Your Car, Income and Home

What will happen to your car?

If you are the owner of the car and have no loan against it, the value of your car can not exceed $8,000 (the threshold). You can have more than one vehicle as long as the total value is less than this amount.

The value is not car yard (retail value), but wholesale value. What this means is that a $10,000.00 car will for bankruptcy purposes be under the threshold, meaning you will be able to keep it.

If your car is valued at more than the threshold and the trustee wants to sell it the trustee has to give you $8,000.00 so you can buy a car.

I own the car with somebody else

 If you own the car with your partner or somebody else the threshold doubles to $16,000. This is whether or not they are going to declare bankruptcy.

I have a loan on my car

If your car is under finance and you no longer want it or can’t afford to pay it you can give it back and you don’t have to pay anymore. That includes when they sell it. Even if the sale doesn’t pay out the loan.

If you want to keep the car you need to keep making the payments. As long as the difference between what you owe and what it is owrth is less than $8,000.00 you will be able to keep the car.

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 valued at more than the $8,000.00 threshold.

Call us if you are not sure.

Will I lose all or part of my pay?

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. This amount is $1,135.00 after tax per week for a person with no dependants.

Hang on, I have dependants

The more dependants you have the higher the protected amount.

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

Dependants     Weekly

0                      $1,135.00

1                      $1,339.00

2                      $1,441.00

3                      $1,498.00

4                      $1,521.00

over 4            $1,543.00

My income is being Garnished

If the Garnishee relates to a debt that is provable in bankruptcy the Garnishee will be terminated.

If you are being garnished you should call us now. We can stop the Garnishee within days, prior to going bankrupt.

I have a mortgage, what happens

If you don’t want to, or can’t pay the mortgage and you go bankrupt the house will be sold. If there is money left over after the mortgage is paid this will go to your bankruptcy estate to pay your unsecured debts.

If when the house is sold the mortgage is not covered you won’t be liable for any shortfall.

I have a mortgage and want to keep my home

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 if it is likely to work based on your circumstances.

I own my home with no mortgage

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.

I am renting my home

If you are renting your home and want to continue renting it and can afford to keep paying the rent, bankruptcy will not affect your situation.

If you owe rent for properties you no longer live at those amounts will be extinguished if you go bankrupt.

What ever your worries, give us a call, we are here to help.

We can answer any of your questions. If bankruptcy is best for you and you want someone to be with you all the way through contact us today.


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