Losing your house: Just how much do you understand about Bankruptcy in Adelaide?

The main concern a lot of people have when they come to our company regarding Bankruptcy is without a doubt 'Can I keep my house?' and in some cases the answer is yes, you can manage to keep your house.

The only reason you are going to be obliged to sell your family home when you file for bankruptcy is actually due to the fact that you have a great deal of equity in the house that it is considered an asset. Please go through these straightforward hypothetical case studies below to get your head around Bankruptcy and how it affects houses in Australia. Remember If you need to know more about Bankruptcy and houses feel free to call us here at Bankruptcy Advice Adelaide on 1300 879 867, or head to our website: www.bankruptcy-advice.com.au/adelaide.com.au

Case Study 1. (Mike & Sue Smith).

5 years ago Mike and Sue bought a house in a mining town for $450,000. At this time the mining boom was keeping all the property prices nice and high. Now they are needing to look at Bankruptcy given that they have massive debts of $80,000 on top of their mortgage and credit card and tax debt.

They really wish to keep their house but wonder if they can, they know that house prices if anything have gone down in the area in the last 5 years so to be safe they think that their house is currently only worth $450,000 after all these years, to make sure they searched www.realestate.com.au/ sold section of the website to see what other houses in the streets nearby have sold for recently.

However they have not paid any principal of the home loan over the last 5 years, mainly just interest, so they still owe $450,000.

Current House Value = $450,000.

Current Mortgage Value = $450,000.

Net Equity Value = $0.

Because there is no equity in this particular property the trustee will not ask Mike and Sue to sell their property 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 are in bankruptcy.

At the end of the bankruptcy period of time the trustee will write to them and ask if they wish to take over ownership of their house again and so long as it has not increased in price over the 3 years they have been bankrupt they will be asked to make an offer to have their house back. This is usually somewhere between $3,000 and $5,000 to cover the legal costs of altering the land title deed etc.

Now let's take a look at a slightly different example of Bankruptcy and houses.

Case Study 2. (Bill & Michelle Johnson).

2 years ago Bill and Michelle bought a townhouse in a wonderful suburb of Adelaide 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 debt. Michelle who does work in banking has a separate job and no other debt except for the mortgage. Bill cannot pay his debts and so he is looking at Bankruptcy. Michelle is bothered that she too may need to file for bankruptcy or be compelled into it due to the house loan.

Within this particular case the trustee is required to access or get their hands on Bill's part of the equity which is $50,000 less selling costs. They may do this in a few ways; 1. Have them sell the home. 2. Invite Michelle to buy Bills half of the equity. 3. leave them in the home - but It's very improbable in this case that the trustee would be happy to leave Bill and Michelle in the house because there is just too much equity.

So Michelle may be able to purchase Bill's share of the equity by coming up with $50,000 and buying out Bills' half and from that moment its now 100 % Michelle's house.

Property and Bankruptcy in Australia is confusing and demanding, these two case studies above are just the tip of the iceberg as far as your options in Adelaide are concerned. If you need to know more about Bankruptcy and houses feel free to consult with us here at Bankruptcy Advice Adelaide on 1300 879 867, or go to our website: www.bankruptcy-advice.com.au/adelaide.com.au.

Bankruptcy Adelaide, What is the Deal with Debts?

What Debts are cleared away if I go Bankrupt?

The simple answer is that when it concerns Bankruptcy most debts are wiped, and I have added a chart below for you to look at.

But, simply put some of the exceptions are Centrelink Debts, Child Support, Court fines (like speeding fines) and also any debts arising from uninsured Motor-vehicle claims and educational debts like HECS or FEE-HELP. These debts are not wiped out when you file for bankruptcy.

What about Secured Debts?

A secured debt is a vehicle loan or a home loan; it is a debt that has some actual security connected to it. So for instance if you buy a new car for $40,000 dollars the security for that car is the actual car itself.

So, can my secured debts be wiped out if I file for bankruptcy?

Yes. If you have a car loan for $40,000 you can have that debt eliminated if you simply return the car. So the lesson is that you cannot have your cake and eat it too (so to speak), so yes all of your secured debts might be wiped but the asset will need to be sold or returned. This is just one facet that, when it comes to Bankruptcy, it is important to get professional advice - like that readily available at Bankruptcy Advice Adelaide.

