Bankruptcy Sydney, What is the Deal with Debts?

Just what Debts are wiped out if I go Bankrupt?

The basic answer is that when it concerns Bankruptcy most debts are wiped, and I have included 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) and even any debts arising from uninsured Motor-vehicle claims and educational debts including 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 absolute security attached 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 erased 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 part that, when it comes to Bankruptcy, it is important to get professional guidance - like that offered at Bankruptcy Experts Sydney.

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

Yes they can, both business and personal debts owing to the ATO can be wiped out 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 right here at Bankruptcy Experts Sydney if you have any type of questions on 1300 795 575. Or feel free to visit our website: www.bankruptcyexpertsSydney.com.au

What about my business or Company debts?

Sometimes when it concerns 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 this 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 Sydney we specialise in business and personal debts so contact us here at Bankruptcy Experts Sydney if you have any questions regarding Bankruptcy on 1300 795 575. Or feel free to go to our website: www.bankruptcyexpertsSydney.com.au

Bankruptcy, Will I lose my Superannuation?

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

What if I have a Self Managed Super Fund?

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

Remember Bankruptcy Experts Sydney is not implying this short article is the whole story, if you have any questions feel free to get in touch with us on 1300 795 575. No matter if you call us or somebody else it doesn't matter, just please don't walk into bankruptcy blind when it comes to your SMSF indeed we suggest you look 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 considering Bankruptcy, you can not be a part of a SMSF. Why? Because if you are coping with bankruptcy, you will be grouped 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 each of these members will need to 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 get familiar with 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 harmful 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 once I'm bankrupt?

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

For starters, the SMSF will have to be restructured. This means that you will want to consider your extensive structure and ensure it is meeting the basic conditions, including things like having a new trustee that is not dealing with 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 most effective 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 indicates you need 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 need to inform the ATO using the form NAT 3036 (Found on the ATO website) and they will 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 unsure call Bankruptcy Experts Sydney 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 need 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 have to resign and the other member will remove 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 would like to roll it all into a managed fund. If both members are entering bankruptcy, then they would definitely need to sell all assets promptly and transfer 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 currently facing this matter 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 suggested earlier, a straightforward 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 receiving proper advice is the best first step. If you want to discuss your options further, give us a call at Bankruptcy Experts Sydney or visit our website: www.bankruptcyexpertsSydney.com.au or just give us a call on 1300 795 575.

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

Bankruptcy Sydney is a confusing process, but I know from meeting with thousands facing the chance of bankruptcy over the years, that practically nothing troubles people more than the thought of losing the family home or apartment. Almost every person is emotionally connected to their home - it's where the kids have grown up, it's where you enjoy life on a day to day basis.

Will you lose your house if you go bankrupt? The response is a resounding maybe. (not very useful, I know) People generally imagine it's an inevitable consequence and a part of Bankruptcy, and consequently 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 accepted to pay back the debt you are in.

So how is it possible to keep my Sydney 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 clearer idea.

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

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 over and above your income threshold. The further role is to sell off any assets that can contribute to fixing your debts.

What this resembles is that yes the trustee will sell your house right? Not normally. The only reason the trustee will sell off any asset including your house is to get money to pay back 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 regions have been heading south so what you paid 4 years ago may not really reflect the price today.

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

You might wonder, why would the bank want bankrupt customers? wouldn't they want to sell your house and not take the risk? The bank that has generously lent you the money for your house is making 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 wants you in there at all costs. Essentially however it's not the bank's call if the trustee decides 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 document the value of your house and the amount of money 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 suggestions or a real estate agents advice to come to this figure. When you get a valuer out to your home, ensure you tell the valuer to value the property for a quick sale, make certain 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 sensitive sale. These days that's not the case, but if you meet them and let them know you need to sell the house 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 system is critical to you: one you will certainly have peace of mind ascertaining the market value of your house, and after that you can easily build your equity position. Second of all, your home may be worth far more than you thought. Get some suggestions before doing this. The amount of times I've met 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 concerns Bankruptcy and houses, another significant consideration is ownership, often houses are purchased 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 to Bankruptcy, this is just one of potentially hundreds of scenarios that are possible when it comes to the family home. Bear in mind the non-bankrupt party can buy the bankrupt's portion of the property in bankruptcy also. I have to repeat this but get some assistance on this area of Bankruptcy because it is very tricky and every case is different.

If you wish to learn more about what to do, where to turn and what questions to ask about Bankruptcy, then feel free to call Bankruptcy Experts Sydney on 1300 795 575, or visit our website: www.bankruptcyexpertsSydney.com.au.