Losing your house: How much do you know of Bankruptcy in Gold Coast?

The primary concern a lot of people have when they come to our company regarding Bankruptcy is certainly 'Can I keep my house?' and in many cases the truth is yes, you can keep your house.

The only reason you can be forced to sell your family home when you declare bankruptcy is because you have so much equity in the home that it is considered an asset. Please check out these straightforward hypothetical case studies below to get your head around Bankruptcy and how it impacts houses in Australia. Remember If you have to know more about Bankruptcy and houses feel free to consult with us here at Fresh Start Solutions Gold Coast on 1300 818 575, or visit our website: www.freshstartsolutions.com.au/bankruptcy-GoldCoast.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 since they have huge debts of $80,000 on top of their mortgage and credit card and tax debt.

They really wish 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 be sure they searched www.realestate.com.au/ sold section of the website to see what other homes in the streets nearby have sold for lately.

Unfortunately 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 house when they go bankrupt, as long as they keep up the mortgage payments then all will be well for them for the 3 years they are in bankruptcy.

At the end of the bankruptcy period of time the trustee will write to them and ask if they wish to take over ownership of their house again and provided that 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 purchased a townhouse in a wonderful suburb of Gold Coast 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.

As a result of a recent business failure Bill is about $240,000 in debt. Michelle who works in banking has a separate job and no other debt apart from the mortgage. Bill cannot pay his debts therefore he is looking at Bankruptcy. Michelle is bothered that she too may need to file for bankruptcy or be pushed into it because of the house loan.

With this particular case the trustee is required to access or get their hands on Bill's part of the equity which is $50,000 less selling costs. They can do this in a few ways; 1. Have them sell the home. 2. Invite Michelle to buy Bills half of the equity. 3. leave them in the home - but It's very improbable in 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 ability 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 challenging and complicated, these two case studies above are just the tip of the iceberg as far as your options in Gold Coast are concerned. If you need to know more about Bankruptcy and houses feel free to get in touch with us here at Fresh Start Solutions Gold Coast on 1300 818 575, or head to our website: www.freshstartsolutions.com.au/bankruptcy-GoldCoast.com.au.

Bankruptcy Gold Coast, Just what is the Deal with Debts?

What Debts are cleared away if I go Bankrupt?

The practical answer is that when it comes to 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) in addition to any debts arising from uninsured Motor-vehicle claims and educational debts for example, HECS or FEE-HELP. These debts are not removed 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 real security linked 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 wiped out 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 facet that, when it comes to Bankruptcy, it is necessary to get professional help - like that you can find at Fresh Start Solutions Gold Coast.

What about my Tax Debts with the ATO can they be wiped out 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 type of debts find some advice because it is not always so straightforward. Feel free to call us right here at Fresh Start Solutions Gold Coast if you have any type of questions on 1300 818 575. Or feel free to check out our website: www.freshstartsolutions.com.au/bankruptcy-GoldCoast.com.au

What about my business or Company debts?

 In some cases when it involves 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 need 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 Gold Coast we specialise in business and personal debts so call us here at Fresh Start Solutions Gold Coast if you have any questions regarding Bankruptcy on 1300 818 575. Or feel free to head to our website: www.freshstartsolutions.com.au/bankruptcy-GoldCoast.com.au

Bankruptcy, Will I lose my Superannuation?

Bankruptcy in Australia can be convoluted and perplexing. A question we often get asked here over at Fresh Start Solutions Gold Coast is 'what happens to my super if I declare Bankruptcy'? The answer for most is simple, 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, take into account the expanding number of members of Self-Managed Super Funds ("SMSFs") in recent years; the ATO tells us it has expanded 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 Fresh Start Solutions Gold Coast is not implying this short article is the complete story, if you have any questions feel free to contact us on 1300 818 575. Whether you call us or someone else it doesn't matter, just please don't walk into bankruptcy blind when it comes to your SMSF in fact we recommend you obtain both legal and financial advice before proceeding with any of the actions indicated 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 taking on bankruptcy, you will be labeled as a 'disqualified person'. And a disqualified individual cannot operate as an Individual Trustee. This poses a problem due to the fact that usually most of the SMSFs are just 2 people, which means each of these members have to also be the individual trustees. The duty of trustee presents a lot of legal rules, and if you are in this role I would highly encourage you to end up being aware of them all-- including 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 long do I have so as to restructure my SMSF Fund after I'm bankrupt?