What about my Tax Debts with the ATO can they be erased If I go bankrupt?

Yes they can, both business and personal debts owing to the ATO can be eliminated with bankruptcy. If you have a business with any form of debts get some advice because it is not always so straightforward. Feel free to call us right here at Bankruptcy Advice Adelaide if you have any type of questions on 1300 879 867. Or feel free to check out our website: www.bankruptcy-advice.com.au/adelaide.com.au

What about my business or Company debts?

In some cases when it concerns Bankruptcy we can assist you with your business debts, call us about this first. Remember bankruptcy applies to an individual not companies, trusts or businesses. Typically you may have to liquidate a company to deal with the debt that way. And when it comes to Bankruptcy, it can be a confusing area, so remember there are implications for a business owner such as insolvent trading. At Bankruptcy Advice Adelaide we specialise in business and personal debts so call us here at Bankruptcy Advice Adelaide if you have any questions regarding Bankruptcy on 1300 879 867. Or feel free to head to our website: www.bankruptcy-advice.com.au/adelaide.com.au

Bankruptcy, Will I lose my Superannuation?

Bankruptcy in Australia can be complicated and confusing. A question we usually get asked here at Bankruptcy Advice Adelaide is 'what happens to my super if I declare Bankruptcy'? The solution for most is simple, if your super is usually in a regulated fund or industry fund like Sunsuper or Host Plus then very little happens; your super is 100 % safe when it comes down to Bankruptcy.

What if I have a Self Managed Super Fund?

This is a growing concern, take into account the evolving number of members of Self-Managed Super Funds ("SMSFs") in the last few years; the ATO tells us it has increased Australia-wide from 758,589 in 2009 to 1,011,689 in 2014. So what happens to these Superfunds when it concerns Bankruptcy?

Remember Bankruptcy Advice Adelaide is not implying this short article is the whole story, if you have any questions feel free to consult with us on 1300 879 867. No matter if you call us or someone else it does not matter, just please don't walk into bankruptcy blind when it comes to your SMSF actually we suggest you obtain both legal and financial advice before proceeding with any of the actions indicated in this article.

What is a Disqualified Person?

First and foremost, if you are taking into account Bankruptcy, you can not be a part of a SMSF. Why? Because if you are dealing with bankruptcy, you will be labeled as a 'disqualified person'. And a disqualified individual cannot operate as an Individual Trustee. This poses a problem due to the fact that usually most of the SMSFs are just 2 people, which means the two of these members need to also be the individual trustees. The position of trustee presents a lot of legal rules, and if you are in this role I would highly recommend you to get familiar with them all-- for example the fact that you can not 'know or suspect' that one of you are bankrupt. So you can notice how an individual bankruptcy can be very destructive to a SMSF and as you can assume the process of Bankruptcy for a SMSF is rather convoluted.

How much time do I have so as to restructure my SMSF Fund after I'm bankrupt?

So what takes effect if one of the members of an SMSF does enter Bankruptcy?

For starters, the SMSF will need to be restructured. This means that you will want to consider your complete structure and ensure it is meeting the basic conditions, including having a new trustee that is not experiencing issues with Bankruptcy. The Australian Tax office will give you a 6 month 'grace period' to get this done before you face penalties. And keep in mind, sometimes the most effective plan would be to simply roll the fund into an industry or corporate fund.

Beyond these large scale restructuring issues, there is a lot of paperwork to deal with too, and you need to be constantly keeping the ATO informed of what is happening. This indicates you need to let them know that you have a bankruptcy issue with your current trustee, that they are being removed as soon as possible know who the new trustee/director is. The Bankrupt will also have to inform the ATO using the form NAT 3036 (Found on the ATO website) and they must also notify ASIC of their resignation.

In the course of that 6 month period you will need to remove the Bankrupt from the SMSF-- including their property and assets. Remember if you are not sure call Bankruptcy Advice Adelaide for some free advice on 1300 879 867.

What if I have a single member fund?

