When you go bankrupt you will get a bankruptcy trustee. From what I can see, not all trustees will try and save the house, as the trustee definitely has the power to take action and sell the house, which is an asset of your bankruptcy.

It’s important that you know that whoever is your bankruptcy trustee, they are obliged to get cash into the bankruptcy for your share of the net equity in the house. 

It’s like this:
Say your house has a current market value of $400,000.  Say the mortgage is $350,000.  Your equity then is the $50,000 balance.  That’s the figure (ignoring selling and legal costs in these examples) that the bankruptcy trustee will be looking for to go into the bankruptcy, in cash.  He’s obliged to do that.

Let’s say that the house is in joint names, and that the other joint owner is not going bankrupt.  Subject to certain bankruptcy rules and tests we’ll presume here that the joint owner would therefore have half of this net equity, ie, $25,000.  If the house was sold, then the other joint owner would get a cheque for $25,000 as it’s not part of the bankruptcy.

The bankrupt’s share of the sale proceeds would go to the bankruptcy trustee to pay into the bankruptcy.  Ultimately it will provide some funds for your bankruptcy to pay back to your unsecured creditors. (Despite what some of the debt collectors will tell you, you don’t have to once you are bankrupt).

The question is, rather than force a sale, can your bankruptcy accept the $25,000 which is your share, off somebody else, and so release the house from the bankruptcy?  In most cases that we handle, the answer is YES.

If both joint owners go bankrupt, can the bankruptcy trustee accept the $50,000 joint equity from somebody else, and so release the house from the bankruptcy?  Again, in most cases that we handle, the answer is YES.

Does the $25,000 or $50,000 have to be paid up front to the bankruptcy?  Well, without giving away trade secrets, let me just say sometimes yes, sometimes no. 

Let me just repeat though, quite often in bankruptcy the house can be saved. 

Even in cases where there is now no equity in the house, there are circumstances where it can still be saved.

In all of this, if the house is going to be saved then you must continue to meet the mortgage repayments.  It also goes without saying that with other debt like credit card and store card and taxation debt and unsecured personal loans being cancelled by your bankruptcy (see www.fredappleton.com.au), this could be looked at as providing you with some form of mortgage help, as the mortgage payments could now be more affordable. 

If this question of your home loan and bankruptcy interests you then why not send me or Steve an email at This e-mail address is being protected from spam bots, you need JavaScript enabled to view it setting out the house details like where it is, who are the owners, what do you estimate it is currently worth, what is the mortgage(s) on it, are there any caveats on it, what are the mortgage repayments, and anything else you would like to tell us.  (You can also call 1300 794 492 and ask for Steve).

Tell us the details of your income, and the other joint owner’s income if this is applicable.
Most importantly, give some contact telephone numbers please, and an email address too please.
Steve or I will call you, or send you an email asking you to call one of us, and you can go into this save the house scenario to see if it looks possible.  If it does, he will pass the relevant information on our colleague Alan Nicholls of Nicholls & Co, Chartered Accountants and Bankruptcy Trustees, and an arrangement will be made for you to call Alan, or for Alan to call you.

It doesn’t matter where you are in Australia, or where the property is.

If you then decide to go ahead with a “save the house” bankruptcy, the costs involved will be $2,200 payable to my office (this can be paid off necessary, somebody recently described it as a bit like a lay-bye type of arrangement), whilst if you become bankrupt and Alan agrees to be your bankruptcy trustee, the Nicholls & Co costs generally are paid out of the funds that come in to the bankruptcy by somebody buying back off the Trustee the bankrupt’s share of the equity in your house.

Mortgage arrangements aren’t changed, there are very few hassles.

We’ve saved a lot of houses in bankruptcy.

Just a comment here, when I talk about joint ownership of the house, there are some rules in bankruptcy which will be followed so as to determine from a bankruptcy perspective the real equity ownership of each joint owner.  That will be examined and explained by Steve or Alan as you go along. It’s not something that I try to cover on this website.

I think that it’s also important that you have a pretty good idea of what bankruptcy is all about, from your point of view, so I strongly recommend that you go back to my website www.fredappleton.com.au and read and understand it. 

There you’ll also read that I’ve been bankrupt, and that I am now a semi retired former Chartered Accountant, and that apart from the government’s website, my www.fredappleton.com.au is the longest running bankruptcy service on the internet, by miles.  We’ve got runs on the board, we don’t make things up.

Here’s a testimonial received in September 2011 which may be of some help:

“I just wanted to update your the status of my bankruptcy.

I got my bankruptcy number last month.  Most of the creditors have acknowledged it with a formal letter/ statement to say that my balance is now zero.

I have started to contribute from my wages the amount advised by Nicholls & Co, directly paid to an account monthly.  (This is the statutory 50% over the Threshhold amount that I explain in detail in Information Note 1 in my bankruptcy website www.fredappleton.com.au )

Being able to keep the house is a relief, not only for me but also to my wife and kids.  I now have more time with them.

Steve, I’d like to thank you from the bottom of my heart for all your help and advice, and for Fred’s website. Without it I wouldn’t be able to know you.  I have checked about 3 companies before you but their advices are not the same as yours, and I felt that they were really not helping. 

One company told me to sell my house first before they would look at me.Thank you very much Steve, and more power to you and Fred, you’re one of a kind.  I’m sure that with your honesty and sincerity and dedication, a lot of people will benefit from your services.”
F...G.....
Gold Coast
22 09 11