Bankruptcy Mildura, Just what is the Deal with Debts?

Which Debts are cleared away if I go Bankrupt?

The basic answer is that when it concerns Bankruptcy most debts are wiped, and I have included a table 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 which include HECS or FEE-HELP. These debts are not removed 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 affixed 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 cleared away 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 can be wiped but the asset must be sold or returned. This is just one part that, when it comes to Bankruptcy, it is important to get professional assistance - like that offered at Bankruptcy Experts Mildura.

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

Yes they can, both business and personal debts owing to the ATO can be removed with bankruptcy. If you have a business with any form of debts get some advice because it is not always so self-explanatory. Feel free to call us right here at Bankruptcy Experts Mildura if you have any questions on 1300 795 575. Or feel free to visit our website: www.bankruptcyexpertsMildura.com.au

What about my business or Company debts?

Sometimes when it comes to 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. Typically you may have to liquidate a company to deal with the debt this way. And 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 Mildura we specialise in business and personal debts so give us a call here at Bankruptcy Experts Mildura if you have any questions about Bankruptcy on 1300 795 575. Or feel free to head to our website: www.bankruptcyexpertsMildura.com.au

Bankruptcy, Will I lose my Superannuation?

Bankruptcy in Australia can be involved and difficult to understand. A question we typically get asked here over at Bankruptcy Experts Mildura is 'what happens to my super if I apply for Bankruptcy'? The answer for most is simple, if your super is simply in a regulated fund or industry fund like Sunsuper or Host Plus then virtually nothing happens; your super is 100 % safe when it comes to Bankruptcy.

What if I have a Self Managed Super Fund?

This is a growing concern, look into the evolving 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 Mildura is not proposing this article is the complete story, if you have any questions feel free to contact us on 1300 795 575. Whether you call us or someone else it does not matter, just please don't walk into bankruptcy blind when it comes to your SMSF actually we encourage you seek 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 facing bankruptcy, you will be classified as a 'disqualified person'. And a disqualified individual cannot operate as an Individual Trustee. This poses a problem since usually most of the SMSFs are just 2 people, which means the two of these members must also be the individual trustees. The duty of trustee presents a lot of legal rules, and if you are in this position I would highly encourage 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 very destructive to a SMSF and as you can imagine the process of Bankruptcy for a SMSF is rather convoluted.

How long do I have to restructure my SMSF Fund once I'm bankrupt?

So what takes place 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 having issues with Bankruptcy. The Australian Tax office will supply you a 6 month 'grace period' to get this done before you face penalties. And keep in mind, sometimes the 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 constantly keeping the ATO informed of what is happening. This suggests you ought 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 need to 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 not exactly sure call Bankruptcy Experts Mildura 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 responsibility 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 take away the property and halve the proceeds. They would then have to decide if they would like 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 right away and move the liquid assets to the managed fund.

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

A simple solution ...

As I recommended earlier, a basic solution to your SMSF situation is to put your super back into a normal regulated managed fund prior to 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, give us a call at Bankruptcy Experts Mildura or visit our website: www.bankruptcyexpertsMildura.com.au or just give us a call on 1300 795 575.

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

Bankruptcy Mildura is a challenging process, but I know from meeting with thousands facing the possibility of bankruptcy over the years, that practically nothing worries people more than the notion of losing the family home or apartment. Almost everybody is on an emotional level 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 solution is a resounding maybe. (not very helpful, I know) People generally believe it's an inevitable consequence and a part of Bankruptcy, and because of this 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 advantage 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 Mildura house, you ask? It's easier if I explain the basic guideline behind the Bankruptcy process as administered by the trustee, then you'll have a more clear picture.

The responsibility of the bankruptcy trustee is to firstly abide by the regulation of the bankruptcy act 1966 (it's a very plain 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 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 further role is to sell off any assets that can contribute to paying back your debts.

What this sounds like is that yes the trustee will sell your house right? Not necessarily. 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 tip here if you have a house in Mildura and are looking at Bankruptcy: get a specialist to help you through this process, there are a number of variables in these scenarios that need to be considered.

You might wonder, why would the bank want bankrupt clients? wouldn't they want to sell your house and not take the risk? The bank that has kindly lent you the money for your house is earning good money every month in interest out of you, month in month out, provided that 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 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 put down the value of your house and the level 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 reach this figure. When you get a valuer out to your house, ensure you tell the valuer to value the property for a quick sale, ensure you mow the lawn and don't leave the kitchen in a mess also.

Valuers used to give two valuations: one for a quick sale and one for a well marketed non time delicate 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 reasonable sell now figure.

There are two main reasons this valuation process is critical to you: one you may have peace of mind ascertaining the market value of your house, then afterwards you can easily establish your equity position. Second of all, your property may be really worth a lot more than you thought. Get some guidance before carrying this out. The number of times I've seen clients that have sold their family home of 20 years simply to figure out I could of helped them keep it; unfortunately this happens all too often

When it comes to Bankruptcy and houses, another notable consideration is ownership, often houses are purchased in joint names. Simply put 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 concerns Bankruptcy, this is just one of probably 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 have to repeat this but get some information on this area of Bankruptcy because it is very tricky and every single 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 reach out to Bankruptcy Experts Mildura on 1300 795 575, or visit our website: www.bankruptcyexpertsMildura.com.au.