Give us a call on 1300 794 492 or email

Did you know that in bankruptcy it is sometimes possible to save your house?

In fact, if you have large amounts of unsecured debt then going bankrupt might be the only way to save your house, and your sanity.

It some cases, as part of your bankruptcy it is possible for your partner, family member or even a friend to reach a settlement with your bankruptcy trustee which results in your house being saved.

Here is a short case study featuring Pete and Jill that I think you will find useful.

Pete & Jill

Pete & Jill are married. They have two school aged children. Pete is a self employed and has built up some tax debt that he can’t pay. Pete also has high levels of credit card debt and at the moment he is only just staying up to date with the minimum payments.

They jointly own a house that has a current market value of $400k. Their mortgage is $360k, all payments are up to date. The equity in the house is $40k.

Jill has next to no personal debt, only Pete needs to look at bankruptcy. So the equity that will be affected by the bankruptcy is Pete’s $20k.

Of course Pete and Jill are extremely concerned. Mainly they are concerned that if Pete goes into bankruptcy that they might lose their house.

Pete’s $20k equity in the house is the asset that Pete’s bankruptcy Trustee has a claim against. Jill’s $20k equity is not part of the bankruptcy at all.

So the question is, must Pete’s bankruptcy Trustee sell the house to collect the $20k of Pete’s equity?

The answer to this question is ‘not necessarily’.

Some trustees would prefer to reach a settlement with Jill rather than sell the house. That would make sense for everyone. If a settlement can be reached with Jill then the house can be saved.

In some cases it might be possible for Jill to settle the Trustee’s $20k claim in equal monthly payments across the three years that Pete is bankrupt. That would be up to the Trustee.

Quite often we suggest that people in Pete’s situation consider starting a conversation with Alan Nicholls. Alan is a registered trustee in bankruptcy and is the principal of Nicholls & Co, Chartered Accountants.

Steve and I have known Alan for many years.

The feedback we regularly hear from folks like Pete and Jill is that Alan is approachable and knows what he is talking about when it comes to bankruptcy situations.

For many years he has specialized in situations where a family house is part of a bankruptcy.

Perhaps your situation is like Pete and Jill’s or maybe it is a little bit different, for example both husband and wife need to look at going into bankruptcy and they jointly own a house.

If you are wanting to have a chat about how bankruptcy works in relation to your house then when you are ready give us a call on 1300 794 492 or send us an email to If I’m not around then somebody from the office of Nicholls & Co will take the call for you and should be able to help you.

Also, for many years I’ve operated a dedicated website that discusses the ins and outs of how bankruptcy works with houses in quite a bit more detail. My suggestion is you have a read through this website.

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