So what comes about 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 that 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 consider, 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 frequently keeping the ATO informed of what is happening. This means 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 have 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 uncertain call Fresh Start Solutions Gold Coast for some free advice on 1300 818 575.

What if I have 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 take away 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 need to sell all assets right away and transfer the liquid assets to the managed fund.

From that 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 actually facing this concern 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 proposed earlier, a basic solution to your SMSF problem is to put your super back into a normal regulated managed fund prior to bankruptcy and save yourself all the problems outlined above. Bankruptcy is never easy, but finding proper advice is the best 1st step. If you want to discuss your options further, give us a call at Fresh Start Solutions Gold Coast or visit our website: www.freshstartsolutions.com.au/bankruptcy-GoldCoast.com.au or just give us a call on 1300 818 575.

Bankruptcy in Gold Coast - Who do I talk to?

Should I speak with my accountant about Bankruptcy?

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

Most accounting degrees will invest very little to no time on bankruptcy, it's generally done as a post graduate specialty program for those who intend to work in the field. Unless your accountant is an insolvency specialist, he won't know that a lot about the effects of Bankruptcy, I can assure you insolvency specialists know much about tax returns or BAS in. If you do manage to find an insolvency accounting firm in Gold Coast, they tend to be large firms with very nice office spaces who charge accordingly.

Should I speak to my Solicitor about Bankruptcy?

No! You can speak with your solicitor in Gold Coast but more than likely it won't do you much good. Solicitors are definitely good at doing things lawyers do, like helping you do your Will and buying your house and trying to keep you out of court if you're lucky. When it concerns Bankruptcy, the specialists in Gold Coast usually have either a legal or accounting background, and the 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 few 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 talk to a financial counsellor about Bankruptcy?

Yes! There are a lot of financial counselling services to guide you through this, they have no hidden agendas and they're an amazing option for really helping you think through your circumstance when it comes to Bankruptcy. If you are stressing constantly, not sleeping, not eating or over-eating and thinking about money pressures all the time, then get some help.

There are also charities around Gold Coast like Lifeline that offer a fantastic service. They will be a sounding board if you just need a person to go over with you what your choices are. Don't let your financial issue destroy your life - in the end it's just money.

If you like to learn more about what to do, where to turn and what questions to ask about Bankruptcy, then feel free to get in touch with Fresh Start Solutions Gold Coast on 1300 818 575, or visit our website: www.freshstartsolutions.com.au/bankruptcy-Gold Coast

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

When people in Gold Coast come to me seeking to discuss Bankruptcy, they are constantly 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 clearer. One of the very most universal problems is 'Will I lose my business if I declare bankruptcy?' The concise answer is no. If you are a manager of a company any shape or size you can keep your business if you want to. In Gold Coast, businesses that end up being insolvent have a few options for instance liquidation, voluntary administration and so on. It's individuals who go bankrupt not companies.

Bankruptcy is a complex area so get some professional advice on this one if you have a business. Generally speaking, the financial obligations in a business and personal debts go hand in hand when a business owner goes bankrupt. There are some important implications for directors of companies when it comes to Bankruptcy in Gold Coast: A bankrupt can not be a director of a company, so if you have a pty ltd company you definitely will need to resign as a director 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. There are things you have to disclose as an aspect of that but basically you can still run your company. For some business owners, bankruptcy impacts their ability to run the business because of the licensing issues. Such as, if you run a building company, your license will be suspended once you're bankrupt and as a consequence you can no longer trade without that license, so make sure you are asking the appropriate questions when it concerns licenses and Bankruptcy in Gold Coast.

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 rack up heaps of debt in your company, then go bankrupt then open the doors the next day like practically nothing had happened. There are laws in place to avoid what is called phoenix companies growing out of the ashes of an old business.

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

When it comes to Bankruptcy, I believe that giving generic advice in this area is possibly dangerous as it can have very substantial implications for directors and business owners. This is because it is one of those cases where what the right advice for one business owner is the wrong advice for the other. There are some principles however, that you may benefit from. There is no limitation to the size of the business you run even though you are bankrupt. You can employ staff. You can continue to deal with your providers 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 too uneasy about what you can and can't do as a business owner, just get the appropriate advice ... If you need to learn more about what to do, exactly where to turn and what questions to ask about Bankruptcy, then feel free to reach out to Fresh Start Solutions Gold Coast on 1300 818 575, or visit our website: www.freshstartsolutions.com.au/bankruptcy-Gold Coast

Bankruptcy in Gold Coast - does it matter if it is voluntary?

