Join our mailing list to stay informed!
Posted by Revive Financial on Apr 6, 2016 12:00:00 AM

One of the major reasons people try to avoid bankruptcy is because it can mean losing your family home or other property assets you have. When you declare bankruptcy, you accept that your trustee will be selling the property to settle your debt. However, in some cases, you will still be able to live in the house.

What happens to your house depends on your ownership structure, the amount of equity you have in your property, and whether or not the mortgagee is willing to cooperate. Your house is not protected under the Bankruptcy Act, and your trustee will sell any equity in the property once the mortgage has been paid.

A Few Scenarios Based on Ownership and Equity

To figure out exactly what your options are, you should talk to a financial advisor from Revive.

You Own Your House Outright

If you do not have a mortgage, your trustee will help you sell your house at market value.

You Own Your House Outright, But There is Joint Ownership

If you and your partner have joint ownership of the house and the mortgage is paid when you declare bankruptcy, your partner can opt to buy out your share. If they are unable to, or choose not to, the house will be sold at market value and the proceeds split between the trustee and co-owner.

You Jointly Own the House, and it Has Low Equity

If you don’t have much equity in your house (perhaps because you recently purchased it, have been paying interest-only, or the property value has depreciated), the trustee will still sell whatever share of the equity you own. If your co-owner is able to buy your share out, you’ll be able to keep the house entirely under their name and they will continue to pay the mortgage on it.

You Jointly Own the House, and it Has No Equity

If your house is valued at less than your mortgage, your partner may be able to purchase the future equity interest on your portion of ownership. Because the trustee has no equity to sell, the co-owner of the house must continue to pay the mortgage and will own any future equity instead of you.

You Jointly Own the House, and it Was Used to Secure a Loan

Because you can use the existing equity in your home to take out another loan, your partner may be eligible for the doctrine of exoneration. If one of you took out a loan on your home that the other had no benefit from, say for a business venture, after the house has been sold, the equity realised would go to the co-owner who did not benefit from the loan.

This does not happen automatically and requires a trustee to verify the claim is valid. Learn more about bankruptcy and situations where your home can be saved, with a consultation from one of our experienced trustees. Call 1800 534 534 or submit an enquiry.

For more information on bankruptcy, check out or bankruptcy page here

Is-Your-Business-In-Financial-Distress

Topics: Bankruptcy, Personal Debt

How Can We Assist You Today?

Business Debt Icon Business
Personal Debt Icon Personal
Please select an assistance option to continue.

Types Of Unsecured Debts

Credit Card Icon Credit/Store Cards
Personal Loan Icon Personal Loan
Pay Day Loan Icon Pay Day Loan
Tax Debt Icon Tax Debt
Disconnected Utilities Icon Utility Bill
Other Debts Icon Other
Please select at least one type of unsecured debt.

Your Business Structure

Sole Trader Icon Sole Trader
Partnership Icon Partnership
Company Icon Pty Ltd Company
Tax Debt Icon Trust
Please select at business structure to continue.

Unsecured Debt Amount

$8,000
$1,000
$100,000+

Business Debt Amount

$100,000
$10,000
$1,000,000+

Take Back Control Today!

First Name

Last Name

Email

Phone Number

Phone number must be 10-digits long and begin with a 0. (e.g. 04 1234 5678)

Post Code

Post code must be 4-digits long (e.g. 4567)

Some of your details appear incorrect.
Please update the highlighted fields and re-submit.

Congratulations

You’ve taken the first step to steer your business back to viability

Let’s keep the momentum going, take the second step by linking your Xero account now.

Congratulations

You've taken the first step to becoming debt free

Let's keep the momentum going, take the second step now and complete the assessment form.

By submitting this form you acknowledge that you have read and accept our Privacy Policy