Bankruptcy Townsville, So what is the Deal with Debts?

Precisely what Debts are wiped out if I go Bankrupt?

The quick answer is that when it comes to Bankruptcy most debts are wiped, and I have provided 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) along with any debts arising from uninsured Motor-vehicle claims and educational debts like HECS or FEE-HELP. These debts are not erased 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 actual security connected to it. So for instance 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 removed if I file for bankruptcy?

Yes. If you have a car loan for $40,000 you can have that debt eliminated 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 could be wiped but the asset needs to be sold or returned. This is just one part that, when it comes to Bankruptcy, it is necessary to get professional assistance - like that provided at Bankruptcy Experts Townsville.

What about my Tax Debts with the ATO can they be erased 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 type of debts find some advice because it is not always so self-explanatory. Feel free to call us right here over at Bankruptcy Experts Townsville if you have any questions on 1300 795 575. Or feel free to check out our website: www.bankruptcyexpertsTownsville.com.au

What about my business or Company debts?

Sometimes when it concerns Bankruptcy we can help you with your business debts, call us about this first. Remember bankruptcy applies to an individual not companies, trusts or businesses. Usually you may need to liquidate a company to deal with the debt this 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 Townsville we specialise in business and personal debts so contact us here at Bankruptcy Experts Townsville if you have any questions about Bankruptcy on 1300 795 575. Or feel free to check out our website: www.bankruptcyexpertsTownsville.com.au

Bankruptcy, Will I lose my Superannuation?

Bankruptcy in Australia can be convoluted and confusing. A question we commonly get asked here at Bankruptcy Experts Townsville is 'what happens to my super if I file for Bankruptcy'? The answer for most is straightforward, if your super is simply in a regulated fund or industry fund like Sunsuper or Host Plus then absolutely nothing happens; your super is 100 % safe when it involves Bankruptcy.

What if I have a Self Managed Super Fund?

This is a growing concern, look into the developing number of members of Self-Managed Super Funds ("SMSFs") over the last few 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 Townsville is not proposing this post is the whole story, if you have any questions feel free to contact us on 1300 795 575. Regardless if you call us or another person it doesn't matter, just please don't walk into bankruptcy blind when it comes to your SMSF indeed we advise you look for both legal and financial advice before proceeding with any of the actions indicated in this article.a

What is a Disqualified Person?

First and foremost, if you are considering Bankruptcy, you can not be a part of a SMSF. Why? Because if you are taking on bankruptcy, you will be labeled 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 each of these members need to also be the individual trustees. The role of trustee causes a lot of legal rules, and if you are in this position I would highly urge you to end up being aware of them all-- for example 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 rather 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 comes to pass if one of the members of an SMSF does enter Bankruptcy?

For starters, the SMSF will need to be restructured. This means that you will need to consider your entire structure and make certain 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 offer you a 6 month 'grace period' to get this done before you face penalties. And consider, sometimes the absolute best plan would be to simply roll the fund into an industry or corporate fund.

Beyond these large scale restructuring 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 suggests you have to let them know that you have a bankruptcy issue 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 need to also notify ASIC of their resignation.

Through that 6 month period you will need to remove the Bankrupt from the SMSF-- including their property and assets. Remember if you are not sure call Bankruptcy Experts Townsville for some free advice on 1300 795 575.

What if I have a single member fund?

If you are a single member fund, then you will have to appoint a new director, and it will then be their duty 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 clear away 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 would like to roll all of it into a managed fund. If both members are entering bankruptcy, then they would need to sell all assets immediately 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 right now facing this issue yourself, or with a partner in a SMSF, please seek financial advice to make certain 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 before bankruptcy and save yourself all the frustrations 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 Townsville or visit our website: www.bankruptcyexpertsTownsville.com.au or just call us on 1300 795 575.

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

Bankruptcy Townsville is a complex process, but I know from meeting with thousands facing the likelihood of bankruptcy over the years, that practically nothing worries people more than the notion of losing the family house. Almost every person is psychologically connected to their home - it's where the kids have grown up, it's where you appreciate life on a day to day basis.

Will you lose your home if you go bankrupt? The reply is a resounding maybe. (not very helpful, I know) People generally imagine it's an inevitable consequence and a part of Bankruptcy, and as a result 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 agreed to pay back the debt you are in.

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

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

Within that regulatory framework, the trustee is to help recover monies owed to your creditors, that is accomplished in a bunch of various 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 off any asset including your house is to get money to repay your debts. If there is no equity in your home then it's pointless to sell your home. This is happening more and more since the GFC as house prices in many locations have been heading south so what you paid 4 years ago may not actually reflect the price today.

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

You might wonder, why would the bank want bankrupt customers? wouldn't they prefer 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, just as long as you keep up to date with your repayments then the bank wants you in there at all costs. Ultimately however it's not the bank's call if the trustee determines that there is ample 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 note the value of your house and the portion you owe on the house. A tip if you are trying 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 tips or a real estate agents advice to come to this figure. When you get a valuer out to your house, make certain 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 main reasons this valuation system is critical to you: one you can have peace of mind ascertaining the market value of your house, and afterwards you can easily develop your equity position. Secondly, your house may be really worth a lot more than you thought. Get some assistance before doing this. The number of times I've seen clients that have sold their family home of 20 years just to find out I could of helped them keep it; unfortunately this happens all too often

When it concerns Bankruptcy and houses, another serious consideration is ownership, in many cases houses are bought 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 does not, the equity is only factored on the 50 % of the property.

When it comes down to Bankruptcy, this is just one of possibly hundreds of 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 help 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 talk to Bankruptcy Experts Townsville on 1300 795 575, or visit our website: www.bankruptcyexpertsTownsville.com.au.