Did you know your family home could be at risk if you have ANY unpaid personal debts which exceed $5,000?
It is so easy to get into debt these days and if you let your debts get out of control you could put your family home or other personal assets at serious risk. All it takes is a credit card, personal loan or a store credit which you haven’t paid and any one of your creditors could petition for your bankruptcy (if the individual debt exceeds $5,000).
Therefore unpaid debts should never be ignored particularly if they exceed $5,000. If you have any unpaid debts you need to make immediate arrangements with your creditors to protect your family home or other personal assets. If you ignore your unpaid debts the greatest risk is that you couldlose everything, including your family home or other personal assets through bankruptcy.
Personal bankruptcy, whether voluntary or forced by a creditor, is probably the worst case scenario for anyone with unpaid debts. Despite this, bankruptcy is relatively common. In the financial year to 2012 there were 22,163 bankruptcies recorded in Australia. (source: AFSA).
If you are like most Australians the two largest investments you have is your family home and superannuation. In most circumstances superannuationis a protected asset in bankruptcy (unless you have made some large or unusual contributions prior to bankruptcy) but the equity in the family home isnot protected if you are made bankrupt. This means that in the worst case scenario and you are made bankrupt, your Bankruptcy Trustee will realize(sell) the equity in your family home.
There are some exceptions of course. If the property is jointly owned it is possible in some circumstances, to sell the bankrupt’s share in the property to the non-bankrupt spouse. If this can be achieved then perhaps the family home can be saved. If you are considering bankruptcy and wish to save the family home then call us now.
If it is not possible to keep the family home, then of course it will need to be sold. The bankrupt’s equity in the house will be paid into the bankrupt estate and distributed to creditors by the Trustee in Bankruptcy.
The best way to save your family home would be to avoid bankruptcy altogether. Here at Get Debt Free we have helped hundreds of people save the family home by avoiding personal bankruptcy. Avoiding bankruptcy can be achieved by entering into a Debt Agreementor a Personal Insolvency Agreement .