Tuesday, July 17, 2018

Losing your house: How much do you know about Bankruptcy in Sydney?


The primary question a lot of people have when they come to our team about Bankruptcy is usually 'Can I manage to keep my house?' and in many cases the answer is yes, you can manage to keep your house.


The only reason you can be required to sell your family home when you file for bankruptcy is actually due to the fact that you have so much equity in the house that it is deemed an asset. Please read through these simple hypothetical case studies below to get your head around Bankruptcy and how it affects houses in Australia. Remember If you need to know more regarding Bankruptcy and houses feel free to get in touch with us here at Fresh Start Solutions Sydney on 1300 818 575, or go to our website: www.freshstartsolutions.com.au/bankruptcy-Sydney.com.au

Case Study 1. (Mike & Sue Smith)

5 years ago Mike and Sue purchased a house in a mining town for $450,000. At this time the mining boom was helping keep all the property prices nice and high. Now they are needing to look at Bankruptcy because they have massive debts of $80,000 on top of their mortgage and credit card and tax debt.

They really want to keep their house but wonder if they can, they know that house prices if anything have gone down in the area in the last 5 years so to be safe they think that their home is still only worth $450,000 after all these years, to make sure they searched www.realestate.com.au/ sold section of the website to see what other homes in the streets close by have sold for lately.

Having said that they have not paid any principal of the home loan over the last 5 years, mainly just interest, so they still owe $450,000.

Current House Value = $450,000.
Current Mortgage Value = $450,000.
Net Equity Value = $0.

Because there is no equity in this property the trustee will not ask Mike and Sue to sell their home when they go bankrupt, as long as they keep up the mortgage payments then all will be well for these people for the 3 years they are in bankruptcy.

At the end of the bankruptcy period the trustee will write to them and ask if they want to take over ownership of their house again and so long as it has not increased in price over the 3 years they have been bankrupt they will be asked to make an offer to have their house back. This is typically somewhere between $3,000 and $5,000 to cover the legal costs of altering the land title deed etc.
Now let's have a look at a slightly different example of Bankruptcy and houses.

Case Study 2. (Bill & Michelle Johnson)

2 years ago Bill and Michelle bought a townhouse in a wonderful suburb of Sydney for $850,000 they tipped in $50,000 as a deposit and now the townhouse two years later is worth $900,000.

Current House Value = $900,000.
Current Mortgage Value = $800,000.
Net Equity Value = $100,000.

Due to a recent business downfall Bill is about $240,000 in debt. Michelle who does work in banking has a separate job and no other debt other than the mortgage. Bill cannot pay his debts so he is considering Bankruptcy. Michelle is worried that she too may need to file for bankruptcy or be compelled into it as a result of the house loan.

Within this particular case the trustee is required to access or get their hands on Bill's half of the equity which is $50,000 less selling costs. They can do this in a few ways; 1. Make them sell the home. 2. Invite Michelle to buy Bills half of the equity. 3. leave them in the home - but It's very unlikely with this case that the trustee would be happy to leave Bill and Michelle in the house because there is just too much equity.

So Michelle may have the chance to purchase Bill's share of the equity by coming up with $50,000 and buying out Bills' half and from that moment its now 100 % Michelle's house.

Property and Bankruptcy in Australia is confusing and complicated, these two case studies above are just the tip of the iceberg as far as your options in Sydney are concerned. 

If you need to know more about Bankruptcy and houses feel free to call us here at Fresh Start Solutions Sydney on 1300 818 575, or check out our website: www.freshstartsolutions.com.au/bankruptcy-Sydney.com.au.

Tuesday, July 25, 2017

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

Sunday, May 21, 2017

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.

Thursday, January 5, 2017

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

Tuesday, November 15, 2016

Bankruptcy in Sydney - Who exactly do I talk to?


Should I speak to my accountant about Bankruptcy?

The answer seems obvious doesn't it: if anybody knows your financial circumstance well in Sydney, It's going to be your accountant. However, the short answer is a definite No! It's not that your accountant doesn't have your best interests at heart when it comes to Bankruptcy, it's that his proficiency lie in helping you save you money at tax time, reducing your tax liability and lodging your BAS.