If you are a single member fund, then you will have to appoint a new director, and it will then end up being their duty to oversee the sale and transfer of assets into a managed fund. If there are two or more members, than the bankrupt member will need to resign and the other member will clear away the property and halve the proceeds. They would then need to decide if they would like to remain as a single member SMSF, or if they intend to roll all of it into a managed fund. If both members are entering bankruptcy, then they would definitely need to sell all assets at once and transfer the liquid assets to the managed fund.

From this you can see how when it comes to Bankruptcy, even though one single member is dealing with issues, it can affect the very existence of an SMSF. If you are actually facing this trouble yourself, or with a partner in a SMSF, please seek financial advice to make certain you are satisfying the ATO requirements.

A simple solution ...

As I suggested earlier, a straightforward solution to your SMSF situation is to put your super back into a normal regulated managed fund prior to bankruptcy and save yourself all the problems outlined above. Bankruptcy is never easy, but receiving proper advice is the best initial step. If you want to discuss your options further, call us at Bankruptcy Advice Adelaide or visit our website: www.bankruptcy-advice.com.au/Adelaide.com.au or just give us a call on 1300 879 867.

Bankruptcy in Adelaide - Who do I talk to?

Should I talk to my accountant about Bankruptcy?

The answer seems obvious doesn't it: if anybody knows your financial situation well in Adelaide, It's going to be your accountant. However, the short answer is a resounding No! It's not that your accountant won't have your best interests at heart when it comes to Bankruptcy, it's that his specialization lie in helping you save you money at tax time, lowering your tax liability and lodging your BAS.

Most accounting degrees will spend very little to no time on insolvency, it's generally carried out as a post graduate speciality program for those who wish to work in the field. Unless your accountant is an insolvency expert, he would not know that a lot about the implications of Bankruptcy, I can guarantee you insolvency specialists know much about tax returns or BAS in. If you do happen to find an insolvency accounting firm in Adelaide, they often tend to be large firms with very nice office spaces who charge accordingly.

Should I speak with my Solicitor about Bankruptcy?

No! You can talk to your solicitor in Adelaide but more than likely it won't do you much good. Solicitors are certainly good at doing things lawyers do, like helping you do your Will and buying your house and keeping you out of court if you're lucky. When it comes to Bankruptcy, the specialists in Adelaide normally have either a legal or accounting background, and the reason for that is simply that you can't enrol in the post graduate study to become a qualified insolvency practitioner until you have a law or accounting degree.

Just as there are few insolvency accounting firms, there are very few insolvency legal practices in Australia, and yes if you find one you will pay a substantial price for their expertise.

Should I speak to a financial counsellor about Bankruptcy?

Yes! There are lots of financial counselling services to aid you through this, they have no hidden agendas and they're a fantastic option for really helping you analyze your circumstance when it comes to Bankruptcy. If you find yourself stressing constantly, not sleeping, not eating or over-eating and thinking of money pressures continuously, then get some help.

There are also charitable organizations around Adelaide like Lifeline that offer a remarkable service. They will be a sounding board if you just need a person to discuss with you what your possibilities are. Don't let your financial trouble destroy your life - ultimately it's just money.

If you want to learn more about what to do, where to turn and what matters to ask about Bankruptcy, then feel free to get in touch with Bankruptcy Advice  Adelaide on 1300 879 867, or visit our website: www.bankruptcy-advice.com.au/Adelaide

Bankruptcy in Adelaide - Will I lose my business if I go bankrupt?

When people in Adelaide come to me trying to speak about Bankruptcy, they are always full of questions. The internet has lots of information, but far too much of it is confusing or contradicts itself, so I make it my mission to try and make it more clear. One of the most usual priorities is 'Will I lose my business if I declare bankruptcy?' The concise answer is no. If you are a manager of a business any shape or size you can keep your business if you want to. In Adelaide, businesses that eventually are insolvent have a few options for instance, liquidation, voluntary administration and so on. It's individuals who go bankrupt not businesses.

