Losing your house: Just how much do you know of Bankruptcy in Geelong?
The most considerable issue numerous people have with Bankruptcy is without a doubt ‘Can I manage to keep my house?’ and it can be complicated, but sometimes it is achievable.
The only reason where you will be obliged to sell your family home when you declare bankruptcy is if you have equity in the home so that it is considered an asset. But exactly how does this work? What is equity? How much equity makes it an asset? We receive the concerns constantly about Bankruptcy. So here are a few instances to show you how it all works and help you comprehend Bankruptcy. Bear in mind if you want to know more concerning Bankruptcy and residential properties feel free to get in touch with us here at Bankruptcy Experts Geelong on 1300 795 575, or check out our website: www.bankruptcyexpertsgeelong.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 during the mining boom and so prices were higher, and life appeared great. Having said that in recent times the work has dried up, prices have gone down and their debt has just kept growing. Now they are having to look at Bankruptcy because of considerable financial debts and home mortgage.
They purchased the home for $450,000, and they have $80,000 in additional debts.
They really wish to keep their house but wonder if they could. They know that residential property prices, if anything, have dropped in the area in the last 5 years so to be safe they believe that their home is at present only worth $450,000 after all these years. To make sure they searched www.realestate.com.au sold category of the site to see what other homes in the streets nearby have sold for recently.
Over the past 5 years they have just been paying off the interest, so they still owe the initial $450,000.
Current House Value = $450,000.
Current Mortgage Value = $450,000.
Net Equity Value = $0.
Considering that there is no equity within this particular property the trustee will not ask Tanya and Matt to sell their house when they go bankrupt, as long as they keep up the mortgage payments then all will be well for them for the 3 years they are in bankruptcy.
By the end of the bankruptcy amount of time the trustee will write to them and inquire if they wish to take over ownership of their home again and provided that it has not increased in price over the 3 years they have been insolvent they will be asked to make an offer to have their home back. This is typically somewhere between $3,000 and $5,000 to cover the legal fees of changing the land title deed etc. This was a fairly simple example to demonstrate 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 Geelong for $850,000. They tipped in $50,000 as a down payment 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 carries out work in banking has a different job and no other financial obligations apart from the mortgage. Bill can not pay his financial debts so he is taking a look at Bankruptcy. Michelle is concerned that she too may need to file for bankruptcy or be driven into it due to the home loan.
Here in this specific instance the trustee is required to access or get their hands on Bill’s share of the equity which is $50,000 less marketing fees. These professionals could carry this out in a few ways; 1. Have them sell the house. 2. Invite Michelle to purchase Bills half of the equity. 3. keep them in the home – but it’s quite unlikely with this situation that the trustee will be happy to leave Bill and Michelle in the house considering that there is simply a lot of equity.
So Michelle may have the ability to buy Bill’s percentage 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 confusing and tricky. These two case studies above are simply the tip of the iceberg as far as your options in Geelong are concerned. If you must know more about Bankruptcy and residential properties don’t hesitate to get in touch with us here at Bankruptcy Experts Geelong on 1300 795 575, or check out our website: www.bankruptcyexpertsgeelong.com.au.