Bankruptcy in Canberra - Will I lose my house if I go bankrupt?

Bankruptcy Canberra is a confusing process, but I know from meeting with thousands facing the possibility of bankruptcy over the years, that pretty much nothing concerns people more than the notion of losing the family house. Almost every person is sentimentally connected to their home - it's where the children have grown, it's where you appreciate life on a day to day base.

Will you lose your home if you go bankrupt? The solution is a resounding maybe. (not very useful, I know) People typically imagine it's an inevitable consequence and a part of Bankruptcy, and because of this push themselves to the brink of insanity to not lose the family home. But when it comes to the whole process of Bankruptcy, a key benefit of Debt Agreements and Personal Insolvency Agreements is you can keep your house. The reason is simple: you've accepted to pay back the debt you are in.

So how is it possible to keep my Canberra house, you ask? It's easier if I explain the basic concept behind the Bankruptcy process as administered by the trustee, then you'll have a more clear idea.

The job of the bankruptcy trustee is to firstly comply with the regulation of the bankruptcy act 1966 (it's a very dry read about 600 pages if you are serious).

Within that regulatory framework, the trustee is to help recuperate monies owed to your creditors, that is executed in a bunch of various ways but it mainly comes down to income and assets. The trustees role is to collect payments over your income threshold. The further role is to sell off any assets that can contribute to paying your debts.

What this seems like is that yes the trustee will sell your house right? Not always. The only reason the trustee will sell any asset including your house is to get money to pay back your debts. If there is no equity in your home then it's pointless to sell your home. This is happening increasingly since the GFC as house prices in many areas have been heading south so what you paid 4 years ago may not really reflect the price today.

A quick tip here if you have a house in Canberra and are looking at Bankruptcy: get an expert to help you through this process, there are loads of variables in these scenarios that need to be considered.

You might wonder, why would the bank want bankrupt customers? wouldn't they like to sell your house and not take the risk? The bank that has kindly lent you the money for your house is generating good money every month in interest out of you, month in month out, provided that you keep up to date with your fees then the bank wants you in there at all costs. Ultimately however it's not the bank's call if the trustee establishes that there is loads of equity in your house the trustee will force you and the bank to sell the house.

When you file for bankruptcy you are asked to list the value of your house and the quantity you owe on the house. A tip if you are attempting to work out the value of your house: use a registered valuer as this will give you peace of mind, don't use your neighbours' gut feel suggestions or a real estate agents advice to reach this figure. When you get a valuer out to your house, make sure you tell the valuer to value the property for a quick sale, see to it you mow the lawn and don't leave the kitchen in a mess also.

Valuers used to give two valuations: one for a quick sale and one for a well marketed non time delicate sale. These days that's not the case, but if you meet them and let them know you need to sell your home in the next 30 days you may control the result. The idea is that you want a life-like sell now figure.

There are two main reasons this valuation technique is critical to you: one you will have peace of mind ascertaining the market value of your house, and after that you can easily create your equity position. Secondly, your house may be worth far more than you thought. Get some guidance before doing this. The amount of times I've met clients that have sold their family home of 20 years simply to learn I could of helped them keep it; unfortunately this happens all too often

When it comes to Bankruptcy and houses, another serious consideration is ownership, often houses are bought in joint names. Simply put a couple may be a house 50/50 using both incomes to make the payments. If one party declares bankruptcy and the other party doesn't, the equity is only factored on the 50 % of the property.

When it concerns Bankruptcy, this is just one of likely hundreds of scenarios that are likely when it comes to the family home. Bear in mind the non-bankrupt party can buy the bankrupt's part of the house in bankruptcy also. I should repeat this but get some advice on this area of Bankruptcy because it is very tricky and each and every case is different.

If you need to learn more about what to do, where to turn and what questions to ask about Bankruptcy, then feel free to talk to Fresh Start Solutions Canberra on 1300 818 575, or visit our website: www.freshstartsolutions.com.au/bankruptcy-Canberra