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My partner and I find ourselves in an undesirable situation. In early 2007 we signed up for an off plan apartment with a view to moving in when it was complete. In the time that has passed since we have moved from Northern Ireland to Australia.

We have been in Australia since early 2009 and have some years left to run on our visas. The apartment completion date has come and went and with a reduction in value of approx 23% and coupled with the reduction in the availability of mortgages we will not be able to complete at contracted price. We tried to negotiate but we have been issued a writ to complete and it is very likely we will be forced into bankruptcy.

It is likely there will be a court order for the balance + legal costs placed on us. This will be around £75,000. Coupled with other debts we have we will then be around £115,000 in total debt. There is no way we could maintain these level of debt as we are currently stretched in maintaining payments to the UK and are helped significantly by the weak Sterling and strong Australian dollar.

I would appreciate any comments or thoughts/experiences that anyone has in relation to a situation like this.

We have a mortgaged house (currently around £20,000 negative equity) and no other real assets to speak of.

1. How would any bankruptcy affect our house? I understand the court will take control with a view to releasing the equity. If there is no equity for the coming years how long can they keep control?
2. How would any bankruptcy impact on salaries in Australia? Our jobs are not at risk from the bankruptcy. What rights/access does the UK court have to Australian salaries?
3. Will the court request regular payments from our salaries?
4. Does being made bankrupt in the UK have any impact on our credit rating in Australia?
5. I understand all UK bank accounts are closed. Does it have any impact on Australian accounts?
6. If we are made bankrupt do all debts get cleared immediately or do you continue to pay for the debts until discharged?
7. From reading online it seems the bankruptcy period is 12 months. Is this a max figure or can it be extended?
8. Would we have to fly back to the UK to complete the bankruptcy in person?

Some of these may be pretty simple questions but with all the info going around in my head I would appreciate some input and comments from people who may have been in a similar situation.

Thank you in advance for any advice or feedback
 

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Hi maximusmeridimus,

I think you need some professional advice on this and the sooner the better.

A few thoughts that come to mind (but I'm not an expert!)....

Is the off plan contract assignable? This means can you sell it on to someone else without buying it yourself. Some contracts are assignable and some aren't. If it was then you could try to sell it on - yes you will still make a loss but it may be a smaller loss and avoid bankruptcy.

I don't think that bankruptcy would have any affect on your salaries or credit rating in Australia.

I don't know enough about bankruptcy to answer your other questions.

Let us know how you get on and I hope you find a way through this.

Regards,
Karen
 
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