Wednesday, October 6th, 2010 - a1debtassistance
The idea that bankruptcy means you must lose the family home is a myth, says an Australian debt management expert, responding to fears that banks may raise interest rates even while the Reserve Bank has maintained the status quo.

Troy Eichelberger of national company A1 Debt Assistance says that the combined threat of further interest rate hikes and electricity price increases is sure to put pressure on many Australian homeowners to consider bankruptcy as an option.

“Many Australian households are experiencing financial hardship,” Mr Eichelberger says. “But the idea that bankruptcy automatically means you lose your home is a misconception.”

Mr Eichelberger says that the percentage of equity you own in the home is the deciding factor.

“If you have a mortgage that is close to 100% of the current value of your home, it’s unlikely that the Trustee will sell it as it may either incur no return or even lose money after selling costs.

“If you have some equity and the home is subject to a joint ownership, the trustee will offer the other owner, who could be your spouse, the opportunity to buy out your share of the equity.”

But he warns that the worst mistake a homeowner can make is to transfer the property into someone else’s name before going bankrupt, or selling at a reduced cost to a related party.

“Such action could be deemed bankruptcy fraud and the consequences are severe and may include a jail sentence,” Mr Eichelberger says.

“While it is not the Government’s priority to move people out of their homes if there is no equity, the Trustee will place an initial caveat over the property.

“Bankruptcy can often save your house, as it frees up your budget and allows more of your income to go back towards your mortgage. Often people hang on to their debts for too long and by the time they seek protection under the Bankruptcy Act, they have already lost everything.

“Had they understood their rights, they would not have hit rock bottom. Financial stress brings a lot of unwanted side-effects, these include general health problems due to stress resulting in a weakened immune system, depression and relationship trauma.

“If you consider bankruptcy as an option for yourself or a friend, don't try to wing it - get professional help. It is important to be advised correctly so that you are in a position to make an informed decision. Seek the help of a professional - it may be the best investment you can make for your future.”

A1 Debt Assistance offer free telephone consultations Australia wide on 1300 79 74 73 and also has free information available on www.a1debtassistance.com.au

About Bankruptcy
One should only look at bankruptcy if it is impossible to pay your bills as and when they fall due - that is when you are officially insolvent. Bankruptcy will affect your credit rating for a long time to come, but hopefully we have learned from our mistakes and credit is a thing of the past. Obtaining a fresh start can change your life. Many people are seeking bankruptcy protection on a daily basis, they may be your neighbours or friends, the point is - it is a private matter and nobody needs to know.

Contact Profile

a1debtassistance


A1 Debt Assistance is an Australian organisatio that specialises in bankruptcy services, helping individuals and small business. We service all of Australia and offer an initial free phone consultation, to establish each caller’s situation and provide them with the pros and cons of going bankrupt, based on the caller’s circumstances. In many cases we suggest alternative options free of charge.
Based in Seaford, Victoria, we prepare and complete all the documentation as required under the Bankruptcy Act on behalf of our clients from all around the country. Visit our website for more detailed information.
Troy Eichelberger
P: 1300 79 74 73
W: www.a1debtassistance.com.au

Keywords

interest rates, home loans, mortgage stress, Reserve Bank of Austrlai, Wayne Swan, treasurer

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