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VIC Declaring Bankruptcy - Will I Lose the House?

Discussion in 'Debt and Bankruptcy Law Forum' started by Michael Lu, 12 August 2014.

  1. Michael Lu

    Michael Lu Member

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    Currently I am in debt of $70k to various creditors. I am thinking of declaring bankruptcy as this is my only option.

    My wife and I have a house. The deed of title is under her name and the property was purchased by my wife a year prior to us getting married. The property is being used as in property investment and all rent money go into her bank account. We do not have a joint bank account either.

    What I want to know is if I declare bankruptcy, are we likely to lose our home as well? Considering that my name is not on the deed nor do I have the mortgage with the bank.

    Thank you
     
  2. michael cousins

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    just declare insolvency declaring bankruptcy cpmes with a lot of draw backs can't get a tax return for 7 years cant travel overseas
     
  3. Sarah J

    Sarah J Well-Known Member

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    Hi Michael L,

    Bankruptcy is governed by the Bankruptcy Act 1966 (Cth). Once a person declares bankruptcy, the bankruptcy trustee (acting on behalf of creditors) has access to property under Section 116 of the Bankruptcy Act. Section 116 also lists "exempted property" which are protected from creditors.

    In short, your family home (or place of residence) is not protected from creditors.

    Items that are protected from creditors include:
    - Certain "essential" household items;
    - Personal property that has sentimental value (eg. engagement ring, family heirloom);
    - Tools of the trade, use to earn an income;
    - Vehicle less than a certain indexed amount;
    - Property not belonging to yourself (eg. trust property);
    - Social allowances (eg. Centrelink payments);
    - Superannuation;
    - Money that is compensation for personal injury or other judgment.

    Here is a guide from the Victorian Legal Aid on bankruptcy that will clarify the situation for you. This Legal Resources Book from NSW may also be helpful for further guidance.

    I agree with Michael C. above and suggest exploring insolvency before voluntarily declaring yourself bankrupt.
     
  4. Michael Lu

    Michael Lu Member

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    Thanks for the information Sarah.

    I am unable to repay these debts as I have been unemployed for a year now.

    I don't understand how they can take away the house even though the title of deeds is under my wife's name and I the property was purchased by her prior to us
    being married.

    I will contact legal aid and clarify on this issue.
     
  5. Michael Lu

    Michael Lu Member

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    Sorry just wanted to clarify the property is not under my name and my previous income did not contribute to mortgage repayments. My wife purchased the property with her own money and repaying mortgage from her own bank account.
     
  6. michael cousins

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    Michael insolvency is the way you will get out of debit ive been there before they will contact your creditors and arrange payment plan for about 5 years i think and they pretty much have to accept what you can pay set out by the insolvency agents i seriously suggest you do this
     
  7. Sarah J

    Sarah J Well-Known Member

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    Hi Michael L,

    If the house is under your wife's name, then the trustee will generally have no claim to it. Meaning, unless the creditors can make out that you have some sort of beneficial interest in the house (or any other of your wife's property), they cannot access it. Creditors can only access property/assets that belong to you, either legally or beneficially.
     
  8. Michael Lu

    Michael Lu Member

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    Thank you M. Cousins.

    Are you referring to personal insolvency or debt agreement? I have looked at cons and pros of a debt agreement. I do know you would have to pay back within 5 years but your record stay on the national system for 7 years.
     

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