Common Questions

Will I Lose My House in Bankruptcy?

In the End It Comes Down to Assets and Liabilities

Our aim is to always carefully consider the options for our clients during a Bankruptcy process. This includes the evaluation of all assets that can help service the debts incurred by our client.

We have years of experience in working with ordinary Australians that have found themselves in a difficoult financial position and we know that this can happen to anyone. The benefit when partnering with us is that we have the knowledge, experience and tools to help you achieve the best possible outcome as quickly as possible.

The law is clear that all assets and liabilities need to be accounted for but makes provision for all considerations to be fair. The Bankruptcy process also needs to ensure that all liabilities need to be paid via the equal distribution of all assets that were raised by the Trustee.

There Are Ways to Keep Your Home

We always try and find ways to help our clients to raise all the required assets needed to service all their debts without the need to ever sell their homes. Working with so many clients over the years, we understand the human element better than anyone.

Our aim is to always give the best possible advice in cases like this where a family home might need to be sold. Fortunately, there are ways to use the frameworks of the law to prevent you from selling your home during a Bankruptcy process. There are however multiple things to consider carefully and they include the following:

Consideration | The Value of Your House and How Much You Owe the Bank

The appointed trustee will always try to establish the amount of equity in any asset to see how much can be derived from it to service debts. If your home has enough equity and all your other assets do not raise the sufficient amount needed, then the house could be attached.

If there is a mortgage on the house, then the bank will be entitled to be paid out first to cover the remaining bond. The remaining equity after the mortgage was paid can then be channeled towards the Bankruptcy process.

Consideration | Is There Co-Ownership Involved?

If you and your partner have a joint mortgage on the property that is registered in both your names, then there are options available to you. If the trustee finds that there is enough equity in the house after the mortgage costs are subtracted, you will essentially own half of the remaining equity.

To prevent the selling of the house, you would need to raise that 50% of remaining equity and pay it towards the bankruptcy pool. This will then exclude your home from the Trustee’s list of assets, but it will transfer complete ownership of the house to your partner.

Sometimes Selling Your Home Is the Sensible Choice

This is definitely not the easiest thing to deal with, especially if the house in question has a lot of sentimental value to the family undergoing the Bankruptcy process. We definitely understand this and will always approach any sale of an assets with a greatest care and sensitivity it deserves.

The benefit that comes with years of experience and having the industry’s best to help you through this difficoult period is that we can often help create new insights that would not have been identified otherwise.

If your home for arguments sake is completely paid up, and it has all the required equity to service all your debts, then it can make complete sense to sell it and take the remaining money left to put towards a new purchase. This will by far be the most stress-free way of securing a resolution for you.

 

Keep Your Home and Simply Refinance It to Raise the Capital You Need

On the other hand, if we take the same scenario where a paid-up property has enough value to service all the debts, then a possible refinancing option like a second mortgage could be considered versus the sale thereof.

This second mortgage will raise the capital needed to pay your creditors and may offer you a more affordable way to have repayment plans that are affordable to you. It is the option that will also have the least amount of disruption on you and your loved ones.

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What you need to know before declaring bankruptcy