September 2009 and I can't believe how excited we are. Scared, nervous but certainly excited. We have just signed the contract to build our dream home.
December 2014 and I'm bankrupt.
How did it all go so wrong, so terribly, terribly wrong?
I am up to date with all the bills. Not a single late payment to the bank or anyone else. I was employed on a pretty good salary so how did I end up bankrupt.
I declared bankruptcy by choice, well, sort of by choice.
We built our dream house in a small town in the Lockyer Valley, 80 minutes drive west of Brisbane, Queensland. 400 square meters of sheer luxury. Every room is huge, in fact ridiculously huge. The laundry is big enough for a dinner party. 6mtr high raked ceiling in the living room, 3 double bathrooms. Situated on a hill with 180-degree views across the Brisbane Valley.
For us it was paradise.
This really was our dream home. 25 years of hard work had led to this point. We poured $700,000 into it. Every cent we had accumulated. $225,000 of our money and $475,000 of the banks money.
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| Our dream home |
Then it started.
A dairy farmer on the edge of town who was sick of working 100 hours a week for no return sold to a property developer. 6 months later there are over 110 poor quality cookie cutter homes sold to interstate investors.
The town population soars. Crime, once nonexistent is no common. Anything big enough to spray paint is covered in graffiti. The small local primary school has gone to the dogs and the high school is even worse.
January 2011 and the biggest floods in Brisbane's history hit. We are safe in our elevated position but large parts of the town go under and we are cut off with no way in or out for 4 days.
Property Prices Plummet
Putting all this together and the property market turns savagely 180-degrees. For 10 years our town had enjoyed between 5 & 8% per annum increases in property values.
In 2010 they dropped by 50%.
No-one wanted to live in a flood affected areas. Let alone one with the crime and other issues our town is now afflicted with.
Life Is Now Longer Enjoyable And It's Time To Sell & Move
December 2012 we decided to sell and move. Our dreams of life in the country are shattered. My 80-minute commute twice a day is taking a toll on me. Our daughter hates the school. My wife can't find a job and we've had enough.
The first Real Estate agent we talk to must be an idiot.
This is a really nice property and I think we can get $495,000 with a decent marketing budget and by decent marketing budget, he is talking $10,000. That means we may be able to pay what we owe the bank with a bit a luck and nothing in our pocket.
We talk to a couple of others and they come in with similar thoughts $475,000 to $495,000.
This is devasting news for us. We decide to wait another year and hope the market rebounds and we can get some of our money back.
December 2013 we go through the exercise again. 3 Real Estate agents and the news is worse. Not one of them thinks we can get more than $475,000. We decide to wait again. Maybe 2014 will be better.
Fast forward to October 2014 our Real Estate agents tell us we will be lucky to get $450,000, but maybe at an Auction, we could do better. We are tired, we are frustrated and emotionally broken. We decide to go all out and see what happens.
30 days of media campaign's $7000 in advertising, 3 open houses and it's Auction day.
Auction Day and no one registers. Not one person. We are there, the Real Estate Agent is there along with the Auctioneer and 2 interested neighbors but not one bidder.
Tired, Dejected & Out Of Options
My wife and I are shattered. Our daughter is simply confused. "Why doesn't anyone want our house?" she asks.
We have had enough. We want, no, we need to get out of this house and this town.
I start talking with our accountant and a couple of financial advisors. At the end of the day, it comes to only 2 options if we really must move and can't sell the house or only sell it at a massive loss.
Debt Agreement Or Bankruptcy
I am a proud man and neither of these options appeals to me. My wife and I spent countless hours on our deck with a glass of red in our hand discussing our options. Finally, we agree. Let's do what we have to do to end this chapter of our lives and move on.
So what do we do? A debt agreement of bankruptcy? A big question and an even bigger answer.
We go back to our financial advisor and thankfully he gives us this bit of wisdom, a golden nugget that I'm sure we only got because we were friends.
Robert starts with "Ian, there is little difference between a debt agreement and bankruptcy. They will both destroy your credit rating. The main difference is that with a debt agreement you still owe all the money. With bankruptcy, you don't. It's that simple, go bankrupt. If I was in your shoes, that's what I would do."
And with that, the decision is made. I am declaring bankruptcy. It's a huge hurdle for me to get over mentally but I am committed and it is going to happen and happen quickly. We decide to have it all done by Christmas 2014.
The Process Of Going Bankrupt
To my surprise, the actual process of going bankrupt was easy, ridiculously easy in fact. We worked with a lady Gae Channells of http://bankruptcyservice.com.au/ We found her to be amazing to deal with. She was compassionate and competent. Everything she said would happen, did happen, exactly as she said.
From the first contact to be declared bankrupt was around a month. We booked removalists, moved out on a Saturday. I walked into the bank on Monday, told them I was bankrupt, gave them a copy of the paperwork from AFSA and handed over the keys.
It was that simple. Of course going bankrupt meant that all bills were wiped including the credit cards, the car loans etc. Over the next couple of months we received the odd call chasing money but as soon as we told them we were bankrupt and gave them our number we never heard from them again.
Paying Back Some Money
Due to my income, AFSA, did make me pay back a certain amount of money for 3 years. Their calculations were very reasonable and we have been able to maintain a very good standard of living.
I am rapidly coming to the end of my 3-year bankruptcy and hoping to have it cleared soon.
Where To From Here?
That's what I will be sharing here. How I plan to go from having nothing to being retired in 11 years at the age of 62.
Will it happen? I honestly don't know but I'm going to share my story and my journey as I try.
I hope you'll join me
Bye for now
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