Lots of bills? Too much debt? Not nearly enough money? Most people struggle financially at some point in their lives. Uncontrolled incidents such as hospitalisation, job loss, or even divorce, can seriously alter your financial circumstances. Yet, when there’s no other way to suitably handle your debts, some folks are forced to file for bankruptcy.
Going bankrupt is never easy. It’s complicated, traumatic, and emotional. As a result, a lot of individuals dig themselves a deeper hole before even filing for personal bankruptcy. It is imperative 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 provide some tips on things you should never do before going bankrupt.
Using Credit Cards
The very first thing you should do when you are experiencing financial problems is to stop using your credit cards. Whilst it is tempting to make smaller purchases like food and fuel, the truth is that credit cards have enormous fees which only get compounded when you are incapable to make repayments. Alongside this, making substantial purchases with the understanding that you will soon be going bankrupt is deemed fraud. Of course, small purchases are fine, but if you purposely max out your credit cards prior to filing for bankruptcy, creditors will investigate and you’ll find yourself in a substantially worse position.
Repay Favoured Creditors
When you have uncontrollable debt, do not repay any creditors before you file for bankruptcy. While it may sound reasonable to pay off as much debt as possible, the reality is that it can land you in a considerable amount of trouble! If one creditor is treated favourably over another, it is called ‘preferential transfer’ and will attract court actions which will essentially delay 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 sue the creditor in what’s called a clawback lawsuit. This is carried out to recoup the money that was paid to the favoured creditor so that it can be spread equally among all creditors.
Lie or Conceal any Information
Whatever you do, do not lie or withhold any information relating to your financial situation. When you file for bankruptcy, you are required by Law to present complete and detailed information regarding 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 unsure of anything, talk with your lawyer and spend the time to investigate to make sure you are supplying the correct information. When it involves money, there are electronic trails pretty much everywhere, so don’t think you can conceal anything. You might get away with it in the first instance, but it can torment you and your case later down the track.
Transfer or Move Assets
Transferring or moving assets to a relative’s name to preserve those assets from bankruptcy is a fantasy. In fact, transferring assets will not shelter those assets in any way, and may be taken as fraudulent activity which comes with criminal consequences. Selling assets to repay your debts is, by all means, a normal response to attempt to ease the financial burden. It’s paramount to keep in mind that your Statement of Financial Affairs is a lawful record, so you must be completely honest with your financial history or face the probable consequences of getting caught. You will 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’ll likewise be asked what you did with the money you obtained from those transfers, so be wary of a preferential transfer, particularly 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 are facing financial adversity, it’s typical for friends and family to offer money to you to relieve 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 also essential to keep work related money and personal money completely separate from each other. All of these activities can produce a lot of confusion and can bring about claims of fraud when filing for bankruptcy.
As you can see, there are some severe consequences for relatively minor financial decisions when you go bankrupt. To guarantee you have the best bankruptcy case possible without any legal hiccups, seek professional advice from the experts. To learn more or to talk with somebody about your circumstances, contact Bankruptcy Experts Cassowary Coast on 1300 795 575 or visit http://www.bankruptcyexpertscassowarycoast.com.au