Bankruptcy in Parramatta is a challenging process, but I recognize from meeting with thousands experiencing the possibility of insolvency for many years that the most terrifying element is the concern of losing the family residential property. Practically everyone is on an emotional degree attached to their house – it’s where the children have grown, it’s the place you sleep, eat, relax and built it from a house to a home. So it is frightening to believe that a thing like bankruptcy can sweep in and take all that from you.
So, Could you lose your home if you declare bankruptcy?
My response is ‘possibly’– I know it is not a practical answer, but it will really depend upon your unique scenarios. People normally think that losing your home is unpreventable and just one more part of Bankruptcy– but don’t make yourself mad just yet, as there could be hope.
So how does bankruptcy view my house?
The very first thing to understand is that homes are viewed as assets– but no two homes will be the same. What you need to comprehend is that whenever it comes to Bankruptcy, they designate a trustee to oversee the procedure. Their role is to make certain that they can repay as much of your liabilities with your asset. This is completed through equity– and if there is no equity in your house then there is no true benefit to selling it.
Trustees not selling homes is occurring increasingly more since the GFC as house prices in many locations have been heading south so what you paid 4 years ago may not instantly demonstrate the price nowadays.
But the biggest part with Parramatta and Bankruptcy is that you really need to get a professional to assist you with this process, there are lots of variables in these scenarios that should be considered.
For instance, if you have no equity in the house you need to think about your home loan. With loans, you are basically just a customer of the financial institution and they will similarly have a preference– will they want to get your house back, or do they want you to keep the home loan? You might think that they would certainly wish to just take the house to steer clear of the risk, but honestly financial institutions are run as a business, and if these guys can leave you with a mortgage to keep earning money off you, they generally will provided that you keep up to date with your repayments. However 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 your home.
What is my home worth?
Typically 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 house, but the manner in which this is calculated in bankruptcy is typically different. When you declare bankruptcy you may have to note down the value of the house, and the amount of money that you owe– and you can work this out by utilizing a valuer. This is going to be much more precise than using your ‘gut feel’ or a real estate agent. The other important factor is that you need to ask your valuer for two prices– one for a Quick Sale, and one for a non-time sensitive sale. This will give you 2 rational amounts that can guide you to correctly value the property and understand its value even if you are being pushed to sell swiftly.
When it comes to Bankruptcy and homes, an additional major factor to consider is ownership, in most cases homes are purchased in shared names. In other words a couple may have bought a house 50/50 utilizing both of these salaries 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 property. With Bankruptcy, this is just one of possibly numerous scenarios that are likely when it is in regards to the family home. Remember the non-bankrupt party can buy the bankrupt’s part of the home in bankruptcy also. I should repeat this but get some guidance on this area of Bankruptcy because it is very tricky and every scenario is varied.
If you genuinely wish to find out more about what to do, where to turn and what questions to ask about Bankruptcy, then don’t hesitate to reach out to Bankruptcy Experts Parramatta on 1300 795 575, or visit our website: www.bankruptcyexpertsparramatta.com.au.