Bankruptcy Bunbury, What is the Deal with Debts?

Exactly what Debts are removed if I go Bankrupt?

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

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

What about Secured Debts?

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

So, can my secured debts be removed 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 hand back 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 necessary to get professional help - like that you can find at Bankruptcy Experts Bunbury.

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 erased with bankruptcy. If you have a business with any kind of debts get some advice because it is not always so easy. Feel free to call us right here at Bankruptcy Experts Bunbury if you have any type of questions on 1300 795 575. Or feel free to head to our website: www.bankruptcyexpertsBunbury.com.au

What about my business or Company debts?

In some cases when it involves Bankruptcy we can help you with your business debts, call us concerning this first. Remember bankruptcy applies to an individual not companies, trusts or businesses. Normally you may need to liquidate a company to deal with the debt that way. 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 Experts Bunbury we specialise in business and personal debts so give us a call here at Bankruptcy Experts Bunbury if you have any questions regarding Bankruptcy on 1300 795 575. Or feel free to go to our website: www.bankruptcyexpertsBunbury.com.au

Bankruptcy, Will I lose my Superannuation?

Bankruptcy in Australia can be involved and difficult to understand. A question we commonly get asked here at Bankruptcy Experts Bunbury is 'what happens to my super if I apply for Bankruptcy'? The reply for most is easy, if your super is simply in a regulated fund or industry fund like Sunsuper or Host Plus then very little happens; your super is 100 % safe when it involves Bankruptcy.

What if I have a Self Managed Super Fund?

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

Remember Bankruptcy Experts Bunbury is not indicating this short article is the whole story, if you have any questions feel free to consult with us on 1300 795 575. Whether or not you call us or another person it doesn't matter, just please don't walk into bankruptcy blind when it comes to your SMSF actually we encourage you ask for both legal and financial advice before proceeding with any of the actions recommended 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 coping with bankruptcy, you will be classified as a 'disqualified person'. And a disqualified person cannot operate as an Individual Trustee. This poses a problem because usually most of the SMSFs are just 2 people, which means the two of these members will need to also be the individual trustees. The duty of trustee sets a lot of legal rules, and if you are in this role I would highly urge you to end up being familiar with them all-- including 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 imagine the process of Bankruptcy for a SMSF is rather convoluted.

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

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

For starters, the SMSF will need to be reorganized. This means that you will have to consider your overall structure and ensure that it is meeting the basic conditions, including things like having a new trustee that is not encountering issues with Bankruptcy. The Australian Tax office will offer you a 6 month 'grace period' to get this done before you face penalties. And bear in mind, sometimes the absolute best 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 means you have to let them know that you have a bankruptcy problem 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 unsure call Bankruptcy Experts Bunbury 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 end up being their responsibility to oversee the sale and relocation 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 take away the property and halve the proceeds. They would then have to decide if they wish to remain as a single member SMSF, or if they intend to roll it all into a managed fund. If both members are entering bankruptcy, then they would definitely need to sell all assets right away and move the liquid assets to the managed fund.

From that 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 at the moment facing this issue yourself, or with a partner in a SMSF, please seek financial advice to make certain you are meeting the ATO requirements.

A simple solution ...

As I suggested 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, call us at Bankruptcy Experts Bunbury or visit our website: www.bankruptcyexpertsBunbury.com.au or just give us a call on 1300 795 575.

Bankruptcy in Bunbury - Will I lose my home if I go bankrupt?

Bankruptcy Bunbury is a tricky process, but I know from meeting with thousands facing the prospect of bankruptcy over the years, that very little troubles people more than the notion of losing the family home or apartment. Almost everybody is sentimentally connected to their home - it's where the kids have grown, it's where you enjoy life on a day to day basis.

Will you lose your home if you go bankrupt? The solution is a resounding maybe. (not very useful, I know) People typically feel that 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 perk of Debt Agreements and Personal Insolvency Agreements is you can keep your house. The reason is simple: you've accepted to pay back the debt you are in.

So how is it possible to keep my Bunbury house, you ask? It's easier if I explain the basic concept behind the Bankruptcy process as administered by the trustee, then you'll have a more clear idea.

The duty of the bankruptcy trustee is to firstly comply with the regulation of the bankruptcy act 1966 (it's a very dull read about 600 pages if you are serious).

Within that regulatory framework, the trustee is to help recuperate monies owed to your creditors, that is executed in a bunch of diverse 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 off any assets that can contribute to paying back your debts.

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

A quick tip here if you have a house in Bunbury and are looking at Bankruptcy: get a skilled professional to help you through this process, there are plenty of variables in these scenarios that should be considered.

You might wonder, why would the bank want bankrupt clients? wouldn't they hope to sell your house and not take the risk? The bank that has nicely lent you the money for your house is creating good money every month in interest out of you, month in month out, so long as you keep up to date with your payments then the bank really wants you in there at all costs. Ultimately however it's not the bank's call if the trustee establishes that there is loads 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 quantity you owe on the house. A tip if you are attempting to work out the value of your house: use a registered valuer as this will offer you peace of mind, don't use your neighbours' gut feel advice or a real estate agents advice to get to this figure. When you get a valuer out to your property, ensure that you tell the valuer to value the property for a quick sale, make sure you mow the lawn and don't leave the kitchen in a mess also.

Valuers used to offer two valuations: one for a quick sale and one for a well marketed non time sensitive sale. These days that's not the case, but if you meet them and let them know you need to sell your home in the next 30 days you may control the result. The idea is that you want a life-like sell now figure.

There are two reasons this valuation technique is critical to you: one you may have peace of mind ascertaining the market value of your house, and after that you can easily develop your equity position. Secondly, your home may be worth far more than you thought. Get some advice before doing this. The number of times I've met clients that have sold their family home of 20 years simply to find out I could of helped them keep it; unfortunately this happens all too often

When it comes to Bankruptcy and houses, another significant consideration is ownership, in most cases houses are bought in joint names. In other words a couple may be a house 50/50 using both incomes 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 property.

When it concerns 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 portion of the house in bankruptcy also. I need to repeat this but get some advice on this area of Bankruptcy because it is very tricky and each and every case is different.

If you really want to learn more about what to do, where to turn and what questions to ask about Bankruptcy, then feel free to talk to Bankruptcy Experts Bunbury on 1300 795 575, or visit our website: www.bankruptcyexpertsBunbury.com.au.