Bankruptcy in Newcastle is a difficult procedure, but I realise from meeting with thousands encountering the likelihood of going bankrupt for many years that the most frightening facet is the concern of losing the family residential property.
Almost everyone is on an emotional level connected to their house – it’s where the little ones have grown up, it’s the place you sleep, eat, relax and built it from a house to a home. So it is frightening to think that a thing like bankruptcy can move in and take all of that from you.
So, Could you lose your home if you declare bankruptcy?
My response is ‘maybe’– I realise it is not a practical reply, but it is going to really depend on your particular circumstances. People usually think that losing your house is unpreventable and just one more part of Bankruptcy– but don’t drive yourself mad right now, because there may be hope.
So how does bankruptcy view my house?
The first thing to comprehend is that homes are viewed as assets– but no two homes will be the same. What you need to grasp is that when it comes to Bankruptcy, they designate a trustee to oversee the procedure. Their task is to make certain that they can settle as much of your financial debts with your asset. This is done via equity– and if there is no equity in your home then there is no true benefit to selling it.
Trustees not selling residential properties is happening increasingly more since the GFC as house prices in many places have been going south so what you paid 4 years ago may not instantly demonstrate the price these days.
However the biggest part with Newcastle and Bankruptcy is that you definitely ought to get a professional to assist you with this procedure, there are lots of factors in these situations that should be considered.
For example, if you have no equity in the house you should think about your bank loan. With loans, you are basically just a client of the bank and they will similarly have a choice– do they wish to take your home back, or do they want you to keep the home loan? You might expect that they would certainly wish to just take your home to avoid the risk, but honestly banks are run as a business, and if they can leave you with a home loan to keep making money off you, they generally will provided that you keep up to date with your repayments. But it is still up to the trustee to identify that there is a lot of equity in your home the trustee will push you and the bank to sell off the house.
What is my house worth?
Usually with Bankruptcy it is hard to know what your house is actually worth– yes, you may have an idea if you were selling off your house, but the manner in which this is calculated in personal bankruptcy is typically varied. When you declare bankruptcy you may need to note down the value of the house, and the amount that you owe– and you can work this out by utilizing a valuer. This is going to be much more precise than applying your ‘gut feel’ or a real estate agent. The other important factor is that you need to ask your valuer for two values– one for a Quick Sale, and one for a non-time sensitive sale. This will give you 2 rational figures that can assist you to properly value the residential property and grasp its value even if you are being pushed to sell promptly.
When it comes to Bankruptcy and homes, an additional significant consideration is ownership, in many cases homes are purchased in shared titles. In other words a couple may have bought a house 50/50 making use of both of these salaries to make the payments. If one party declares bankruptcy and the other party does not, the equity is only factored on the 50 % of the property. With Bankruptcy, this is just one of quite possibly numerous situations that are likely when it relates to the family home. Keep in mind the non-bankrupt party can purchase the bankrupt’s part of the house in bankruptcy also. I must repeat this but get some guidance on this area of Bankruptcy because it is very tricky and each and every scenario is different.
If you really would like to learn more about what to do, where to turn and what questions to ask about Bankruptcy, then feel free to talk to Bankruptcy Experts Newcastle on 1300 795 575, or visit our website: www.bankruptcyexpertsnewcastle.com.au.