Using bankruptcy to escape debt?

[Travis Morien]

kelly_7_21@hotmail.com (Kelly) wrote in message news:<9d09917e.0411092340.5a70cb69@posting.google.com>...
> Hi
>
> A few years ago i went into business with my parents. Unfortunately
> the business has collapsed and has left us with a $150,000 bank loan
> which we are no longer able to service. My parents are on the pension
> and i only work part time.
>
> We are considering whether it is worth declaring bankruptcy. We arent
> concerned about hurting our credit rating because none of us envisage
> borrowing money for a long time. However i'm worried because i share
> ownership of my home with my husband. My parents own their home. Would
> bankruptcy take our houses?

Get advice from an accountant. The consequences of bankruptcy are
more far reaching than you may realise.

Bankruptcy could cost you your houses, it depends on how they are
owned and who owes the money.

Do you now have negative equity in your homes?

Bankruptcy should generally be avoided, if possible it may be
preferable merely to sell the homes and pay off the loan. If you
declare bankruptcy you'll almost certainly lose the houses anyway.

Travis
www.travismorien.com

[cc]

Travis Morien wrote:
> kelly_7_21@hotmail.com (Kelly) wrote in message news:<9d09917e.0411092340.5a70cb69@posting.google.com>...
>
>>Hi
>>
>>A few years ago i went into business with my parents. Unfortunately
>>the business has collapsed and has left us with a $150,000 bank loan
>>which we are no longer able to service. My parents are on the pension
>>and i only work part time.
>>
>>We are considering whether it is worth declaring bankruptcy. We arent
>>concerned about hurting our credit rating because none of us envisage
>>borrowing money for a long time. However i'm worried because i share
>>ownership of my home with my husband. My parents own their home. Would
>>bankruptcy take our houses?
>
>
> Get advice from an accountant. The consequences of bankruptcy are
> more far reaching than you may realise.
>
> Bankruptcy could cost you your houses, it depends on how they are
> owned and who owes the money.
>
> Do you now have negative equity in your homes?
>
> Bankruptcy should generally be avoided, if possible it may be
> preferable merely to sell the homes and pay off the loan. If you
> declare bankruptcy you'll almost certainly lose the houses anyway.

I seem to recall some scam a while ago where lawyers would
declare bankruptcy every X years for taxation reasons.

[Vaughan Williams]

"Kelly" <kelly_7_21@hotmail.com> wrote in message
news:9d09917e.0411092340.5a70cb69@posting.google.c om...

> We are considering whether it is worth declaring bankruptcy. We arent
> concerned about hurting our credit rating because none of us envisage
> borrowing money for a long time. However i'm worried because i share
> ownership of my home with my husband. My parents own their home. Would
> bankruptcy take our houses?

Yes.

[Tom N]

cc wrote:

> I seem to recall some scam a while ago where lawyers would
> declare bankruptcy every X years for taxation reasons.

IIRC, they had no assets in their names, and weren't paying income taxes.
When the ATO issued an order to pay that they couldn't delay or get out of,
they just went bankrupt to avoid paying.

[savgoose]

http://www.fredappleton.com.au/


Kelly <kelly_7_21@hotmail.com> wrote in message
news:9d09917e.0411092340.5a70cb69@posting.google.c om...
> Hi
>
> A few years ago i went into business with my parents. Unfortunately
> the business has collapsed and has left us with a $150,000 bank loan
> which we are no longer able to service. My parents are on the pension
> and i only work part time.
>
> We are considering whether it is worth declaring bankruptcy. We arent
> concerned about hurting our credit rating because none of us envisage
> borrowing money for a long time. However i'm worried because i share
> ownership of my home with my husband. My parents own their home. Would
> bankruptcy take our houses?
>
> Thanks
> Kelly

