Bankruptcy Maitland, So what is the Deal with Debts?

Exactly what Debts are erased if I go Bankrupt?

The quick answer is that when it concerns Bankruptcy most debts are wiped, and I have also included a compendium below for you to look at.

But, put simply some of the exceptions are Centrelink Debts, Child Support, Court fines (like speeding fines) and even any debts arising from uninsured Motor-vehicle claims and educational debts including HECS or FEE-HELP. These debts are not eliminated 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 genuine security attached to it. So as an example 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 erased if I file for bankruptcy?

Yes. If you have a car loan for $40,000 you can have that debt cleared away 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 may be wiped but the asset will need to be sold or returned. This is just one part that, when it comes to Bankruptcy, it is vital to get professional help - like that provided at Bankruptcy Experts Maitland.

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

Yes they can, both business and personal debts owing to the ATO can be wiped out with bankruptcy. If you have a business with any sort of debts find some advice because it is not always so simple. Feel free to call us here over at Bankruptcy Experts Maitland if you have any questions on 1300 795 575. Or feel free to visit our website: www.bankruptcyexpertsMaitland.com.au

What about my business or Company debts?

Sometimes when it involves Bankruptcy we can really help you with your business debts, call us concerning this first. Remember bankruptcy applies to an individual not companies, trusts or businesses. Generally you may have to liquidate a company to deal with the debt that way. And when it comes to Bankruptcy, it can be a complicated area, so remember there are implications for a business owner such as insolvent trading. At Bankruptcy Experts Maitland we specialise in business and personal debts so contact us here at Bankruptcy Experts Maitland if you have any questions regarding Bankruptcy on 1300 795 575. Or feel free to check out our website: www.bankruptcyexpertsMaitland.com.au

Bankruptcy, Will I lose my Superannuation?

Bankruptcy in Australia can be convoluted and perplexing. A question we usually get asked here over at Bankruptcy Experts Maitland is 'what happens to my super if I file for Bankruptcy'? The reply for most is straightforward, if your super is probably in a regulated fund or industry fund like Sunsuper or Host Plus then absolutely nothing 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, think about the expanding number of members of Self-Managed Super Funds ("SMSFs") in recent years; the ATO tells us it has expanded Australia-wide from 758,589 in 2009 to 1,011,689 in 2014. So what happens to these Superfunds when it involves Bankruptcy?

Remember Bankruptcy Experts Maitland is not suggesting this article is the complete story, if you have any questions feel free to get in touch with us on 1300 795 575. Whether you call us or somebody else it does not matter, just please don't walk into bankruptcy blind when it comes to your SMSF actually we recommend you look for 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 thinking about Bankruptcy, you can not be a part of a SMSF. Why? Because if you are coping with bankruptcy, you will be grouped 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 both of these members have to also be the individual trustees. The job of trustee causes a lot of legal rules, and if you are in this role I would highly urge you to get knowledgeable about them all-- for example the fact that you can not 'know or suspect' that one of you are bankrupt. So you can see how an individual bankruptcy can be very harmful to a SMSF and as you can assume the process of Bankruptcy for a SMSF is rather convoluted.

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

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

For starters, the SMSF will have to be restructured. This means that you will have to consider your complete structure and make sure it is meeting the basic conditions, including things like having a new trustee that is not suffering from issues with Bankruptcy. The Australian Tax office will give you a 6 month 'grace period' to get this done before you face penalties. And consider, sometimes the most suitable plan would be to simply roll the fund into an industry or corporate fund.

Beyond these large scale reorganizing issues, there is a lot of paperwork to deal with too, and you need to be continuously keeping the ATO informed of what is happening. This indicates you ought to let them know that you have a bankruptcy concern with your current trustee, that they are being removed as soon as possible know who the new trustee/director is. The Bankrupt will also need 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 unsure call Bankruptcy Experts Maitland for some free advice on 1300 795 575.

What if I use a single member fund?

If you are a single member fund, then you will have to appoint a new director, and it will then become 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 remove the property and halve the proceeds. They would then want to decide if they wish to remain as a single member SMSF, or if they want to roll it all into a managed fund. If both members are entering bankruptcy, then they would definitely need to sell all assets as soon as possible 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 facing 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 sure you are satisfying the ATO requirements.

A simple solution ...