Most accounting degrees will put in hardly any to no time on bankruptcy, it's generally performed as a post graduate specialty program for those who want to work in the field. Unless your accountant is an insolvency specialist, he will not know that a lot about the effects of Bankruptcy, I can guarantee you insolvency specialists know much about tax returns or BAS in. If you do happen to find an insolvency accounting firm in Sydney, they have the tendency to be large firms with very nice offices who charge accordingly.

Should I talk with my Solicitor about Bankruptcy?

No! You can speak to your solicitor in Sydney but more than likely it won't do you much good. Solicitors are certainly good at doing things lawyers do, like assisting you do your Will and buying your house and keeping you out of court if you're lucky. When it relates to Bankruptcy, the specialists in Sydney normally have either a legal or accounting experience, and the main reason for that is simply that you can't enrol in the post graduate study to become a qualified insolvency practitioner until you have a law or accounting degree.
Just as there are a handful of insolvency accounting firms, there are very few insolvency legal practices in Australia, and yes if you locate one you will pay a considerable price for their expertise.

Should I speak to a financial counsellor about Bankruptcy?

Yes! There are plenty of financial counselling services to aid you through this, they have no hidden agendas and they're a marvellous option for really helping you think through your situation when it comes to Bankruptcy. If you are freaking out constantly, not sleeping, not eating or over-eating and thinking of money pressures regularly, then get some help.
There are also charitable organizations around Sydney like Lifeline that offer a fantastic service. They will be a sounding board if you just need someone to talk about with you what your possibilities are. Don't let your financial problem destroy your life - in the end it's just money.


If you would like 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

Sunday, August 7, 2016

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


When people in Sydney come to me hoping to talk about Bankruptcy, they are usually filled with questions. The internet has lots of information, but far too much of it is confusing or contradicts itself, so I make it my mission to try and make it more clear. One of the most usual problems is 'Will I lose my business if I declare bankruptcy?' The concise answer is no. If you are an owner of a business any shape or size you can maintain your business if you want to. In Sydney, businesses that eventually are insolvent have a few options for instance liquidation, voluntary administration and so on. It's people who go bankrupt not businesses.

Bankruptcy is a complex area so get some expert advice on this if you have a business. Generally speaking, the debts in a business and personal debts go hand in hand when a business owner declares bankruptcy. There are some vital implications for directors of companies when it pertains to Bankruptcy in Sydney: A bankrupt can not be a director of a company, so if you have a pty ltd company you will definitely need to retire as a director soon after you're bankrupt.

A limitation that applies when you are actually bankrupt as a business owner is that you can be in your own business as a sole trader only. Certainly there are things you will need to make known as an aspect of that but in essence you can still run your business. For some business owners, bankruptcy impacts their ability to run the business because of the licensing issues. For instance, if you run a building company, your license will be suspended once you're bankrupt and consequently you can no longer trade without that license, so make sure you are asking the ideal questions when it concerns licenses and Bankruptcy in Sydney.

Having said that if your business is not impacted directly by such issues, then you'll need to restructure the way you run your business. There are considerations when and if you go bankrupt as a business owner: you can not acquire heaps of debt in your company, then go bankrupt and after that open the doors the next day like almost nothing had happened. There are laws in place to prevent what is called phoenix companies appearing out of the ashes of an old company.

Having said that, it's just a matter of talking to the right people about Bankruptcy. Here in this circumstance you may think you need a liquidator for your business, and you might be right, but keep in mind that every liquidator is distinct and have their own motives. Liquidators profit from your liquidation - heaps of money - so what advice do you believe you will get?

When it comes to Bankruptcy, I consider that giving generic advice in this area is potentially damaging as it can have very major implications for directors and business owners. This is since it is just one of those cases where what the right guidance for one business owner is the inappropriate advice for the other. There are some fundamentals however, that you may benefit from. There is no limit to the size of the business you run while you are bankrupt. You can employ staff. You can constantly deal with your suppliers under certain conditions, the main one being you will need to meet the payment terms agreed upon.


So when it concerns Bankruptcy, don't get extremely stressed about what you can and can't do as a business owner, just get the right advice ... If you would like to learn more about what to do, exactly where to turn and what questions to ask about Bankruptcy, then feel free to get in touch with Fresh Start Solutions Sydney on 1300 818 575, or visit our website:.freshstartsolutions.com.au/bankruptcy-Sydney

Sunday, July 3, 2016

Bankruptcy in Sydney - does it matter if it is voluntary?


