Bankruptcy Mackay, So what is the Deal with Debts?

Which Debts are cleared away if I go Bankrupt?

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

But, simply put 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 such as 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 genuine 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 erased 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 could be wiped but the asset will need to be sold or returned. This is just one aspect that, when it comes to Bankruptcy, it is necessary to get professional advice - like that offered at Bankruptcy Experts Mackay.

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 erased with bankruptcy. If you have a business with any sort of debts find some advice because it is not always so self-explanatory. Feel free to call us right here over at Bankruptcy Experts Mackay if you have any type of questions on 1300 795 575. Or feel free to go to our website: www.bankruptcyexpertsMackay.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 have to liquidate a company to deal with the debt that 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 Mackay we specialise in business and personal debts so contact us here at Bankruptcy Experts Mackay if you have any questions about Bankruptcy on 1300 795 575. Or feel free to visit our website: www.bankruptcyexpertsMackay.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 Mackay is 'what happens to my super if I file for Bankruptcy'? The reply for most is straightforward, if your super is probably in a regulated fund or industry fund like Sunsuper or Host Plus then 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") 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 down to Bankruptcy?

Remember Bankruptcy Experts Mackay is not proposing this article 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 does not matter, just please don't walk into bankruptcy blind when it comes to your SMSF indeed we advise you ask for 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 thinking about Bankruptcy, you can not be a part of a SMSF. Why? Because if you are facing bankruptcy, you will be categorized 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 the two of these members have to 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 encourage you to become knowledgeable about them all-- including 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 rather damaging 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 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 whole structure and see to it that it is meeting the basic conditions, including things like having a new trustee that is not experiencing issues with Bankruptcy. The Australian Tax office will offer you a 6 month 'grace period' to get this done before you face penalties. And keep in mind, sometimes the absolute 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 indicates 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 have 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 Mackay 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 responsibility 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 choose to remain as a single member SMSF, or if they intend to roll it all 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 when one single member is running into issues, it can affect the very existence of an SMSF. If you are currently facing this trouble yourself, or with a partner in a SMSF, please seek financial advice to make certain you are meeting the ATO requirements.

A simple solution ...

As I suggested earlier, a simple solution to your SMSF issue 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 possibilities further, call us at Bankruptcy Experts Mackay or visit our website: www.bankruptcyexpertsMackay.com.au or just give us a call on 1300 795 575.

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

Bankruptcy Mackay is a complicated process, but I know from meeting with thousands facing the likelihood of bankruptcy over the years, that almost nothing troubles people more than the idea of losing the family house. Almost every person is on an emotional level 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 answer is a resounding maybe. (not very helpful, I know) People generally think 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 benefit 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 Mackay 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 more clear picture.

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

Within that regulatory framework, the trustee is to help recuperate 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 over and above your income threshold. The further role is to sell off any assets that can contribute to paying your debts.

What this seems like is that yes the trustee will sell your house right? Not necessarily. The only reason the trustee will sell any asset including your house is to get money to pay back your debts. If there is no equity in your house then it's pointless to sell your home. This is happening much more since the GFC as house prices in many locations have been heading south so what you paid 4 years ago may not always reflect the price today.

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

You might wonder, why would the bank want bankrupt clients? 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, provided you keep up to date with your monthly payments then the bank wants you in there at all costs. Ultimately however it's not the bank's call if the trustee figures out 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 make a note of the value of your house and the amount of money you owe on the house. A tip if you are aiming 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 tips or a real estate agents advice to get to this figure. When you get a valuer out to your home, make certain 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 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 the house in the next 30 days you may sway the result. The idea is that you want a reasonable sell now figure.

There are two reasons this valuation technique is critical to you: one you are going to have peace of mind ascertaining the market value of your house, then afterwards you can easily establish your equity position. Secondly, your house may be really worth far more than you thought. Get some advice before doing this. The amount of times I've met with clients that have sold their family home of 20 years simply to learn I could of helped them keep it; unfortunately this happens all too often

When it concerns Bankruptcy and houses, another notable consideration is ownership, in most cases 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 comes down to Bankruptcy, this is just one of probably numerous scenarios that are likely when it comes to the family home. Bear in mind the non-bankrupt party can buy the bankrupt's portion of the house in bankruptcy also. I need to repeat this but get some advice 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 speak with Bankruptcy Experts Mackay on 1300 795 575, or visit our website: www.bankruptcyexpertsMackay.com.au.