Bankruptcy is a complicated area so get some qualified advice on this if you have a business. Generally speaking, the financial debts in a business and personal debts go together when a business owner goes bankrupt. There are some necessary implications for directors of companies when it pertains to Bankruptcy in Adelaide: A bankrupt can not be a director of a company, so if you have a pty ltd company you definitely will need to retire as a director after you're bankrupt.

A constraint that applies when you are generally bankrupt as a business owner is that you may be in your very own business as a sole trader only. There are things you will want to reveal as an aspect of that but essentially you can still run your business. For some business owners, bankruptcy impacts their ability to run the business because of the licensing issues. Such as, if you run a building company, your license will be suspended once you're bankrupt and therefore you can not trade without that license, so make sure you are asking the right questions when it concerns licenses and Bankruptcy in Adelaide.

On the other hand if your business is not impacted directly by such issues, then you'll have to restructure the way you run your business. There are considerations when and if you go bankrupt as a business owner: you can not acquire heaps of debt in your company, then go bankrupt and after that open the doors the next day like practically nothing had happened. There are laws in place to stop what is called phoenix companies popping up out of the ashes of an old business.

Having said that, it's just a matter of consulting with the correct people about Bankruptcy. In this circumstance you may think you need a liquidator for your company, and you could be right, but remember that every liquidator is varied and have their own motives. Liquidators make money from your liquidation - heaps of money - so just what advice do you think you will get?

When it comes to Bankruptcy, I consider that giving generic advice in this area is potentially risky as it can have very significant implications for directors and business owners. This is considering that it is one of those cases where what the right guidance for one business owner is the wrong advice for the other. There are some principles however, that you may benefit from. There is no limit to the size of the business you run though you are bankrupt. You can employ staff. You can constantly deal with your manufacturers under certain conditions, the main one being you will need to meet the payment terms agreed upon.

So when it comes to Bankruptcy, don't get overly uneasy about what you can and can't do as a business owner, just get the right advice ... If you want to learn more about what to do, precisely where to turn and what questions to ask about Bankruptcy, then feel free to contact Bankruptcy Advice  Adelaide on 1300 879 867, or visit our website: .bankruptcy-advice.com.au/Adelaide

Bankruptcy in Adelaide - does it matter if it is voluntary?

When it comes to Bankruptcy Adelaide, often people aren't aware that there may be both voluntary, and involuntary bankruptcy - both of these have distinct methods and policies.

Involuntary bankruptcy arises when a person you owe money to applies to the court to declare you bankrupt. Usually when you get one of those notices, you have normally 21 days to pay all the debt. If you do not, then the creditor goes back to the court and asks the court to issue a sequestration order that declares you bankrupt. A trustee is assigned, and then you have 14 days to get the documents in and then you are bankrupt.

You can object to a bankruptcy notice by going to court immediately after the 21 days have expired and put your case forward, to prevent it going to the next level. Apart from the way you became bankrupt there is in fact no difference between Involuntary Bankruptcy and or Voluntary Bankruptcy - once you are declared bankrupt, they're administered to in the very same way.

However, when it comes to Bankruptcy for this, the stress and anxiety, torment and fear that accompanies this method is incredible. If you think you are prone to be made bankrupt by someone, get some advice and act on that advice. Generally I've found it's always much better to know what you can and can't do before you have someone else bankrupt you. Once you are bankrupt, it's generally too late.

Voluntary Bankruptcy

Alternatively, when it comes to Bankruptcy, sometimes there are moments that it is the most effective option. So you may have to ask yourself, 'when should I consider voluntary Bankruptcy?'.

This question is not the very same for everyone of course, but typically I find that one way you could work it out is to figure out just how long it will take you to pay each one of your debts - if its longer than 3 years (the period you are declared bankrupt), then this may help you make that decision, and help you to understand Bankruptcy.

Once, I had an 80 year old pensioner, who came to me once regarding * Bankrupcty tell me that her credit card statement calculated how long her debt would take to pay at the rate she was paying her account, and it was 35 years! Imagine 35 years for one credit card bill.

Credit rating damage can really help you think this through. If you move house and overlook to pay your $30 phone bill for 6 months more, it's very likely the phone service will default your credit file. That default will sit on your file for 5 years, so for $30 you can have your credit file very seriously damaged for that period of time - and all of this will impact how you need to approach Bankruptcy.