When it comes toBankruptcy Sydney, often people aren't aware that there may be both voluntary, and involuntary bankruptcy - both of these have distinct methods and policies.

Involuntary bankruptcy arises when somebody you owe money to involves the court to declare you bankrupt. Normally when you get one of these kinds of notices, you have 21 days to pay all the debt. If you do not, then the creditor returns to the court and asks the court to provide a sequestration order that declares you bankrupt. A trustee is selected, and then you have 14 days to get the documentation in and then you are bankrupt.

You can challenge a bankruptcy notice by going to court shortly after the 21 days have expired and put your case forward, to avoid it going to the next level. Other than the way you became bankrupt there is in fact no distinction between Involuntary Bankruptcy and or Voluntary Bankruptcy - once you are declared bankrupt, they're conducted to in the same way.

However, when it comes to Bankruptcy for this, the stress and anxiety, torment and fear that accompanies this process is incredible. If you think you are more than likely to be made bankrupt by someone, get some suggestions and act on that advice. Generally I've found it's always more ideal to know what you can and can't do before you have someone bankrupt you. Once you are bankrupt, it's usually far too late.

Voluntary Bankruptcy

On the other hand, when it comes to Bankruptcy, sometimes there are times that it is the best option. So you may have to ask yourself, 'when should I consider voluntary Bankruptcy?'.

This question is not the very same for everybody of course, but typically I find that one way you could work it out is to figure out how long it will take you to pay each one of your debts - if its longer than 3 years (the period you are declared bankrupt), then this may serve to help you make that decision, and help you to understand Bankruptcy.

Once, I had an 80 year old pensioner, who spoke to me once regarding * Bankrupcty tell me that her credit card statement calculated how long her debt would take to pay at the rate she was paying off her account, and it was 35 years! Imagine 35 years for one credit card bill.

Credit rating damage can help you think this through. If you move house and forget to pay your $30 phone bill for 6 months more, it's very likely the telephone company will default your credit file. That default will sit on your file for 5 years, so for $30 you can have your credit file very seriously damaged for that period of time - and all of this will affect how you have to approach Bankruptcy.

In many ways, the ease with which companies/credit providers can default your credit file is not fair. The punishment doesn't seem to equate to the crime in my book. So if you currently have defaults on your credit report for 5 years, keep in mind that bankruptcy is on your credit file for a total 7 years then its rubbed out completely.

So if your credit rating is a big aspect in trying to decide whether to enter into a Debt Agreement or Personal Insolvency Agreement or Bankruptcy remember they will all sit on your credit file for a total of 7 years. The biggest variation is that with a DA or PIA you repay the money and still have it on your file for 7 years.


Bankruptcy

I have talked about the word a few times now, but when it comes down to it, Bankruptcy is the biggest part, and the element most people are afraid of when they come to me to discuss their financial situation and Bankruptcy. The other side of crime and punishment equation is bankruptcy, and in this country the provisions are very generous: you can go bankrupt owing millions of dollars and after 3 years it's all finished with no strings attached. Compared to countries like the United States, our bankruptcy laws are really generous.

I don't pretend to know why that is but a few hundred years ago debtors went to prison. Nowadays I suppose the government thinks the sooner it can get you back on your feet working and paying tax, the better. It makes more sense than locking you up which in turn costs the taxpayer anyway.

Bankruptcy wipes all your debts including ATO debts with the exception of a few things:.

·         Centrelink Debts, Court Fines like parking and speeding fines.
·         HECS or Fee Help loans.
·         Money to pay for a car accident if the car was not insured.

There is far more that can be said about doing this and Bankruptcy in general but the purpose of this blog was to help you decide between a few possible options. When getting some advice, bear in mind that there are always alternatives when it involves Bankruptcy in Sydney, so do some legwork, and Good luck!


If you would like to find out more about just what to do, where to turn and what questions to ask about Bankruptcy, then don't hesitate to speak with Fresh Start Solutions Sydney on 1300 818 575, or visit our website: freshstartsolutions.com.au/bankruptcy-Sydney