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  • Profile photo of gags327gags327
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    @gags327
    Join Date: 2008
    Post Count: 64

    Can someone please explain to me the different types of bankruptcy. I am led to believe that there is a difference between undischarged and discharged bankruptcy and if so what are the ramifications?

    Profile photo of TerrywTerryw
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    @terryw
    Join Date: 2001
    Post Count: 16,213

    There is only one type – bankruptcy!

    If you become bankrupt this generally lasts 3 years. It can be extended if you do not cooperate with the trustee in bankrupcy or try to hide assets etc. Once this period is over you are discharged.

    During bankruptcy you can often negotiate an annulment. This is often done by making an offer to creditors to give them some money in exchange for annulment. Money obviously comes from relatives etc as all your money will be seized. If your bankruptcy is annuled you are let out of bankruptcy which is better than being discharge.

    Ramifications. Extremely hard to get finance while bankrupt and not much easier after being discharged. You cannot go overseas during bankruptcy without permission and you will lose various licences such as fin planning, mortgage broking, real estate, security clearances for govt jobs etc.

    Bankruptcy will stay on your credit file for 8 years and you will often be asked "have you ever been bankrupt?" on various application forms.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
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    Profile photo of gags327gags327
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    @gags327
    Join Date: 2008
    Post Count: 64

    Thanks for your reply terry, making sense now. So obviously if someone is telling me that they are undischarged  bankrupt they are still in the 3 year period and more than likely have no hope of being annulled. 

    Profile photo of TerrywTerryw
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    @terryw
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    Yes, but there is always hope of an annulment if they can conjure up some money.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
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    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of gags327gags327
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    @gags327
    Join Date: 2008
    Post Count: 64

    If someone is annuled what are there chances of bank finance compared to some that has been discharged? Is it just a matter of larger deposits Etc?

    Profile photo of DerekDerek
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    @derek
    Join Date: 2004
    Post Count: 3,544
    Terryw wrote:
    Yes, but there is always hope of an annulment if they can conjure up some money.

    Like this?

    http://tatts.com/nswlotteries/games/lotto/play-lotto

    Profile photo of TerrywTerryw
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    @terryw
    Join Date: 2001
    Post Count: 16,213

    I dont' know if annullment means void from the begining or not. If it did it would be like the bankruptcy never happened.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
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    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of Scott No MatesScott No Mates
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    @scott-no-mates
    Join Date: 2005
    Post Count: 3,856

    You may need to see the Pope to get that annulment Terry.

    Profile photo of TheFinanceShopTheFinanceShop
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    @thefinanceshop
    Join Date: 2012
    Post Count: 1,271

    Re getting finance – its hard to give you decisive answer without looking at the whole situation/application. Essentially, you either need to look at a specialist lender which will charge you a higher interest rate of 9's% and a set up fee of about 1.5% of the loan amount. or you can look at a mainstream lender but this is much tougher. Depending on the strength of the application  and how long you have been discharged – you may be able to go onto the loan as a guarantor (if you want to jump on the title) but you will need to have a second applicant (say your wife) service the entire loan without using your income. Getting through a specialist lender will be much easier but more expensive.

    TheFinanceShop | Elite Property Finance
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    Profile photo of gags327gags327
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    @gags327
    Join Date: 2008
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    Thanks Shahin, I am looking at doing at vf a property to sell and have had quite a few applicants that have been bankrupt and of course have been looking at how they would stack up for a bank loan in the years to come. One guy has two years left to run out of his 8 but everything else looks great, while another is still undischarged, but has great income. After the above comments looking like the undischarged would be a very long process to get financed out.

    Profile photo of AussieKiwiAussieKiwi
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    @aussiekiwi
    Join Date: 2012
    Post Count: 29

    Hi can you give me some idea's of theses special finanace lenders are shahn.

    Thanks Murray

    Profile photo of TheFinanceShopTheFinanceShop
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    @thefinanceshop
    Join Date: 2012
    Post Count: 1,271

    Pepper and Resimac are my favourites when it comes to specialist lenders. 

