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Can I stay living in my home?

FAQs | Bankruptcy and Your House

If you are renting, you can stay in your current accommodation, just ensure that your rent is up to date.

If you own your home, you will be able to remain living in the property while the trustee undertakes his investigations to work out the circumstances that pertain to your property. As an occupation fee, the trustee will require you to keep the mortgage payments, rates, and body corporate levies up to date whilst you remain living at the property. The trustee will also lodge a caveat on title of the property to record the interest of the bankrupt estate.

The first action your trustee will take will be to document the equity which your property displays and then work out what actions will be taken regarding your property. The trustee’s actions will depend on the amount of equity your property displays.

You may be able to save your house, depending on your circumstances and the equity position of the property. We often find that the co-owner does not want to lose the house and, in these situations, we work to help the co-owner to save the house. This involves the co-owner buying the interest of the bankrupt estate in the property.

If the property has negative equity i.e. the value of the property is less than the value of the mortgage, it can be possible to save the house. Some examples of how a house with negative equity may be saved are:

the co-owner may buy out the interest of the bankrupt estate in the property for the cost of the trustee removing the caveat and work required for the trustee to transfer the interest of the bankrupt estate in the property to the co-owner.

If the property continues to have no equity throughout and after your discharge from bankruptcy, you will be able to deal with the trustee subsequent to your discharge from bankruptcy to save your home. This would involve you buying out the interest of the bankrupt estate The cost of doing this would be the cost of the trustee removing the caveat and releasing the interest of the bankrupt estate in the property.

If the property has positive equity i.e. the value of the house is more than the value of the mortgage, it is possible to save the house. Some examples of how a house with positive equity may be saved are:

the non-bankrupt co-owner may buy out the equitable interest of the bankrupt estate in the property,

if you are at retirement age you may be able to use your superannuation to buy out the equitable interest of the bankrupt estate in your property, without involving the co-owner.

If you would like to discuss your circumstances give us a call on 1300 060 122 or email helpdesk@nichollsco.com.au, we will discuss your options with you.

For further information on bankruptcy, we recommend our articles ‘Pathways to Bankruptcy – Essential Facts’, ‘Life During Bankruptcy’ and ‘The Bankruptcy Option Explained’.

Nicholls & Co have a complementary ‘help desk’ to answer your questions on bankruptcy. Call Nicholls & Co on 1300 060 122 or email helpdesk@nichollsco.com.au

Alan Nicholls - Registered Trustee

Alan Nicholls’ no obligation help desk

Nicholls & Co provide a free, no obligation ‘help desk’ for people considering bankruptcy – we discuss and explain bankruptcy and answer questions for anyone who is considering bankruptcy. The Nicholls & Co help desk can be accessed by phone  
1300 060 122  or helpdesk@nichollsco.com.au . Alan Nicholls, Registered Trustee in Bankruptcy is also available to answer your questions to enable you to decide if bankruptcy is right for you.