Stressed About Losing Your Home?

Bankruptcy in Melbourne is a difficult task, but I recognize from meeting with thousands dealing with the possibility of personal bankruptcy throughout the years that the most frightening aspect is the concern of losing the family residential property.

untitled-1Practically everyone is on an emotional degree linked to their house – it’s where the children have grown, it’s the place you sleep, eat, unwind and built it from a house to a home. So it is terrifying to think that something like personal bankruptcy can move in and take all that off you.

So, Could you lose your home if you declare bankruptcy?

My response is ‘possibly’– I realise it is not an useful reply, but it will really based upon your particular scenarios. People normally believe that losing your house is unpreventable and just another part of Bankruptcy– but don’t make yourself mad right now, because there could be hope.

So how does personal bankruptcy view my house?

The very first thing to recognize is that properties are considered as assets– but no two homes will be the same. What you need to grasp is that whenever it concerns Bankruptcy, they designate a trustee to oversee the procedure. Their role is to make sure that they can settle as much of your debts with your asset. This is completed via equity– and if there is no equity in your house then there is no real advantage to selling it.

Trustees not selling houses is occurring progressively more ever since the GFC as house prices in many areas have been heading south so what you spent 4 years ago may not immediately demonstrate the price these days.

But the most significant part with Melbourne and Bankruptcy is that you truly need to get an expert to help you with this procedure, there are a number of variables in these scenarios that should be taken into account.

As an example, if you have no equity in the house you will need to consider your home loan. With loans, you are essentially just a client of the bank and they will also have a preference– will they want to get your home back, or do they prefer you to keep the loan? You might believe that they would wish to just take your home to avoid the risk, but honestly banks are run as a business, and if they can leave you with a mortgage to keep making money off you, they generally will provided that you keep up to date with your repayments. However it is still up to the trustee to identify that there is a lot of equity in your home the trustee will force you and the bank to sell the house.

What is my home worth?

Often with Bankruptcy it is difficult to know what your house is really worth– yes, you may have an idea if you were selling off your house, but the way that this is worked out in insolvency is generally different. When you declare insolvency you may need to note down the value of your home, and the amount that you owe– and you can figure this out by using a valuer. This is going to be much more accurate than using your ‘gut feel’ or a real estate agent. The other important factor is that you need to ask your valuer for two values– one for a Quick Sale, and one for a non-time sensitive sale. This will certainly give you 2 rational numbers that can help you to properly value the residential property and grasp its value even if you are being pushed to sell quickly.

When it comes to Bankruptcy and homes, an additional significant consideration is ownership, in many cases houses are purchased in shared titles. In other words a couple may have bought a house 50/50 making use of both salaries to make the payments. If one party declares bankruptcy and the other party does not, the equity is only factored on the 50 % of the residential property. With Bankruptcy, this is merely one of perhaps numerous circumstances 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 insolvency too. I must repeat this but get some advice on this area of Bankruptcy given that it is very complicated and each and every scenario is varied.

If you really would like to find out more about what to do, where to turn and what questions to ask about Bankruptcy, then do not hesitate to reach out to Bankruptcy Experts Melbourne on 1300 795 575, or visit our website: www.bankruptcyexpertsmelbourne.com.au.

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