The most significant concern numerous people have with Bankruptcy is without a doubt ‘Will I manage to retain my home?’ and it may be complicated, but sometimes it is achievable.
The only good reason where you will be required to sell your family home when you declare bankruptcy is if you have equity in the home so that it is looked as an asset. But how does this work? What is equity? How much equity can make it an asset? We get the problems frequently about Bankruptcy. So below are a few instances to show you how all of it works and help you understand Bankruptcy. Remember if you wish to know more relating to Bankruptcy and houses don’t hesitate to get in touch with us here at Bankruptcy Experts Albury on 1300 795 575, or check out our website: www.bankruptcyexpertsalbury.com.au
Case Study 1. (Tanya & Matt).
5 years ago Matt and Tanya bought a house in a mining town, they moved there for their job during the mining boom and so prices were high, and life looked great. Having said that in recent years the work has dried up, prices have gone down and their debt has just kept growing. Now they are needing to take a look at Bankruptcy as a result of considerable financial debts and home mortgage.
They bought the home for $450,000, and they have $80,000 in various other unpaid debts.
They definitely wish to keep their house but question if they can. They know that residential property prices, if anything, have decreased in the region in the last 5 years so to be safe they think that their home is presently only worth $450,000 after all these years. To make sure they browsed www.realestate.com.au sold category of the website to see what various other homes in the streets close by have sold for most recently.
Over the past 5 years they have just been paying off the interest, so they currently owe the initial $450,000.
Current House Value = $450,000.
Current Mortgage Value = $450,000.
Net Equity Value = $0.
As 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 keep up the mortgage payments then all will be fine for them for the 3 years they remain in insolvency.
By the end of the bankruptcy amount of time the trustee will write to them and inquire if they want to take control of ownership of their house again and provided that it has not grown in price over the 3 years they have been insolvent they will be asked to make an offer to have their house back. This is typically somewhere around $3,000 and $5,000 to pay for the legal expenses of changing the land title deed etc. This was a rather simple scenario to demonstrate how a house may be taken into consideration 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 suburb of Albury for $850,000. They tipped in $50,000 as a deposit and now the townhouse two years later is worth $900,000.
Current House Value = $900,000.
Current Mortgage Value = $800,000.
Net Equity Value = $100,000.
As a result of a recent business problem Bill is about $240,000 in the red. Michelle who does work in banking has a separate job and no other financial debts apart from the mortgage. Bill can not pay his debts so he is taking a look at Bankruptcy. Michelle is worried that she too may have to file for insolvency or be driven into it as a result of the home loan.
Here in this particular instance the trustee is required to gain access to or get their hands on Bill’s share of the equity which is $50,000 less marketing costs. These professionals might do this in a few ways; 1. Have them sell the home. 2. Welcome Michelle to buy Bills half of the equity. 3. leave them in the house – but it’s very unlikely in this instance that the trustee would be happy to leave Bill and Michelle in the house considering that there is just a lot of equity.
So Michelle may have the ability to acquire Bill’s share of the equity by coming up with $50,000 and buying out Bills’ fifty percent and from that time its now 100 % Michelle’s property.
Property and Bankruptcy in Australia is challenging and tricky. These two examples above are simply the tip of the iceberg as far as your options in Albury are concerned. If you should know more about Bankruptcy and residential properties do not hesitate to get in touch with us here at Bankruptcy Experts Albury on 1300 795 575, or check out our website: www.bankruptcyexpertsalbury.com.au.