The most considerable worry many have with Bankruptcy is without a doubt ‘Will I manage to keep my home?’ and it may be complicated, but occasionally it is possible.
The only good reason where you will be obliged to sell your family home when you declare insolvency is if you have equity in the home so that it is thought as an asset. But how does this work? What is equity? Just how much equity can make it an asset? We get the problems all the time about Bankruptcy. So here are a few examples to demonstrate to you how all of it works and really help you comprehend Bankruptcy. Remember if you want to know more concerning Bankruptcy and residential properties do not hesitate to get in touch with us here at Bankruptcy Experts Maitland on 1300 795 575, or check out our website: www.bankruptcyexpertsmaitland.com.au
Case Study 1. (Tanya & Matt).
5 years ago Matt and Tanya bought a house in a mining town, they moved there for work throughout the mining boom therefore prices were higher, and life appeared good. However in recent times the work has dried up, prices have dropped and their debt has just kept growing. Now they are needing to take a look at Bankruptcy because of significant liabilities and mortgage.
They bought the house for $450,000, and they have $80,000 in various other unpaid debts.
They really would like to keep their house but wonder if they can. They know that residential property prices, if anything, have decreased in the town in the last 5 years so to be safe they believe that their home is presently 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 lately.
Over the past 5 years they have just been paying off the interest, so they currently owe the original $450,000.
Current House Value = $450,000.
Current Mortgage Value = $450,000.
Net Equity Value = $0.
Considering that there is no equity in this particular property the trustee will not ask Tanya and Matt to sell their home when they go bankrupt, provided that they maintain the mortgage payments then all will be fine for them for the 3 years they remain in bankruptcy.
At the end of the insolvency period of time the trustee will write to them and ask if they wish 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 get their home back. This is usually somewhere around $3,000 and $5,000 to cover the legal fees of modifying the land title deed etc. This was a rather simple sample to demonstrate how a home 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 Maitland for $850,000. They tipped in $50,000 as a down payment 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 issue Bill is about $240,000 in the red. Michelle who carries out work in banking has a different job and no other financial obligations besides the home mortgage. Bill can not pay his financial obligations 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 as a result of the house loan.
Here in this particular instance the trustee is required to access or get their hands on Bill’s share of the equity which is $50,000 less selling fees. They could accomplish this in a couple of ways; 1. Have them sell off the home. 2. Welcome Michelle to purchase Bills half of the equity. 3. keep them in the home – but it’s quite improbable in this scenario that the trustee will be happy to keep Bill and Michelle in the house since there is just a lot of equity.
So Michelle may have the capability to buy Bill’s percentage 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 simply the tip of the iceberg as far as your options in Maitland are concerned. If you must know much more about Bankruptcy and houses feel free to get in touch with us here at Bankruptcy Experts Maitland on 1300 795 575, or check out our website: www.bankruptcyexpertsmaitland.com.au.