When it comes to Bankruptcy Gold Coast, often people aren't aware that there can be both voluntary, and involuntary bankruptcy - the two have different approaches and guidelines.

Involuntary bankruptcy takes place when a person you owe money to applies to the court to declare you bankrupt. Commonly when you get one of these notices, you have 21 days to pay all the debt. If you do not, then the creditor returns to the court and requests the court to issue a sequestration order that declares you bankrupt. A trustee is selected, and then you have 14 days to get the documents in and after that 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 prevent it going to the next level. Other than the way you became bankrupt there is in reality 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 method is incredible. If you think you are in all likelihood to be made bankrupt by someone, get some help 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 else bankrupt you. Once you are bankrupt, it's typically too late.

Voluntary Bankruptcy

However, when it comes to Bankruptcy, sometimes there are times that it is the most effective option. So you may need to ask yourself, 'when should I consider voluntary Bankruptcy?'.

This question is not the same for every person of course, but basically I find that one way you could work it out is to figure out just how long it will take you to pay every 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 came to me once regarding * Bankrupcty tell me that her credit card statement calculated how long her debt would take to pay at the level she was paying her account, and it was 35 years! Imagine 35 years for one credit card bill.

Credit rating damage can really 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 need 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 amount 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 difference is that with a DA or PIA you pay back the money and nevertheless have it on your file for 7 years.

Bankruptcy

I have mentioned 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 review their financial situation and Bankruptcy. The other side of crime and punishment equation is bankruptcy, and in this country the arrangements are very generous: you can go bankrupt owing millions of dollars and after 3 years it's all over with no strings attached. As compared to countries like the United States, our bankruptcy laws are extremely good.

I don't claim to know why that is but a few hundred years ago debtors went to prison. Nowadays I suppose the government believes 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 costs the taxpayer anyway.

Bankruptcy wipes all of 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 actually insured.

There is much 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 possibilities when it comes to Bankruptcy in Gold Coast, so do some research, and Good luck!

If you want to learn more about exactly what to do, where to turn and what questions to ask about Bankruptcy, then don't hesitate to consult with Fresh Start Solutions Gold Coast on 1300 818 575, or visit our website: freshstartsolutions.com.au/bankruptcy-Gold Coast

Bankruptcy in Gold Coast - Will my income be influenced if I go bankrupt?

Bankruptcy Gold Coast is a complicated process, and you should be sure you get the right suggestions. And when it comes to your income being affected, the answer to the question is maybe. The very first thing you have to know about going bankrupt is there is no restraint on how much you can earn. However, I will point out that your income is a serious consideration when working through when it comes to Bankruptcy.

The very first thing you need to know about this area of Bankruptcy is how much you can earn before you start paying back money to your creditors via your trustee (see table below).

Net income is the pre-tax/ in the hand portion you earn annually. A dependant is someone who lives with you and earns less than $3,124 per year (regardless of their age).

You can get a hardship variation that increases the threshold amount, if you have expenses in Gold Coast such as medical, child care, major travel to and from your job, or a circumstance where your spouse used to work but is not able to support the family income.

Some of the useful parts of Bankruptcy is that your employer will not be alerted when you file for bankruptcy. Also, Child support is always taken into account in bankruptcy, if you receive child support that is not factored in as income. If you pay child support this will be also thought about, for example if you pay $5,000 child support each year and you have no dependents living with you then your modified net income limit will be $55,332.10.

There are much more issues covering income and what is or isn't considered income - if you're uncertain, it's ideal to get specialist advice. The reason you need to consider your income as a part of the Big 5 questions here is that bankruptcy is in some situations not an economically viable option.

If one of your creditors is the ATO (for unpaid taxes), then your tax refund will likely be taken by the ATO whilst you are bankrupt to contribute toward your tax bill. If you don't have a tax bill then you will keep your tax refund provided that doesn't take you over your threshold income limits.

If you think when it comes to Bankruptcy, your circumstance is more complex, then please get experienced advice in Gold Coast. I may seem like a broken record, but keep in mind that it's always a good idea to work through these options prior to declaring bankruptcy, because once you have filed the paperwork it's too late to change your mind.

If you would like to learn more about what to do, where to turn and what problems to ask about Bankruptcy, then feel free to contact Fresh Start Solutions Gold Coast on 1300 818 575, or go to our website: freshstartsolutions.com.au/bankruptcy-GoldCoast