    Here is the website for Pepper – it will give you a load of good info:

    http://www.pepperonline.com.au/ProductsAndServices/FlexiAdvantage

    TheFinanceShop | Elite Property Finance
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    Profile photo of Paul DobsonPaul Dobson
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    @pauldobson
    Join Date: 2003
    Post Count: 1,196

    Hi gags

    I've been told that it's illegal to give an undischarged bankrupt credit.  I don't know if this is factually correct but we've always taken it as correct.  This has left us with the option of selling the undischarged bankrupt a property with a Lease/Option (not a credit contract) but, the time involved to have the bankruptcy disappear off the credit report is just too long for us.

    We've often sold with Instalment Contracts to discharged bankrupts and, overall, it's worked out well, i.e. we found their default rate to be the same as everybody else.

    Cheers, Paul

    Paul Dobson | Vendor Finance Institute
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    An alternative way to finance your home.

    Profile photo of gags327gags327
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    @gags327
    Join Date: 2008
    Post Count: 64

    Great to know Paul, I was looking at a lease option on the property anyway. I suppose if they are still undischarged you have to wait 5 years from when they are discharged for it to be off there record. How have you found it getting finance for people that are discharged to finace them out of your properties? Is it just a case of larger deposits or much more complicated  than that?

    Profile photo of Mick CMick C
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    @shape
    Join Date: 2010
    Post Count: 1,099

    Adding on…

    If you have good banking records for 24 month and you have been discharged from bankruptcy for at least 24 month, i know Westpac is happy to lend up to 90% as i done 2 loans with them only in the last 6 month for discharge bankruptcy…

    Specialized lenders like Pepper, Resimac, Perpetual etc…has a special product for 1 day discharged bankruptcy- rates starts from 8.85%!!!! LVR restricted  to under 80%.

    A majority of banks won't touch discharge bankruptcy….

    But there are still a handful that would consider up to 80% depending on how long the bankruptcy has been discharged for and the reason for the bankruptcy – ie AMP bank, Credit unions, CBA etc..each bank has different tolerance level and LVR.

    Mick C | Shape Home Loans
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    Profile photo of TerrywTerryw
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    @terryw
    Join Date: 2001
    Post Count: 16,213
    PaulDobson wrote:
    Hi gags

    I've been told that it's illegal to give an undischarged bankrupt credit.  I don't know if this is factually correct but we've always taken it as correct.  This has left us with the option of selling the undischarged bankrupt a property with a Lease/Option (not a credit contract) but, the time involved to have the bankruptcy disappear off the credit report is just too long for us.

    We've often sold with Instalment Contracts to discharged bankrupts and, overall, it's worked out well, i.e. we found their default rate to be the same as everybody else.

    Cheers, Paul

    As far as I know this is not correct. There is nothing to stop a bankrupt borrowing as long as they declare it.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of zehrazehra
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    @zehra
    Join Date: 2012
    Post Count: 11

    I think there is kind of 2 types of Bankruptcy , there is Part IX Debt agreement and the full on Bankruptcy .

    I am involved with the first one and the restrictions are almost the same except I can leave the country and dont loose my house and so on .

    Saying that I am not sure the main difference when I go for a finance , I am sure I may have a easier time to obtain finance but its still on my files for 4 yrs ( I think )

    Please inform me if I am wrong

    thanks guys

    Profile photo of mattstamattsta
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    @mattsta
    Join Date: 2011
    Post Count: 604

    As far as I know there are two types of bankruptcy: voluntary and involuntary. I am not sure if it is the answer you are looking for , but you can read further about it at http://www.lawhandbook.sa.gov.au/ch03s03.php. 

    Profile photo of Paul DobsonPaul Dobson
    Participant
    @pauldobson
    Join Date: 2003
    Post Count: 1,196

    Hi gags

    It's just a personal opinion but I won't sell to someone, using any form of VF, until they're discharged.  Of all the mistakes we've made since we started in this business, the one that always comes back to bite us the most is rushing the choice of your buyer.  It's natural because you have holding costs but the grief it causes down the road easily surpasses these holding costs.  The voice of hard earned experience  :-)

    Cheers,  Paul

    Paul Dobson | Vendor Finance Institute
    http://www.vendorfinanceinstitute.com.au
    Email Me | Phone Me

    An alternative way to finance your home.

    Profile photo of gags327gags327
    Participant
    @gags327
    Join Date: 2008
    Post Count: 64

    Thanks everyone for the comments, getting my head round it now, wise words of wisdom there Paul I will take your advice, as hard as it is to want to rush in and get someone in there. Does anyone know what the set time is for it to stay on your record after you have been discharged?

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