[Travis Morien]

travismorien@yahoo.com (Travis Morien) wrote in message news:<2efc0b72.0411100334.24673616@posting.google.com>...
> kelly_7_21@hotmail.com (Kelly) wrote in message news:<9d09917e.0411092340.5a70cb69@posting.google.com>...
> > Hi
> >
> > A few years ago i went into business with my parents. Unfortunately
> > the business has collapsed and has left us with a $150,000 bank loan
> > which we are no longer able to service. My parents are on the pension
> > and i only work part time.
> >
> > We are considering whether it is worth declaring bankruptcy. We arent
> > concerned about hurting our credit rating because none of us envisage
> > borrowing money for a long time. However i'm worried because i share
> > ownership of my home with my husband. My parents own their home. Would
> > bankruptcy take our houses?
>
> Get advice from an accountant. The consequences of bankruptcy are
> more far reaching than you may realise.
>
> Bankruptcy could cost you your houses, it depends on how they are
> owned and who owes the money.
>
> Do you now have negative equity in your homes?
>
> Bankruptcy should generally be avoided, if possible it may be
> preferable merely to sell the homes and pay off the loan. If you
> declare bankruptcy you'll almost certainly lose the houses anyway.
>
> Travis
> www.travismorien.com

By the way, you'll find good information on bankruptcy at
www.itsa.gov.au, including the amount of income a bankrupt can earn
during the period of bankruptcy before the excess gets skimmed off by
the trustee in bankruptcy, what assets are protected (not many) and
other things.

Travis
www.travismorien.com

[mindesign]

yes you run the very real risk of losing your homes


....and no offence intended, but why shouldn't you? the people who extended
you the credit at your (probable) ongoing requests are not responsible for
your inability to run your business.

losing a business is a very sad thing, but taking people's money and not
having the required skills/motivation to use it wisely is a bigger one


Steve



"savgoose" <savgoose@tpg.com.au> wrote in message
news:41921be3@dnews.tpgi.com.au...
> http://www.fredappleton.com.au/
>
>
> Kelly <kelly_7_21@hotmail.com> wrote in message
> news:9d09917e.0411092340.5a70cb69@posting.google.c om...
>> Hi
>>
>> A few years ago i went into business with my parents. Unfortunately
>> the business has collapsed and has left us with a $150,000 bank loan
>> which we are no longer able to service. My parents are on the pension
>> and i only work part time.
>>
>> We are considering whether it is worth declaring bankruptcy. We arent
>> concerned about hurting our credit rating because none of us envisage
>> borrowing money for a long time. However i'm worried because i share
>> ownership of my home with my husband. My parents own their home. Would
>> bankruptcy take our houses?
>>
>> Thanks
>> Kelly
>
>

[Kelly]

Hi

A few years ago i went into business with my parents. Unfortunately
the business has collapsed and has left us with a $150,000 bank loan
which we are no longer able to service. My parents are on the pension
and i only work part time.

We are considering whether it is worth declaring bankruptcy. We arent
concerned about hurting our credit rating because none of us envisage
borrowing money for a long time. However i'm worried because i share
ownership of my home with my husband. My parents own their home. Would
bankruptcy take our houses?

Thanks
Kelly

[Chad Sexington]

What was the business ?

"Kelly" <kelly_7_21@hotmail.com> wrote in message
news:9d09917e.0411092340.5a70cb69@posting.google.c om...
> Hi
>
> A few years ago i went into business with my parents. Unfortunately
> the business has collapsed and has left us with a $150,000 bank loan
> which we are no longer able to service. My parents are on the pension
> and i only work part time.
>
> We are considering whether it is worth declaring bankruptcy. We arent
> concerned about hurting our credit rating because none of us envisage
> borrowing money for a long time. However i'm worried because i share
> ownership of my home with my husband. My parents own their home. Would
> bankruptcy take our houses?
>
> Thanks
> Kelly

[Sylvia Else]

Kelly wrote:

> Hi
>
> A few years ago i went into business with my parents. Unfortunately
> the business has collapsed and has left us with a $150,000 bank loan
> which we are no longer able to service. My parents are on the pension
> and i only work part time.
>
> We are considering whether it is worth declaring bankruptcy. We arent
> concerned about hurting our credit rating because none of us envisage
> borrowing money for a long time. However i'm worried because i share
> ownership of my home with my husband. My parents own their home. Would
> bankruptcy take our houses?

