000.
Net Equity Value = $100,000.
Because of a recent business problem Bill is about $240,000 in debt. Michelle who does work in banking has a different job and no other financial debts besides the home mortgage. Bill can not pay out his financial debts so he is having a look at Bankruptcy. Michelle is worried that she too may need to file for bankruptcy or be driven into it due to the house loan.
Here in this specific situation the trustee is required to access or get their hands on Bill’s share of the equity which is $50,000 less selling fees. These professionals could do this in a few ways; 1. Have them sell the house. 2. Welcome Michelle to purchase Bills half of the equity. 3. keep them in the house – but it’s very unlikely with this instance that the trustee would be happy to leave Bill and Michelle in the house as there is simply a lot of equity.
So Michelle may have the ability to buy Bill’s share of the equity by coming up with $50,000 and buying out Bills’ fifty percent and from that moment its now 100 % Michelle’s home.
Property and Bankruptcy in Australia is complex and complicated. These two case studies above are just the tip of the iceberg as far as your options in Shellharbour are concerned. If you need to know much more about Bankruptcy and houses don’t hesitate to contact us here at Bankruptcy Experts Shellharbour on 1300 795 575, or check out our website: www.bankruptcyexpertsshellharbour.com.au.