Bankruptcy Darwin, Just what is the Deal with Debts?

What Debts are cleared away if I go Bankrupt?

The basic answer is that when it concerns Bankruptcy most debts are wiped, and I have also included 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) as well as any debts arising from uninsured Motor-vehicle claims and educational debts which include HECS or FEE-HELP. These debts are not wiped out when you file for bankruptcy.

What about Secured Debts?

A secured debt is a car 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 removed if I file for bankruptcy?

Yes. If you have a car loan for $40,000 you can have that debt wiped out 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 will need to be sold or returned. This is just one component that, when it comes to Bankruptcy, it is important to get professional advice - like that offered at Bankruptcy Experts Darwin.

What about my Tax Debts with the ATO can they be removed 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 receive some advice because it is not always so easy. Feel free to call us right here over at Bankruptcy Experts Darwin if you have any questions on 1300 795 575. Or feel free to go to our website: www.bankruptcyexpertsDarwin.com.au

What about my business or Company debts?

In some cases when it involves Bankruptcy we can really help you with your business debts, call us concerning 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 Darwin we specialise in business and personal debts so call us here at Bankruptcy Experts Darwin if you have any questions about Bankruptcy on 1300 795 575. Or feel free to explore our website: www.bankruptcyexpertsDarwin.com.au

Bankruptcy, Will I lose my Superannuation?

Bankruptcy in Australia can be convoluted and confusing. A question we normally get asked here at Bankruptcy Experts Darwin is 'what happens to my super if I file for Bankruptcy'? The reply for most is easy, if your super is usually 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, think about the growing number of members of Self-Managed Super Funds ("SMSFs") lately; the ATO tells us it has grown 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 Darwin is not suggesting this post 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 another person it doesn't matter, just please don't walk into bankruptcy blind when it comes to your SMSF in truth we highly recommend you get 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 classified 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 must also be the individual trustees. The duty of trustee causes a lot of legal rules, and if you are in this role I would highly recommend you to become knowledgeable about 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 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 transpires 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 complete structure and make certain it is meeting the basic conditions, involving having a new trustee that is not having issues with Bankruptcy. The Australian Tax office will give 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 indicates you ought to let them know that you have a bankruptcy complication 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 Darwin 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 become 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 clear away the property and halve the proceeds. They would then need to decide if they want to remain as a single member SMSF, or if they need to roll it all into a managed fund. If both members are entering bankruptcy, then they will need to sell all assets at once and move the liquid assets to the managed fund.

From this you can see how when it comes to Bankruptcy, even if one single member is running into issues, it can affect the very existence of an SMSF. If you are already facing this problem yourself, or with a partner in a SMSF, please seek financial advice to make sure you are satisfying 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 finding proper advice is the best initial step. If you want to discuss your possibilities further, contact us at Bankruptcy Experts Darwin or visit our website: www.bankruptcyexpertsDarwin.com.au or just call us on 1300 795 575.

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

Bankruptcy Darwin is a complicated process, but I know from meeting with thousands facing the possibility of bankruptcy over the years, that virtually nothing concerns people more than the thought of losing the family home or apartment. Almost everybody is sentimentally connected to their home - it's where the children have grown, it's where you appreciate 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 feel that 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 accepted to pay back the debt you are in.

So how is it possible to keep my Darwin 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 image.

The responsibility of the bankruptcy trustee is to firstly comply with the regulation of the bankruptcy act 1966 (it's a very dull read about 600 pages if you are wondering).

Within that regulatory framework, the trustee is to help recover monies owed to your creditors, that is accomplished in a bunch of assorted 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 fixing 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 pay back your debts. If there is no equity in your home 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 necessarily reflect the price today.

A quick tip here if you have a house in Darwin and are looking at Bankruptcy: get an expert to help you through this process, there are a number of variables in these scenarios that have to be considered.

You might wonder, why would the bank want bankrupt customers? wouldn't they choose to sell your house and not take the risk? The bank that has generously lent you the money for your house is creating good money every month in interest out of you, month in month out, so long as you keep up to date with your payments then the bank desires you in there at all costs. Essentially however it's not the bank's call if the trustee determines that there is plenty 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 recommendations or a real estate agents advice to arrive at this figure. When you get a valuer out to your home, ensure 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 delicate 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 reasonable sell now figure.

There are two main reasons this valuation technique is critical to you: one you may have peace of mind ascertaining the market value of your house, and afterwards you can easily build your equity position. The second thing is, your home may be worth a lot more than you thought. Get some tips before doing this. The amount of times I've met 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 primary 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 down to Bankruptcy, this is just one of potentially 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 need to repeat this but get some guidance on this area of Bankruptcy because it is very tricky and every single 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 talk to Bankruptcy Experts Darwin on 1300 795 575, or visit our website: www.bankruptcyexpertsDarwin.com.au.