As I recommended earlier, a basic solution to your SMSF problem 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 getting proper advice is the best initial step. If you want to discuss your options further, give us a call at Bankruptcy Experts Maitland or visit our website: www.bankruptcyexpertsMaitland.com.au or just give us a call on 1300 795 575.

Bankruptcy in Maitland - Will I lose my house if I go bankrupt?

Bankruptcy Maitland is a difficult to understand process, but I know from meeting with thousands facing the chance of bankruptcy over the years, that virtually nothing troubles people more than the idea of losing the family home or apartment. Almost everyone is sentimentally connected to their home - it's where the kids have grown up, it's where you take pleasure in life on a day to day basis.

Will you lose your house if you go bankrupt? The answer

 is a resounding maybe. (not very useful, I know) People typically presume it's an inevitable consequence and a part of Bankruptcy, and hence push themselves to the brink of insanity to not lose the family home. But when it comes to the whole process of Bankruptcy, a key strength of Debt Agreements and Personal Insolvency Agreements is you can keep your house. The reason is simple: you've agreed to pay back the debt you are in.

So how is it possible to keep my Maitland house, you ask? It's easier if I explain the basic theory behind the Bankruptcy process as administered by the trustee, then you'll have a clearer image.

The job of the bankruptcy trustee is to firstly agree to the regulation of the bankruptcy act 1966 (it's a very dry read about 600 pages if you are serious).

Within that regulatory framework, the trustee is to help recover monies owed to your creditors, that is carried out in a bunch of assorted ways but it mainly comes down to income and assets. The trustees role is to collect payments beyond your income threshold. The further role is to sell any assets that can contribute to paying your debts.

What this seems is that yes the trustee will sell your house right? Not normally. The only reason the trustee will sell off any asset including your house is to get money to repay your debts. If there is no equity on your property then it's pointless to sell your home. This is happening more and more since the GFC as house prices in many areas have been heading south so what you paid 4 years ago may not always reflect the price today.

A quick word of advice here if you have a house in Maitland and are looking at Bankruptcy: get a specialist to help you through this process, there are a lot of variables in these scenarios that should be considered.

You might wonder, why would the bank want bankrupt customers? wouldn't they hope to sell your house and not take the risk? The bank that has kindly lent you the money for your house is making good money every month in interest out of you, month in month out, provided that you keep up to date with your repayments then the bank really wants you in there at all costs. Essentially however it's not the bank's call if the trustee decides that there is a lot of equity in your house the trustee will force you and the bank to sell the house.

When you file for bankruptcy you are asked to mark the value of your house and the portion you owe on the house. A tip if you are aiming to work out the value of your house: use a registered valuer as this will give you peace of mind, don't use your neighbours' gut feel advice or a real estate agents advice to arrive at this figure. When you get a valuer out to your house, ensure you tell the valuer to value the property for a quick sale, see to it you mow the lawn and don't leave the kitchen in a mess also.

Valuers used to provide two valuations: one for a quick sale and one for a well marketed non time sensitive sale. Nowadays that's not the case, but if you meet them and tell them you need to sell the house in the next 30 days you may control the result. The idea is that you want a real sell now figure.

There are two reasons this valuation system is critical to you: one you will certainly have peace of mind ascertaining the market value of your house, then afterwards you can easily set up your equity position. Second of all, your property may be worth so much more than you thought. Get some tips before doing this. The amount of times I've seen clients that have sold their family home of 20 years only to find out I could of helped them keep it; unfortunately this happens all too often

When it concerns Bankruptcy and houses, another big consideration is ownership, often houses are acquired in joint names. To puts it simply a couple may be a house 50/50 using both incomes to make the payments. If one party declares bankruptcy and the other party doesn't, the equity is only factored on the 50 % of the property.

When it relates to Bankruptcy, this is just one of potentially numerous scenarios that are possible when it relates to the family home. Bear in mind the non-bankrupt party can buy the bankrupt's part of the home in bankruptcy also. I need to repeat this but get some advice on this area of Bankruptcy because it is very tricky and every case is different.

If you need to learn more about what to do, where to turn and what questions to ask about Bankruptcy, then feel free to speak with Bankruptcy Experts Maitland on 1300 795 575, or visit our website: www.bankruptcyexpertsMaitland.com.au.