Unpaid personal debts can put your home at risk
By Administrator 02 April, 2013
What debts can put your home at risk?
Do you have a credit card, personal loan or store credit which exceeds $5,000? If you do and you fall behind in your payments or stop making payments, any individual creditor owed $5,000 or more can petition for your bankruptcy.
How does bankruptcy affect your home?
If you are made bankrupt and you own a home, you stand to lose it. Your Bankruptcy Trustee will make an assessment on the value of your home and will establish what equity is in it. Depending on how much equity is in it, your Trustee may seek to sell it immediately. If there is little or no equity in it, then the Trustee will most likely lodge a caveat over the property and review the situation every year. What most people won’t realise is that the Trustee has six years after you have been discharged from bankruptcy (i.e. 9 years after you first became bankrupt) to realise the equity in the property and this period can be extended by the Trustee by simply writing to you before this period expires.
How can you save your home?
If you have become bankrupt and you own a home you should take immediate steps to encourage a family member or your spouse to make an offer to your Trustee. Even if the Trustee doesn’t intend to take immediate steps to sell the property (due to insufficient equity), it is best to make a commercial offer to your Trustee to resolve the matter early on in your bankruptcy. If the situation is left unattended and the equity builds up (as house prices increase) the Trustee will then obviously seek to realise the increased value.
If you have unpaid debts and they are over $5,000 don’t ignore the problem and put your house at risk. Call our bankruptcy consultants on 1800 676 598.