Bankruptcy in Darwin is a challenging procedure, but I know from meeting with thousands facing the likelihood of bankruptcy for many years that the most frightening thought is the fear of losing the family home.
Practically every person is on an emotional level linked to their home – it’s where the little ones have grown up, it’s the place you sleep, eat, relax and built it from a house to a home. So it is frightening to believe that something like insolvency can move in and take all that from you.
So, Will you lose your home if you declare bankruptcy?
My response is ‘maybe’– I realise it is not a helpful response, but it will really depend upon your particular conditions. People usually think that losing your house is inevitable and just an additional part of Bankruptcy– but don’t make yourself mad just yet, because there may be hope.
So how does insolvency view my house?
The very first thing to understand is that properties are viewed as assets– but no two houses will be the same. What you ought to understand is that whenever it concerns Bankruptcy, they designate a trustee to oversee the procedure. Their job is to make certain that they can settle as much of your financial obligations with your asset. This is performed through equity– and if there is no equity in your house then there is no real advantage to selling it.
Trustees not selling residential properties is happening considerably more ever since the GFC as house prices in many places have been heading south so what you spent 4 years ago may not instantly reflect the price nowadays.
However the biggest part with Darwin and Bankruptcy is that you definitely should get an expert to help you through this process, there are a number of factors in these situations that ought to be taken into consideration.
As an example, if you have no equity in your property you need to take into account your home loan. With loans, you are essentially just a customer of the financial institution and they will also have a choice– will they wish to get your home back, or do they prefer you to keep the loan? You may feel that they would want to just take your home to steer clear of the risk, but honestly financial institutions are run as a business, and if they can leave you with a loan to keep making money off you, they generally will provided that you keep up to date with your monthly payments. But it is nonetheless up to the trustee to identify that there is a lot of equity in your property the trustee will push you and the bank to sell off the house.
What is my home worth?
Usually with Bankruptcy it is hard to know what your house is actually worth– indeed, you may have an idea if you were selling off your home, but the way that this is worked out in insolvency is typically different. When you declare bankruptcy you may have to note down the value of your house, and the amount that you owe– and you can work this out by using a valuer. Doing this is going to be far more accurate than applying your ‘gut feel’ or a real estate agent. The other important factor is that you will need to ask your valuer for two values– one for a Quick Sale, and one for a non-time sensitive sale. This will give you 2 realistic amounts that can guide you to properly value the residential property and understand its value even if you are being pushed to sell quickly.
When it comes to Bankruptcy and properties, another significant consideration is ownership, in many cases houses are bought in joint titles. In other words a couple may have bought a house 50/50 utilizing both of these incomes to make the payments. If one party declares insolvency and the other party does not, the equity is only factored on the 50 % of the home. With Bankruptcy, this is just one of undoubtedly various scenarios that are likely when it is in regards to the family home. Bear in mind the non-bankrupt party can buy the bankrupt’s part of the home in bankruptcy also. I should repeat this but get some advice on this area of Bankruptcy because it is very tricky and every situation is varied.
If you really wish to find out more about what to do, where to turn and what questions to ask about Bankruptcy, then feel free to talk to Bankruptcy Experts Darwin on 1300 795 575, or visit our website: www.bankruptcyexpertsdarwin.com.au.