Losing your house: How much do you understand about Bankruptcy in Mount Isa?
The most
important question people have when they come to our team regarding Bankruptcy
is without a doubt 'Can I manage to keep my house?' and sometimes the answer is
yes, you can manage to keep your house.
The only
reason you can be driven to sell your family home when you declare bankruptcy
is due to the fact that you have so much equity in the home that it is believed
an asset. Please read these basic hypothetical case studies below to get your
head around Bankruptcy and how it has an effect on houses in Mount Isa.
Remember If you want to know more about Bankruptcy and houses feel free to call
us here at Bankruptcy Experts Mount Isaon 1300 795 575, or visit our website:
www.BankruptcyExperts.com.au
Case Study 1.
(Mike & Sue Smith).
5 years ago
Mike and Sue purchased a house in a mining town for $450,000. At this time the
mining boom was keeping all the property prices nice and high. Now they are
needing to look at Bankruptcy because they have substantial debts of $80,000 on
top of their mortgage and credit card and tax debt.
They really
wish to keep their house but wonder if they can, they know that house prices if
anything have gone down in the area in the last 5 years so to be safe they
think that their house is still only worth $450,000 after all these years, to
be sure they searched www.realestate.com.au/ sold section of the website to see
what other houses in the streets nearby have sold for fairly recently.
Unfortunately
they have not paid any principal of the home loan over the last 5 years, mainly
just interest, so they still owe $450,000.
Current House
Value = $450,000.
Current
Mortgage Value = $450,000.
Net Equity
Value = $0.
Because there
is no equity in this particular property the trustee will not ask Mike and Sue
to sell their property when they go bankrupt, as long as they keep up the
mortgage payments then all will be well for these people for the 3 years they
are in bankruptcy.
At the end of
the bankruptcy time period the trustee will write to them and ask if they want
to take over ownership of their house again and so long as it has not grown in
price over the 3 years they have been bankrupt they will be asked to make an
offer to have their house back. This is normally somewhere between $3,000 and
$5,000 to cover the legal costs of modifying the land title deed etc.
Now let's
look at a slightly different example of Bankruptcy and houses.
Case Study 2.
(Bill & Michelle Johnson).
2 years ago
Bill and Michelle bought a townhouse in a wonderful suburb of Mount Isa 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.
As a result
of a recent business failing Bill is about $240,000 in debt. Michelle who does
work in banking has a separate job and no other debt apart from the mortgage.
Bill cannot pay his debts so he is reviewing Bankruptcy. Michelle is bothered
that she too may need to file for bankruptcy or be forced into it thanks to the
house loan.
Within this
particular case the trustee is required to access or get their hands on Bill's
part of the equity which is $50,000 less selling costs. They may do this in a
few ways; 1. Make them sell the home. 2. Invite Michelle to buy Bills half of
the equity. 3. leave them in the home - but It's very unlikely with this case
that the trustee would be happy to leave Bill and Michelle in the house because
there is just too much equity.
So Michelle
may be able to purchase Bill's share of the equity by coming up with $50,000
and buying out Bills' half and from that moment its now 100 % Michelle's house.
Property and Bankruptcy
in Mount Isa is confusing and demanding, these two case studies above are just
the tip of the iceberg as far as your options in Mount Isa are concerned. If
you need to know more about Bankruptcy and houses feel free to consult with us
here at Bankruptcy Experts Mount Isa on 1300 795 575, or go to our website: www.bankruptcyexpertsmountisa.com.au
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