Yes, if that's what it takes to pay back the loan. Bankruptcy is not
just a way of wiping the slate clean debtwise, otherwise everyone would
be doing it.

Sylvia.

[Lionheart]

"Kelly" <kelly_7_21@hotmail.com> wrote in message
news:9d09917e.0411092340.5a70cb69@posting.google.c om...
> Hi
>
> A few years ago i went into business with my parents. Unfortunately
> the business has collapsed and has left us with a $150,000 bank loan
> which we are no longer able to service. My parents are on the pension
> and i only work part time.
>
> We are considering whether it is worth declaring bankruptcy. We arent
> concerned about hurting our credit rating because none of us envisage
> borrowing money for a long time. However i'm worried because i share
> ownership of my home with my husband. My parents own their home. Would
> bankruptcy take our houses?
>
> Thanks
> Kelly

Almost certainly you will lose your share of homes and other substantial
holding you may have. Bankruptcy means you are insolvent/unable to pay your
way under current circumstances

[Phil Herring]

Tom N <me@privacy.net> wrote in message news:<Xns959E3849B8Endt601946x@130.133.1.4>...

> IIRC, they had no assets in their names, and weren't paying income taxes.
> When the ATO issued an order to pay that they couldn't delay or get out of,
> they just went bankrupt to avoid paying.

The exta step that they took was to get a family court order to pay
their entire income to their partner. At the time, bankruptcy law
didn't allow such payments to be garnished, so the barrister kept
paying 100% of their income to the wife, and the ATO got nothing.

I believe that this loophole is now closed.


-- Phil

[Peter]

On 10 Nov 2004 15:49:48 -0800, phil_herring@yahoo.com.au (Phil
Herring) wrote:

>Tom N <me@privacy.net> wrote in message news:<Xns959E3849B8Endt601946x@130.133.1.4>...
>
>> IIRC, they had no assets in their names, and weren't paying income taxes.
>> When the ATO issued an order to pay that they couldn't delay or get out of,
>> they just went bankrupt to avoid paying.
>
>The exta step that they took was to get a family court order to pay
>their entire income to their partner. At the time, bankruptcy law
>didn't allow such payments to be garnished, so the barrister kept
>paying 100% of their income to the wife, and the ATO got nothing.
>
>I believe that this loophole is now closed.
>
Interesting it was a barrister. A solicitor declared bankrupt would
either stop practicing or convince the Law Society that his future
area of practice would have nothing to do with money or trust.

[Seppo Renfors]

Kelly wrote:
>
> Hi
>
> A few years ago i went into business with my parents. Unfortunately
> the business has collapsed and has left us with a $150,000 bank loan
> which we are no longer able to service. My parents are on the pension
> and i only work part time.
>
> We are considering whether it is worth declaring bankruptcy. We arent
> concerned about hurting our credit rating because none of us envisage
> borrowing money for a long time. However i'm worried because i share
> ownership of my home with my husband. My parents own their home. Would
> bankruptcy take our houses?
>

Hmmm..... what nobody has mentioned so far is that debts from a
partnership are owed "jointly and severally" - meaning the full amount
of the debt can be demanded from any partner (it isn't shared equally
between partners). Some parts of superannuation (anything above a
"Reasonable Benefit Limit") can also be at risk and certainly any real
property is at risk.

--
SIR - Philosopher unauthorised
-----------------------------------------------------------------
The one who is educated from the wrong books is not educated, he is
misled.
-----------------------------------------------------------------

[Trevor S]

phil_herring@yahoo.com.au (Phil Herring) wrote in
news:36565b6e.0411101549.7cd2b94@posting.google.co m:

<snip>


> The exta step that they took was to get a family court order to pay
> their entire income to their partner. At the time, bankruptcy law
> didn't allow such payments to be garnished, so the barrister kept
> paying 100% of their income to the wife, and the ATO got nothing.

Which begs the question as to why the wife did not have to pay tax ?

