Lots of bills? Too much debt? Not nearly enough money? Lots of people struggle financially at some point in their lives. Unforeseen situations such as hospitalisation, losing a job, and also divorce, can greatly affect your financial condition. But, when there’s no other way to effectively handle your debts, some individuals are forced to file for bankruptcy.
Going bankrupt is never simple. It’s complicated, stressful, and emotional. Consequently, lots of folks dig themselves a deeper hole before even filing for personal bankruptcy. It’s critical that you ask for professional advice concerning your bankruptcy options. There are particular financial decisions that should be avoided at all costs to avoid ruining your bankruptcy case. This article will present some tips on things you should never do before going bankrupt.
Using Credit Cards
The first thing you should do when you are having financial troubles is to cease using your credit cards. Whilst it is tempting to make smaller purchases like food and petrol, the reality is that credit cards have enormous fees which only get intensified when you’re not able to make repayments. Along with this, making big purchases with the understanding that you will shortly be going bankrupt is considered fraud. Naturally, small purchases are okay, but if you intentionally max out your credit cards before filing for bankruptcy, creditors will investigate and you will wind up in a much worse position.
Repay Favoured Creditors
When you have uncontrolled debt, do not repay any creditors before you file for bankruptcy. Though it may seem practical to repay as much debt as possible, the reality is that it can land you in a lot of trouble! If one creditor is treated favourably over another, it is called ‘preferential transfer’ and will attract court actions which will consequently impede your bankruptcy filing and discharge. Each and every creditor carries the same weight under Australian Law, so if you completely repay one over another, the bankruptcy trustee will file a claim against the creditor in what’s called a clawback lawsuit. This is done to recuperate the money that was paid to the favoured creditor to ensure it can be spread equally between all creditors.
Lie or Withhold any Information
Whatever you do, do not lie or withhold any information concerning your financial situation. When you file for bankruptcy, you are required by Law to provide complete and specific information relating to your assets, income, debts, and expenses. Failing to acknowledge an asset, for instance, is considered misrepresentation and you will be liable to criminal prosecution. If you’re not sure of anything, talk with your lawyer and spend the time to investigate to make sure you are giving the correct information. When it comes to money, there are electronic trails everywhere, so don’t think you can hide anything. You might get away with it in the first instance, but it can plague you and your case later down the track.
Transfer or Move Assets
Transferring or moving assets to a family member’s name to protect those assets from bankruptcy is a misconception. As a matter of fact, transferring assets will not protect those assets at all, and may be deciphered as fraudulent activity which involves criminal repercussions. Selling assets to settle your debts is, obviously, a common response to attempt to relieve the financial strain. It’s essential to keep in mind that your Statement of Financial Affairs is a legal document, so you must be straightforward with your financial history or confront the probable repercussions of getting caught. You will be asked by the trustee if you sold, transferred or gave away any assets, usually for a period of one year prior to filing for bankruptcy. You’ll also be asked what you did with the money you collected from those transfers, so be wary of a preferential transfer, especially with friends and family members.
Deposit Non-Income Earning Money Into Your Bank Account
Friends and family are there to assist in times of distress. If you are facing financial distress, it’s normal for friends and family to offer money to you to ease the burden. Do not deposit any money from friends or relatives into your bank account, or any money that is not directly income related such as work or dividends. It’s likewise imperative to keep work related money and personal money totally separate from each other. All of these activities can create a lot of confusion and can lead to claims of fraud when filing for bankruptcy.
As you can see, there are some severe consequences for relatively trivial financial decisions when you go bankrupt. To make sure you have the best bankruptcy case possible without any legal hiccups, seek professional advice from the experts. For more information or to speak to someone about your circumstances, contact Bankruptcy Experts Hervey Bay, on 1300 795 575 or visit http://www.bankruptcyexpertsherveybay.com.au