Lots of bills? Too much debt? Not nearly enough money? Most people struggle financially at some point in their lives. Unanticipated events such as hospitalisation, losing a job, as well as divorce, can seriously reshape your financial condition. But, when there is no other way to properly control your debts, some folks are forced to file for bankruptcy.
Going bankrupt is never easy. It’s complicated, stressful, and emotional. Consequently, lots of individuals dig themselves a deeper hole before even filing for personal bankruptcy. It is critical that you ask for professional advice pertaining to 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 very first thing you should do when you’re facing financial problems is to cease using your credit cards. While it is tempting to make smaller purchases like food and fuel, the fact is that credit cards have inflated fees which only get exacerbated when you’re incapable to make repayments. Alongside this, making substantial purchases with the understanding that you will shortly be going bankrupt is deemed fraud. Of course, small purchases are okay, but if you intentionally max out your credit cards before filing for bankruptcy, creditors will investigate and you’ll find yourself in a substantially worse position.
Repay Favoured Creditors
When you have uncontrolled debt, do not repay any creditors before you file for bankruptcy. Though it may sound logical 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 legal actions which will consequently impede your bankruptcy filing and discharge. 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 recoup the money that was paid to the favoured creditor so that it can be distributed equally amongst all creditors.
Lie or Conceal any Information
Whatever you do, do not lie or withhold any information regarding your financial situation. When you file for bankruptcy, you are required by Law to present complete and detailed information relating to your assets, income, debts, and expenses. Failing to acknowledge an asset, for instance, is regarded as misrepresentation and you will be liable to criminal prosecution. If you are unclear of something, speak to your lawyer and spend the time to investigate to make certain you’re giving the correct information. When it involves money, there are electronic trails almost everywhere, so do not think you can conceal anything. You might get away with it in the first instance, but it can haunt you and your case later down the track.
Transfer or Move Assets
Transferring or moving assets to a family member’s name to save those assets from bankruptcy is a delusion. As a matter of fact, transferring assets will not shelter those assets in any way, and may be interpreted as fraudulent activity which involves criminal consequences. Selling assets to pay back your debts is, needless to say, a normal reaction to try to ease the financial strain. It’s imperative to bear in mind that your Statement of Financial Affairs is a lawful document, so you must be straightforward with your financial history or face the probable consequences of getting caught. You’ll be asked by the trustee if you sold, transferred or gave away any assets, typically for a period of one year prior to filing for bankruptcy. You will also be asked what you did with the money you received 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
Family and friends are there to help in times of distress. If you’re grappling with financial difficulty, it’s normal for friends and family to offer money to you to lessen the burden. Do not deposit any money from friends or relatives into your bank account, or any money that is not specifically income related such as work or dividends. It’s likewise imperative to keep work related money and personal money completely separate from each other. All of these activities can produce a great deal of confusion and can lead to claims of fraud when filing for bankruptcy.
As you can see, there are some serious consequences for relatively minor 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. To learn more or to talk with someone about your circumstances, contact Bankruptcy Experts Gympie on 1300 795 575 or visit http://www.bankruptcyexpertsgympie.com.au