Bankruptcy Melbourne, Just what is the Deal with Debts?

Which Debts are eliminated if I go Bankrupt?

The straightforward answer is that when it comes to Bankruptcy most debts are wiped, and I have included a chart 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 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 vehicle loan or a home loan; it is a debt that has some absolute security linked to it. So for example 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 eliminated if I file for bankruptcy?

Yes. If you have a car loan for $40,000 you can have that debt cleared away 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 has to be sold or returned. This is just one part that, when it comes to Bankruptcy, it is essential to get professional help - like that offered at Fresh Start Solutions Melbourne.

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 cleared away 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 here at Fresh Start Solutions Melbourne if you have any type of questions on 1300 818 575. Or feel free to check out our website: www.freshstartsolutions.com.au/bankruptcy-Melbourne.com.au

What about my business or Company debts?

Sometimes when it involves Bankruptcy we can aid you with your business debts, call us about this first. Remember bankruptcy applies to an individual not companies, trusts or businesses. Normally you may have to liquidate a company to deal with the debt that 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 Fresh Start Solutions Melbourne we specialise in business and personal debts so give us a call here at Fresh Start Solutions Melbourne if you have any questions about Bankruptcy on 1300 818 575. Or feel free to check out our website: www.freshstartsolutions.com.au/bankruptcy-Melbourne.com.au

Bankruptcy, Will I lose my Superannuation?

Bankruptcy in Australia can be involved and perplexing. A question we often get asked here over at Fresh Start Solutions Melbourne is 'what happens to my super if I file for Bankruptcy'? The reply for most is simple, if your super is normally in a regulated fund or industry fund like Sunsuper or Host Plus then absolutely 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, take into consideration the expanding number of members of Self-Managed Super Funds ("SMSFs") lately; 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 concerns Bankruptcy?

Remember Fresh Start Solutions Melbourne is not indicating this short article is the complete story, if you have any questions feel free to get in touch with 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 suggest you look 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 coping with bankruptcy, you will be grouped 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 must also be the individual trustees. The position of trustee poses a lot of legal rules, and if you are in this role I would highly encourage you to end up being 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 very destructive to a SMSF and as you can imagine 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 takes place 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 have to consider your over-all 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 supply 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 frequently keeping the ATO informed of what is happening. This means you ought 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 Melbourne 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 be their responsibility to oversee the sale and transfer of assets into a managed fund. If there are two or more members, than the bankrupt member will need to resign and the other member will take away the property and halve the proceeds. They would then have to decide if they wish 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 transfer the liquid assets to the managed fund.

From that you can notice how when it comes to Bankruptcy, even when one single member is dealing with issues, it can affect the very existence of an SMSF. If you are right now facing this matter yourself, or with a partner in a SMSF, please seek financial advice to make sure you are fulfilling the ATO requirements.

A simple solution ...

As I suggested earlier, a simple solution to your SMSF situation is to put your super back into a normal regulated managed fund before bankruptcy and save yourself all the frustrations outlined above. Bankruptcy is never easy, but receiving proper advice is the best initial step. If you want to discuss your options further, contact us at Fresh Start Solutions Melbourne or visit our website: www.freshstartsolutions.com.au/bankruptcy-Melbourne.com.au or just give us a call on 1300 818 575.

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

Bankruptcy Melbourne is a complex process, but I know from meeting with thousands facing the prospect of bankruptcy over the years, that nothing worries people more than the thought of losing the family house. Almost everybody is psychologically connected to their home - it's where the children have grown up, it's where you enjoy life on a day to day basis.

Will you lose your home if you go bankrupt? The solution is a resounding maybe. (not very helpful, I know) People typically assume it's an inevitable consequence and a part of Bankruptcy, and therefore 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 agreed to pay back the debt you are in.

So how is it possible to keep my Melbourne house, you ask? It's easier if I explain the basic theory behind the Bankruptcy process as administered by the trustee, then you'll have a more clear image.

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

Within that regulatory framework, the trustee is to help recuperate monies owed to your creditors, that is executed in a bunch of diverse 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 repaying 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 repay 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 regions have been heading south so what you paid 4 years ago may not automatically reflect the price today.

A quick word of advice here if you have a house in Melbourne and are looking at Bankruptcy: get an expert to help you through this process, there are plenty of variables in these scenarios that need 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 nicely lent you the money for your house is earning good money every month in interest out of you, month in month out, so long as you keep up to date with your monthly payments then the bank desires you in there at all costs. Essentially however it's not the bank's call if the trustee establishes 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 put down the value of your house and the level 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 give you peace of mind, don't use your neighbours' gut feel recommendations or a real estate agents advice to get to this figure. When you get a valuer out to your property, make sure you tell the valuer to value the property for a quick sale, make sure 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 sensitive sale. These days 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 real sell now figure.

There are two reasons this valuation system is critical to you: one you will likely have peace of mind ascertaining the market value of your house, and then you can easily build your equity position. The second thing is, your property may be really worth so much more than you thought. Get some guidance before doing this. The number of times I've met with clients that have sold their family home of 20 years simply to find out I could of helped them keep it;

 unfortunately this happens all too often

When it concerns Bankruptcy and houses, another main consideration is ownership, often houses are bought 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 involves Bankruptcy, this is just one of possibly numerous scenarios that are likely when it relates to the family home. Bear in mind the non-bankrupt party can buy the bankrupt's portion of the property in bankruptcy also. I have 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 wish 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 Melbourne on 1300 818 575, or visit our website: www.freshstartsolutions.com.au/bankruptcy-Melbourne