What happens to your car if you go bankrupt?

1 – You own the car and do not have any secured loan against the title of the vehicle.

If you are the owner of the car and have no loan against it, the
value of you car can not exceed $8,100. You can have more than one
vehicle as long as the total is less than this threshold.

Also you need to know that the value is not car yard (retail value),
but wholesale value. What this means for you is that most people who
have a $10,000.00 car will find that for bankruptcy purposes your car is
under the limit and you will be able to keep it.

If your car is still valued at more than the threshold and the
trustee wants to sell it the trustee has to give you $8,100.00 so you
can buy a car.

2 – If you own the car with your partner or somebody else the
threshold doubles to $16,200. This is whether or not they are going to
declare bankruptcy.

3 – Your car is used as security for a loan.

If your car is leased or is collateral for a loan the value of the
car now does not matter as long as you can afford to (and want to)
continue your loan repayments and your equity in the car is not more
than $8,100.

The one thing that is important is that your car doesn’t becomes an asset if your loan is finalised prior to
the completion of your bankruptcy term. So that means that you finish
paying off the car during the 3 years of your bankruptcy and it is then
valued at more than the $7,900.00 threshold.

What happens to your income in bankruptcy?

Many people think and are told that if you go bankrupt
you will lose part of your income. For most people who go bankrupt, this
is not true. There is a protected amount, which is always yours to
keep. Currently this amount is $1,100.75 after tax per week for a person
with no dependants.

The more dependants you have the higher the protected amount.

Here are the protected amounts. They are all after tax.

  • Dependants     Weekly                         Yearly
  • 0                     $1,145.38                      $59,559.50
  • 1                      $1,351.54                      $70,280.21
  • 2                      $1,454.63                      $75,640.57
  • 3                      $1,511.90                      $78,618.54
  • 4                      $1,534.80                      $79,809.73
  • over 4            $1,557.71                      $81,000.92

If you need to go bankrupt and you are worried about income, call us and we will explain how it will affect
you. Most people are surprised at how generous the protected amounts
are.

What happens to your home in Bankruptcy

If you are buying your home and have a
mortgage the equity in your home will vest with your Trustee. Depending
on circumstances there may be options to get that equity back and in
turn keep your home. You really need to seek proper advice before going
bankrupt. Call us today and we will explain how it is likely to work
based on your circumstances.

If you own your home with no mortgage
and you go bankrupt your home will vest with your Trustee. This means
that the Trustee will sell the home so that your creditors can be paid.

If you are renting your home and want to continue renting it bankruptcy will not affect your situation.

For a free friendly chat call us:

1300 163 017

We serve all of Australia