In many ways, the ease with which companies/credit providers can default your credit file is unjustifiable. The punishment doesn't seem to match the crime in my book. So if you actually have defaults on your credit report for 5 years, remember that bankruptcy is on your credit file for a total 7 years then its rubbed out completely.

So if your credit rating is a big element in trying to decide whether to enter into a Debt Agreement or Personal Insolvency Agreement or Bankruptcy remember they will all sit on your credit file for a total of 7 years. The biggest change is that with a DA or PIA you pay back the money and still have it on your file for 7 years.

Bankruptcy

I have mentioned the word a few times now, but when it comes down to it, Bankruptcy is the biggest part, and the element most people are afraid of when they come to me to talk about their financial situation and Bankruptcy. The other side of crime and punishment equation is bankruptcy, and in this country the arrangements are very generous: you can go bankrupt owing millions of dollars and after 3 years it's all finished with no strings attached. Compared with countries like the United States, our bankruptcy laws are extremely generous.

I don't claim to know why that is but a few hundred years ago debtors went to prison. These days I suppose the government thinks the sooner it can get you back on your feet working and paying tax, the better. It makes more sense than locking you up which in turn costs the taxpayer anyway.

Bankruptcy wipes all of your debts including ATO debts with the exception of a few things:

·         Centrelink Debts, Court Fines like parking and speeding fines.

·         HECS or Fee Help loans.

·         Money to take care of a car accident if the car was not insured.

There is a lot more that can be said about this and Bankruptcy in general but the objective of this blog was to help you decide between a few readily available options. When getting some advice, remember that there are always possibilities when it relates to Bankruptcy in Adelaide, so do some study, and Good luck!

If you want to find out more about exactly what to do, where to turn and what questions to ask about Bankruptcy, then feel free to reach out to Bankruptcy Advice  Adelaide on 1300 879 867, or visit our website:bankruptcy-advice.com.au/Adelaide

Bankruptcy in Adelaide - Will my income be influenced if I go bankrupt?

Bankruptcy Adelaide is a challenging process, and you ought to be sure you get the right insight. And when it comes to your income being affected, the answer to the question is maybe. The first thing you have to know about going bankrupt is there is no restraint on how much you can earn. However, I will point out that your income is a significant consideration when working through when it comes to Bankruptcy.

The very first thing you need to keep in mind about this area of Bankruptcy is how much you can earn before you start paying back money to your creditors via your trustee (see table below).

Net income is the pre-tax/ in the hand amount of money you earn each year. A dependant is someone who lives with you and earns less than $3,124 per year (regardless of their age).

You can make an application for a hardship variation that raises the threshold amount, if you have costs in Adelaide such as medical, child care, serious travel to and from your job, or a situation where your spouse used to work but is not able to add to the household income.

Some of the insightful parts of Bankruptcy is that your employer will not be told when you file for bankruptcy. Also, Child support is always taken into account in bankruptcy, if you receive child support that is not factored in as income. If you pay child support this will be also considered, for example if you pay $5,000 child support each year and you have no dependents living with you then your revised net income limit will be $55,332.10.

There are more issues encompassing income and what is or isn't thought of as income - if you're unsure, it's recommended to get qualified advice. The reason you should consider your income as a part of the Big 5 questions here is that bankruptcy is in some instances not an economically viable option.

If one of your creditors is the ATO (for unpaid taxes), then your tax refund will be taken by the ATO whilst you are bankrupt to contribute toward your tax bill. If you don't have a tax bill then you will keep your tax refund just as long as that doesn't take you over your threshold income caps.

If you think when it comes to Bankruptcy, your issue is more complex, then please get qualified advice in Adelaide. I may seem like a broken record, but remember that it's always a good idea to work through these options before declaring bankruptcy, because once you have filed the paperwork it's far too late to change your mind.

If you wish to find out more about what to do, where to turn and what questions to ask about Bankruptcy, then don't hesitate to contact Bankruptcy Advice Adelaide on 1300 879 867, or visit our website: bankruptcy-advice.com.au/Adelaide