Bankruptcy Sydney, So what is the Deal with Debts?

So what Debts are removed if I go Bankrupt?

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

But, simply put 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 car loan or a home loan; it is a debt that has some definite 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 cleared away if I file for bankruptcy?

Yes. If you have a car loan for $40,000 you can have that debt removed 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 necessary to get professional assistance - like that offered at Fresh Start Solutions Sydney.

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 get some advice because it is not always so self-explanatory. Feel free to call us here at Fresh Start Solutions Sydney if you have any type of questions on 1300 818 575. Or feel free to check out our website: www.freshstartsolutions.com.au/bankruptcy-Sydney.com.au

What about my business or Company debts?

Sometimes when it concerns 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. Generally 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 Fresh Start Solutions Sydney we specialise in business and personal debts so contact us here at Fresh Start Solutions Sydney if you have any questions about Bankruptcy on 1300 818 575. Or feel free to go to our website: www.freshstartsolutions.com.au/bankruptcy-Sydney.com.au

Bankruptcy, Will I lose my Superannuation?

Bankruptcy in Australia can be convoluted and difficult to understand. A question we commonly get asked here at Fresh Start Solutions Sydney is 'what happens to my super if I file for Bankruptcy'? The answer for most is easy, if your super is actually in a regulated fund or industry fund like Sunsuper or Host Plus then 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 into the developing number of members of Self-Managed Super Funds ("SMSFs") over the last few years; 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 concerns Bankruptcy?

Remember Fresh Start Solutions Sydney is not proposing this article is the entire story, if you have any questions feel free to contact us on 1300 818 575. 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 strongly recommend you seek both legal and financial advice before proceeding with any of the actions suggested 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 going up against bankruptcy, you will be categorized as a 'disqualified person'. And a disqualified person 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 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 recommend you to be 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 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 once I'm bankrupt?

So what comes to pass 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 over-all structure and ensure that it is meeting the basic conditions, involving 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 consider, sometimes the absolute 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 means you will 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 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 unsure call Fresh Start Solutions Sydney for some free advice on 1300 818 575.

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 become their obligation 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 want to decide if they would like 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 at once and move the liquid assets to the managed fund.

From that 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 right now facing this issue 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 suggested earlier, a basic 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 finding proper advice is the best 1st step. If you want to discuss your options further, call us at Fresh Start Solutions Sydney or visit our website: www.freshstartsolutions.com.au/bankruptcy-Sydney.com.au or just give us a call on 1300 818 575.

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

Bankruptcy Sydney is a difficult to understand process, but I know from meeting with thousands facing the chance of bankruptcy over the years, that almost nothing worries people more than the idea of losing the family home or apartment. Almost everyone is emotionally connected to their home - it's where the children have grown up, it's where you take pleasure in life on a day to day base.

Will you lose your house if you go bankrupt? The solution is a resounding maybe. (not very useful, I know) People typically think 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 strength 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 Sydney 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 clearer picture.

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 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 any assets that can contribute to fixing your debts.

What this seems like is that yes the trustee will sell your house right? Not always. 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 in your house then it's pointless to sell your home. This is happening increasingly more since the GFC as house prices in many regions have been heading south so what you paid 4 years ago may not necessarily reflect the price today.

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

You might wonder, why would the bank want bankrupt clients? wouldn't they hope to sell your house and not take the risk? The bank that has kindly lent you the money for your house is generating good money every month in interest out of you, month in month out, provided that you keep up to date with your fees then the bank really wants you in there at all costs. Ultimately however it's not the bank's call if the trustee establishes 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 note the value of your house and the level 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 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 home, ensure that 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 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 tell them you need to sell the house in the next 30 days you may sway the result. The idea is that you want a sensible 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 create your equity position. Secondly, your property may be worth so much more than you thought. Get some advice before doing this. The amount of times I've met 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 comes to Bankruptcy and houses, another notable consideration is ownership, in most cases 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 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 hundreds of scenarios that are likely when it relates 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 assistance 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 contact Fresh Start Solutions Sydney on 1300 818 575, or visit our website: www.freshstartsolutions.com.au/bankruptcy-Sydney