|December 28, 2016||Comments Closed|
The most significant issue many have with Bankruptcy is without a doubt ‘Can I manage to keep my house?’ and it might be complicated, but in some cases it is possible.
The only good reason where you will be obliged to sell your family residence when you declare insolvency 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 inquiries frequently about Bankruptcy. So below are a few instances to show you how it all works and really help you understand Bankruptcy. Bear in mind if you wish to know more regarding Bankruptcy and houses feel free to get in touch with us here at Bankruptcy Experts Ipswich on 1300 795 575, or check out our website: www.bankruptcyexpertsipswich.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 throughout the mining boom and so prices were higher, and life looked great. Having said that recently the work has dried up, prices have dropped and their financial debt has just kept growing. Now they are needing to take a look at Bankruptcy because of considerable financial debts and mortgage.
They purchased the home for $450,000, and they have $80,000 in various other unpaid debts.
They definitely would like to keep their home but question if they could. They know that residential property prices, if anything, have gone down in the area in the last 5 years so to be safe they believe that their house is at present only worth $450,000 after all these years. To make sure they searched www.realestate.com.au sold category of the website to see what various other houses in the streets nearby have sold for recently.
Over the past 5 years they have solely been repaying the interest, so they currently owe the original $450,000.
Current House Value = $450,000.
Current Mortgage Value = $450,000.
Net Equity Value = $0.
As there is no equity within this specific property the trustee will not ask Tanya and Matt to sell their home 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 remain in bankruptcy.
At the end of the insolvency amount of time the trustee will write to them and inquire if they want to take control of ownership of their home again and provided that it has not increased in price over the 3 years they have been bankrupt they will be requested to make an offer to have their house back. This is generally somewhere around $3,000 and $5,000 to cover the legal expenses of modifying the land title deed etc. This was a rather simple scenario to show how a home 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 residential area of Ipswich for $850,000. They tipped in $50,000 as a deposit 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 the red. Michelle who does work in banking has a separate job and no other debt besides the home loan. Bill can not pay out his financial obligations 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 as a result of the house loan.
Here in this specific instance the trustee is required to gain access to or get their hands on Bill’s half of the equity which is $50,000 less selling expenses. These professionals may accomplish this in a few ways; 1. Have them sell off the home. 2. Welcome Michelle to buy Bills half of the equity. 3. leave them in the house – but it’s quite unlikely with this case that the trustee would be happy to keep Bill and Michelle in the home as there is simply too much 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 home.
Property and Bankruptcy in Australia is difficult to understand and tricky. These two examples above are just the tip of the iceberg as far as your options in Ipswich are concerned. If you should know much more about Bankruptcy and residential properties do not hesitate to contact us here at Bankruptcy Experts Ipswich on 1300 795 575, or check out our website: www.bankruptcyexpertsipswich.com.au.