Help please: Bankruptcy and saving my house

[smileyface]

For example, if you owe $500k, but you have only 70k net assets, offer them say 200k contributed by your wife to stop bankruptcy and 'do a deal'.

Okay debt is $320k... do you think the ATO would do a deal for $70k?

 

[Wunderbar]

haha the ATO - always the last one to get paid! They might do a deal - it's in taxpayer's interests that they do. I guess you just gotta play poker with them and say 'this is all I got, if u don't take it you get nothing anyway'.

 

[smileyface]

If the wife were to purchase the house at market value it would be, probably, ok. The family would get to keep the price. The funds the wife paid to the husband would go to discharging the husband's mortgage to the bank and the rest would be available to creditors.

That all sounds right to me, after all if my wife were paying proper market rates for the house, then I'd have $70k (minus fees) to pay creditors.

The issue with that is, my wife doesn't work, and wouldn't qualify for $550,000 in loans, especially not at the LVR it sits at at the moment. The only viable way I see for us to keep them is to keep the title and loan in my name.. Just have to find an agreeable trustee that sees it that way and not the one I have currently been speaking to.

 

[Terryw]

If the loan is to be in her name, the title has to be in her name too. It's standard bank protocol because it's part of their responsible lending i.e. the person borrowing the money has to have an interest (i.e. ownership) of the property.

Banks will allow title in one name but both spouses on title. But, I doubt they would want to allow things to change now, especially if they think one of the borrowers is going bankrupt.

 

[Terryw]

That all sounds right to me, after all if my wife were paying proper market rates for the house, then I'd have $70k (minus fees) to pay creditors.

The issue with that is, my wife doesn't work, and wouldn't qualify for $550,000 in loans, especially not at the LVR it sits at at the moment. The only viable way I see for us to keep them is to keep the title and loan in my name.. Just have to find an agreeable trustee that sees it that way and not the one I have currently been speaking to.

I made a spelling mistake in the quote - I meant the family would get to keep the place (not price).

 

[Terryw]

haha the ATO - always the last one to get paid! They might do a deal - it's in taxpayer's interests that they do. I guess you just gotta play poker with them and say 'this is all I got, if u don't take it you get nothing anyway'.

The ATO doesn't usually turn up at creditor meetings - they have too many to attend to them all. If they are not there then they can't vote, and other creditors may control the meeting.

 

[Wunderbar]

Yes but at the very least they would/should be aware as to what's on offer

 

[Terryw]

You see smileyface - if you really want to keep the house, and you are certain that your wife/family/friends have enough money to bail you out, then you can do a Part X arrangement. This means that you avoid bankruptcy as third parties will contribute and pay off some of the debt for you, and the creditors promise to leave you alone. For example, if you owe $500k, but you have only 70k net assets, offer them say 200k contributed by your wife to stop bankruptcy and 'do a deal'.

That way everybody wins - creditors get 200k (rather than only 70k), you keep the house and you avoid bankruptcy (although Part Xs are still on your credit history)

The reason why it can't be your wife registering an interest is because it becomes a related party transaction and it looks very dodgy....it's better if it's a bit more removed from you.

This may be a way out of the mess. Part IX Debt Agreement

 

[smileyface]

This may be a way out of the mess. Part IX Debt Agreement

I thought I read somewhere that Part 9 under law only caters to debts up to $88,000. I have no idea where I saw that though.

 

[Wunderbar]

Er since his debt is $320k - it surpasses the maximum threshold for a Part IX (which is around 45k)

 

[smileyface]

[ATO] might do a deal - it's in taxpayer's interests that they do.

The ATO doesn't usually turn up at creditor meetings - they have too many to attend to them all.

What is this meeting specifically and who sets it up? If you're trying to do a deal, is there someone better to call than just calling your creditors directly?

Thanks again for the knowledge, it's really appreciated.

 

[Wunderbar]

Communicate with your trustee. He'll know what to do

 

[smileyface]

Communicate with your trustee. He'll know what to do

Trying to find a good one that I don't have to teach along the way

 

[Ausprop]

what is the nature of the ATO debt? you owe it personally or is thru an entity? is it PAYG or GST or...?

 

[smileyface]

what is the nature of the ATO debt? you owe it personally or is thru an entity? is it PAYG or GST or...?

It's personal income tax. I'm personally insolvent, not a company.

 

[pennyk]

The way I see it, the bankruptcy trustee shouldn't be interested in the houses at all, only the equity, so if someone comes along and pays him $70k instead, then why should he care what happens to the house/title/loan?
.

Because then they get all the money from the proceeds.

My understanding is you could only transfer them to your wifes name if she paid the full amount for them... not just the equity.

Its a significant sized debt, and unless you can come to an agreement with the ATO for a payment plan, then I dont see that you have alot of choices than to sell the houses (and any other saleable assets you own........ cars etc)

I also think you need to really understand how you got into the situation, so you can avoid a similar thing happening in the future.

Hope you are able to find a solution.

 

[pennyk]

Trying to find a good one that I don't have to teach along the way

I find this comment a bit strange...... you've got yourself into a situation of being bankrupt by not paying tax, and you are able to tell a trustee, who is likely to have significant levels of training/ experience what they should be doing.

I'm not being judgemental ........ I have also had to enter an agreement with ATO to pay off tax over a period of time, but are you really being honest with yourself about this situation?

 

[ianvestor]

I think what smiley was saying is something that applies to many professions... let's take property managers for example: They don't all think alike and they don't all know 100% of what it takes to be a good PM, so sometimes you need to take what's good from one PM and 'teach' it to another so that you get all the expertise you require being carried out by just one person.

 

[Ausprop]

the insolvency profession are a breed of their own. they dont give a stuff about creditors or anybody else, it's a simple business case of how much fees can be generated for themselves within the confines of the law (and paid for). sadly most things are - the best example being the medical industry... it is an industry not a benevolent institution

as for insolvency industry, it's one of the few things that I think should not be privatised

Smiley therefore has a right to be skeptical - he is taking on an adversary in a game where everyone is in it for themselves and in it for the kill.

 

[bluestorm]

I say just suck it up, and pay up (eventually). Too many people take the easy way out, and declare bankruptcy, and avoid their obligations.
Get a 2nd, 3rd job, sell all your other assets.

It's personal income tax. I'm personally insolvent, not a company.

So you rorted on your taxes, and now you have to pay up?? Is that correct?