Bankruptcy Australia, What is the Deal with Debts?

So what Debts are wiped out if I go Bankrupt?

The uncomplicated answer is that when it involves Bankruptcy most debts are wiped, and I have provided a summary below for you to look at.

But, put simply some of the exceptions are Centrelink Debts, Child Support, Court fines (like speeding fines) and any debts arising from uninsured Motor-vehicle claims and educational debts like HECS or FEE-HELP. These debts are not cleared away 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 real security connected to it. So for instance 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 eliminated 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 may 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 important to get professional guidance - like that available at Bankruptcy Experts Australia.

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

Yes they can, both business and personal debts owing to the ATO can be cleared away with bankruptcy. If you have a business with any type of debts get some advice because it is not always so basic. Feel free to call us here at Bankruptcy Experts Australia if you have any questions on 1300 795 575. Or feel free to explore our website: www.bankruptcyexpertsAustralia.com.au

What about my business or Company debts?

Sometimes when it comes to Bankruptcy we can assist you with your business debts, call us about 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 complicated area, so remember there are implications for a business owner such as insolvent trading. At Bankruptcy Experts Australia we specialise in business and personal debts so contact us here at Bankruptcy Experts Australia if you have any questions about Bankruptcy on 1300 795 575. Or feel free to visit our website: www.bankruptcyexpertsAustralia.com.au

Bankruptcy, Will I lose my Superannuation?

Bankruptcy in Australia can be complicated and difficult to understand. A question we often get asked here at Bankruptcy Experts Australia is 'what happens to my super if I declare Bankruptcy'? The solution for most is simple, 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 at the evolving number of members of Self-Managed Super Funds ("SMSFs") in 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 Australia is not suggesting this short article is the entire story, if you have any questions feel free to contact us on 1300 795 575. No matter if you call us or another person it does not matter, just please don't walk into bankruptcy blind when it comes to your SMSF actually we suggest you ask for both legal and financial advice before proceeding with any of the actions proposed 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 dealing with bankruptcy, you will be grouped as a 'disqualified person'. And a disqualified individual 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 must also be the individual trustees. The position of trustee presents 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 destructive to a SMSF and as you can assume 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 happens 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 have to consider your over-all structure and see to it that it is meeting the basic conditions, including having a new trustee that is not having 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 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 constantly keeping the ATO informed of what is happening. This suggests you need 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 need to inform the ATO using the form NAT 3036 (Found on the ATO website) and they must also notify ASIC of their resignation.

During 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 uncertain call Bankruptcy Experts Australia 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 be their obligation to oversee the sale and transfer of assets into a managed fund. If there are two or more members, than the bankrupt member will have to resign and the other member will remove the property and halve the proceeds. They would then want to decide if they want to remain as a single member SMSF, or if they intend to roll everything into a managed fund. If both members are entering bankruptcy, then they will need to sell all assets as soon as possible and transfer the liquid assets to the managed fund.

From this you can notice how when it comes to Bankruptcy, even if one single member is facing issues, it can affect the very existence of an SMSF. If you are actually facing this matter yourself, or with a partner in a SMSF, please seek financial advice to make certain you are fulfilling the ATO requirements.

A simple solution ...

As I proposed earlier, a straightforward solution to your SMSF situation is to put your super back into a normal regulated managed fund before bankruptcy and save yourself all the headaches outlined above. Bankruptcy is never easy, but getting proper advice is the best 1st step. If you want to discuss your possibilities further, contact us at Bankruptcy Experts Australia or visit our website: www.bankruptcyexpertsAustralia.com.au or just give us a call on 1300 795 575.

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

Bankruptcy Australia is a difficult to understand process, but I know from meeting with thousands facing the likelihood of bankruptcy over the years, that not much concerns people more than the notion of losing the family home or apartment. Almost everyone is emotionally connected to their home - it's where the kids have grown, it's where you take pleasure in life on a day to day basis.

Will you lose your house if you go bankrupt? The reply is a resounding maybe. (not very useful, I know) People typically imagine 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 agreed to pay back the debt you are in.

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

The role of the bankruptcy trustee is to firstly abide by the regulation of the bankruptcy act 1966 (it's a very dry 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 different ways but it mainly comes down to income and assets. The trustees role is to collect payments beyond your income threshold. The other role is to sell off any assets that can contribute to repaying your debts.

What this resembles is that yes the trustee will sell your house right? Not normally. 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 on your property then it's pointless to sell your home. This is happening increasingly 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 tip here if you have a house in Australia and are looking at Bankruptcy: get an expert to help you through this process, there are plenty of variables in these scenarios that need to 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 generously lent you the money for your house is generating good money every month in interest out of you, month in month out, as long as you keep up to date with your payments then the bank really wants you in there at all costs. Essentially 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 mark 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 suggestions or a real estate agents advice to come to this figure. When you get a valuer out to your property, make certain 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. Nowadays 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 will have peace of mind ascertaining the market value of your house, and after that you can easily build your equity position. Secondly, your house may be really worth so much more than you thought. Get some guidance before carrying this out. The amount of times I've met with clients that have sold their family home of 20 years only to learn I could of helped them keep it; unfortunately this happens all too often

When it comes to Bankruptcy and houses, another main consideration is ownership, often houses are purchased 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 doesn't, the equity is only factored on the 50 % of the property.

When it relates to Bankruptcy, this is just one of likely numerous scenarios that are possible when it comes down to the family home. Bear in mind the non-bankrupt party can buy the bankrupt's part of the house in bankruptcy also. I should repeat this but get some information 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 speak to Bankruptcy Experts Australia on 1300 795 575, or visit our website: www.bankruptcyexpertsAustralia.com.au.