Losing your home: How much do you know of Bankruptcy in Wollongong?
Easily the most significant worry numerous people have with Bankruptcy is without a doubt ‘Will I manage to keep my house?’ and it might be complicated, but in some cases it is attainable.
The only reason where you will be obliged to sell your family home when you declare bankruptcy is if you have equity in the home so that it is thought as an asset. But how does this work? What is equity? How much equity can make it an asset? We receive the concerns frequently about Bankruptcy. So below are a few examples to demonstrate to you how all of it works and help you understand Bankruptcy. Keep in mind if you wish to know more regarding Bankruptcy and residential properties don’t hesitate to get in touch with us here at Bankruptcy Experts Wollongong on 1300 795 575, or check out our website: www.bankruptcyexpertswollongong.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 throughout the mining boom therefore prices were higher, and life looked great. Having said that recently the work has dried up, prices have gone down and their financial debt has just kept increasing. Now they are needing to look at Bankruptcy due to significant personal debts and home mortgage.
They purchased the home for $450,000, and they have $80,000 in various other unpaid debts.
They definitely would like to keep their house but wonder if they could. They know that residential property prices, if anything, have gone down in the region in the last 5 years so to be safe they think that their house is presently only worth $450,000 after all these years. To make sure they researched www.realestate.com.au sold category of the website to see what other homes in the streets nearby have sold for lately.
Over the past 5 years they have just been repaying 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 in this specific residential property the trustee will not ask Tanya and Matt to sell their home when they go bankrupt, provided that they keep up the mortgage payments then all will be well for them for the 3 years they remain in bankruptcy.
By the end of the insolvency period of time the trustee will contact them and ask if they want to take control of ownership of their house again and provided that it has not grown in price over the 3 years they have been insolvent they will be asked to make an offer to have their house back. This is typically somewhere between $3,000 and $5,000 to pay for the legal costs 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 suburb of Wollongong 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.
Because of a recent business problem Bill is about $240,000 in debt. Michelle who carries out work in banking has a different job and no other financial debts besides the home loan. Bill can not pay his financial debts so he is taking a look at Bankruptcy. Michelle is concerned that she too may need to file for bankruptcy or be driven into it due to the home loan.
Within this particular instance the trustee is required to access or get their hands on Bill’s half of the equity which is $50,000 less selling fees. They could accomplish this in a few ways; 1. Have them sell off the house. 2. Invite Michelle to purchase Bills half of the equity. 3. leave them in the home – but it’s very improbable with this instance that the trustee would be happy to keep Bill and Michelle in the home since there is simply a lot of equity.
So Michelle might have the ability to buy 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 house.
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 Wollongong are concerned. If you need to know more about Bankruptcy and houses don’t hesitate to contact us here at Bankruptcy Experts Wollongong on 1300 795 575, or check out our website: www.bankruptcyexpertswollongong.com.au.