--
Trevor S


"Unthinking respect for authority is the greatest enemy of truth."
-Albert Einstein

[Galimatias]

Trevor S wrote:
> phil_herring@yahoo.com.au (Phil Herring) wrote in
> news:36565b6e.0411101549.7cd2b94@posting.google.co m:
>
> <snip>
>
>
>> The exta step that they took was to get a family court order to pay
>> their entire income to their partner. At the time, bankruptcy law
>> didn't allow such payments to be garnished, so the barrister kept
>> paying 100% of their income to the wife, and the ATO got nothing.
>
> Which begs the question as to why the wife did not have to pay tax ?

He derives the income, and attracts the tax liability. The income is
diverted to the partner as maintenance for the spouse/child(ren) where was
exempt income.

[Tim Josling]

My understanding about what would happen is:

1. You would be declared bankrupt.

2. You have to do lots of things or face imprisonment e.g. supply
accurate records of your assets and liabilities, change of address,
employment, any assets that come into your hands, you have to attend the
trustee's premises as and when he chooses.

3. You may be subject to a public examination as to the reasons for the
bankruptcy. All your creditors will know you have gone bankrupt, and
they can inspect the trustee's records, which will include details of
your finances.

4. Permanent public records are kept of your bankruptcy, even after it
is terminated.

5. Your ability to borrow is impaired for many years. Are you sure you
don't want to borrow ever? Ditto for renting.

6. Any wages are garnisheed for a long period of time, leaving you with
very linited funds to live on. Ay gifts in kind such as accommodation or
use of a car are also condsidered income and may be garnisheed.

7. All your assets are sold, bar a pretty modest set of exceptions e.g.
a semi-bomd car is allowed for example.

8. Don't bother trying to put things into other names now. It is too
late, the trustte can undo any such transactions, and you can be charged
in some circumstances if you try this.

9. Trustees are expensive and this will come out of anything you are
left with.

As for the house, the trusee will take over your 1/2 of the house. This
occurs even if you own the house as tenants in common. Your husband then
would have the option to buy out the trustee if he has 1/2 the value of
the house available for this. Otherwise the trustee can force the sale
of the house and keep your share to pay debts. The trustee may not care
much about getting full value as long as your creditors are paid.

It is a pretty unpleasant process. Threatening someone with bankruptcy
is a common ploy in debt collection, for this reason.

This is just my understanding. If you want professional advice you would
have to pay for it. I would recommend you consider seeing a debt
counsellor before doing anything.

Tim Josling


Kelly wrote:
> Hi
>
> A few years ago i went into business with my parents. Unfortunately
> the business has collapsed and has left us with a $150,000 bank loan
> which we are no longer able to service. My parents are on the pension
> and i only work part time.
>
> We are considering whether it is worth declaring bankruptcy. We arent
> concerned about hurting our credit rating because none of us envisage
> borrowing money for a long time. However i'm worried because i share
> ownership of my home with my husband. My parents own their home. Would
> bankruptcy take our houses?
>
> Thanks
> Kelly

[Thales]

"Kelly" <kelly_7_21@hotmail.com> wrote in message
news:9d09917e.0411092340.5a70cb69@posting.google.c om...
> Hi
>
> A few years ago i went into business with my parents. Unfortunately
> the business has collapsed and has left us with a $150,000 bank loan
> which we are no longer able to service. My parents are on the pension
> and i only work part time.
>
> We are considering whether it is worth declaring bankruptcy. We arent
> concerned about hurting our credit rating because none of us envisage
> borrowing money for a long time. However i'm worried because i share
> ownership of my home with my husband. My parents own their home. Would
> bankruptcy take our houses?
>
> Thanks
> Kelly

Is the business structured in the form of a company? (e.g. Pty Ltd or Ltd?).
If so, did the directors of the company give personal guarantees or charges
over assets for the borrowed amount(s)? If so, are you one of those
directors?

You may lose your home. Your parents may lose their home. You may lose both
homes. Or you may lose neither. You haven't provided enough information to
tell one way or another.

My advice: go talk to an accountant. You are unlikely to get the best advice
under the circumstances in a newsgroup.

[EnjoyDialup]

going bankrupt does not clear the debt. it effectivly puts someone else in
charge of your finances to pay the debt. they will sell your assets and
garnish your wages until the debt is paid or the bankrupsy expires. It is
not a way to avoid paying the debt, rather it is a way to make the debt
collectors leave you alone while you get back on your feet.

the only time it would save you from having to pay anything is if you dont
have any assets or a job. in which case you were probably screwed anyway!

