Losing your house: Just how much do you know of Bankruptcy in Tamworth?
Easily the most considerable concern many have with Bankruptcy is without a doubt ‘Will I manage to keep my house?’ and it may be complicated, but in some cases it is achievable.
The only reason where you will be obliged to sell your family house when you declare insolvency is if you have equity in the home so that it is thought as an asset. But exactly how does this work? What is equity? How much equity can make it an asset? We receive the inquiries constantly about Bankruptcy. So below are a few instances to demonstrate to you how everything works and help you understand Bankruptcy. Keep in mind if you wish to know more concerning Bankruptcy and houses don’t hesitate to get in contact with us here at Bankruptcy Experts Tamworth on 1300 795 575, or check out our website: www.bankruptcyexpertstamworth.com.au
Case Study 1. (Tanya & Matt).
5 years ago Matt and Tanya purchased a house in a mining town, they moved there for their job during the mining boom therefore prices were higher, and life looked good. Having said that recently the work has dried up, prices have gone down and their debt has just kept growing. Now they are having to take a look at Bankruptcy because of considerable debts and home mortgage.
They bought the home for $450,000, and they have $80,000 in various other debts.
They definitely would like to keep their home but question if they can. They know that residential property prices, if anything, have declined in the area in the last 5 years so to be safe they think that their house is at present only worth $450,000 after all these years. To make sure they browsed www.realestate.com.au sold section of the website to see what various other homes in the streets nearby have sold for recently.
Over the past 5 years they have only 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.
As there is no equity within this particular property the trustee will not ask Tanya and Matt to sell their house when they declare bankruptcy, provided that they maintain the mortgage repayments then all will be well for them for the 3 years they remain in insolvency.
At the end of the insolvency period of time the trustee will write to them and inquire if they want 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 get their house back. This is usually somewhere around $3,000 and $5,000 to cover the legal costs of modifying the land title deed etc. This was a pretty simple sample to show 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 Tamworth 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 separate job and no other debt besides the mortgage. Bill can not pay out his debts so he is having a look at Bankruptcy. Michelle is concerned that she too may have to file for bankruptcy or be driven into it because of the home loan.
Within this particular case the trustee is required to gain access to or get their hands on Bill’s share of the equity which is $50,000 less selling expenses. These professionals could carry this out in a couple of ways; 1. Have them sell off the home. 2. Welcome Michelle to purchase Bills half of the equity. 3. leave them in the house – but it’s very improbable with this case that the trustee will be happy to leave Bill and Michelle in the home considering that there is simply too much equity.
So Michelle might have the ability to purchase 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 confusing and complicated. These two examples above are simply the tip of the iceberg as far as your options in Tamworth are concerned. If you must know much more about Bankruptcy and residential properties do not hesitate to get in touch with us here at Bankruptcy Experts Tamworth on 1300 795 575, or take a look at our website: www.bankruptcyexpertstamworth.com.au.