--
EnjoyDialup - You know you want to...
mail=valid required when replying
http://www.EnjoyDialup.info
http://www.NigelHowe.info truth about Nigel Howe
http://www.HyperOz.com all about HyperOz


"Kelly" <kelly_7_21@hotmail.com> wrote in message
news:9d09917e.0411092340.5a70cb69@posting.google.c om...
> Hi
>
> A few years ago i went into business with my parents. Unfortunately
> the business has collapsed and has left us with a $150,000 bank loan
> which we are no longer able to service. My parents are on the pension
> and i only work part time.
>
> We are considering whether it is worth declaring bankruptcy. We arent
> concerned about hurting our credit rating because none of us envisage
> borrowing money for a long time. However i'm worried because i share
> ownership of my home with my husband. My parents own their home. Would
> bankruptcy take our houses?
>
> Thanks
> Kelly

[EnjoyDialup]

very good advice. especialy the bit about seeing a fiancial councelor.

having worked for a debt collector in the past, i agree with you that
bankrupsy is something to be avoided at all costs! (no punn intended)

--
EnjoyDialup - You know you want to...
mail=valid required when replying
http://www.EnjoyDialup.info
http://www.NigelHowe.info truth about Nigel Howe
http://www.HyperOz.com all about HyperOz


"Tim Josling" <tej_at_melbpc.org.au_rubbish@nospam.com> wrote in message
news:cmv7g3$4f6$1@possum.melbpc.org.au...
> My understanding about what would happen is:
>
> 1. You would be declared bankrupt.
>
> 2. You have to do lots of things or face imprisonment e.g. supply
> accurate records of your assets and liabilities, change of address,
> employment, any assets that come into your hands, you have to attend the
> trustee's premises as and when he chooses.
>
> 3. You may be subject to a public examination as to the reasons for the
> bankruptcy. All your creditors will know you have gone bankrupt, and
> they can inspect the trustee's records, which will include details of
> your finances.
>
> 4. Permanent public records are kept of your bankruptcy, even after it
> is terminated.
>
> 5. Your ability to borrow is impaired for many years. Are you sure you
> don't want to borrow ever? Ditto for renting.
>
> 6. Any wages are garnisheed for a long period of time, leaving you with
> very linited funds to live on. Ay gifts in kind such as accommodation or
> use of a car are also condsidered income and may be garnisheed.
>
> 7. All your assets are sold, bar a pretty modest set of exceptions e.g.
> a semi-bomd car is allowed for example.
>
> 8. Don't bother trying to put things into other names now. It is too
> late, the trustte can undo any such transactions, and you can be charged
> in some circumstances if you try this.
>
> 9. Trustees are expensive and this will come out of anything you are
> left with.
>
> As for the house, the trusee will take over your 1/2 of the house. This
> occurs even if you own the house as tenants in common. Your husband then
> would have the option to buy out the trustee if he has 1/2 the value of
> the house available for this. Otherwise the trustee can force the sale
> of the house and keep your share to pay debts. The trustee may not care
> much about getting full value as long as your creditors are paid.
>
> It is a pretty unpleasant process. Threatening someone with bankruptcy
> is a common ploy in debt collection, for this reason.
>
> This is just my understanding. If you want professional advice you would
> have to pay for it. I would recommend you consider seeing a debt
> counsellor before doing anything.
>
> Tim Josling
>
>
> Kelly wrote:
> > Hi
> >
> > A few years ago i went into business with my parents. Unfortunately
> > the business has collapsed and has left us with a $150,000 bank loan
> > which we are no longer able to service. My parents are on the pension
> > and i only work part time.
> >
> > We are considering whether it is worth declaring bankruptcy. We arent
> > concerned about hurting our credit rating because none of us envisage
> > borrowing money for a long time. However i'm worried because i share
> > ownership of my home with my husband. My parents own their home. Would
> > bankruptcy take our houses?
> >
> > Thanks
> > Kelly
>