Lots of bills? Too much debt? Not enough money? Lots of people struggle financially at some point in their lives. Unanticipated incidents like hospitalisation, job loss, as well as divorce, can drastically affect your financial circumstances. But, when there’s no other way to effectively control your debts, some individuals are forced to file for bankruptcy.
Going bankrupt is never easy. It’s complicated, traumatic, and emotional. Consequently, lots of individuals dig themselves a deeper hole before even filing for personal bankruptcy. It’s essential that you seek professional advice regarding your bankruptcy options. There are certain 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 dilemmas is to stop using your credit cards. Even though it is tempting to make modest purchases like meals and fuel, the fact is that credit cards have inflated fees which only get intensified when you are incapable to make repayments. Along with this, making substantial purchases with the understanding that you will soon be going bankrupt is considered fraud. Needless to say, small purchases are fine, but if you purposely max out your credit cards prior to filing for bankruptcy, creditors will investigate and you will end up in a much worse position.
Repay Favoured Creditors
When you have uncontrolled debt, do not repay any creditors before you file for bankruptcy. While it may sound logical to pay off as much debt as possible, the truth 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 lawsuits which will ultimately 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 carried out to recoup the money that was paid to the favoured creditor so that it can be allocated equally among 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 specific information concerning your assets, income, debts, and expenses. Failing to disclose an asset, for instance, is considered misrepresentation and you will be liable to criminal prosecution. If you’re uncertain of something, talk with your lawyer and spend the time to investigate to guarantee you’re supplying the correct information. When it comes to money, there are digital trails just about everywhere, so don’t think you can conceal anything. You might get away with it initially, 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 rescue those assets from bankruptcy is a fantasy. As a matter of fact, transferring assets will not shield those assets in any way, and may be interpreted as fraudulent activity which involves criminal consequences. Selling assets to settle your debts is, by all means, a normal response to try to reduce the financial burden. It’s vital to bear 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 possible consequences of getting caught. You’ll be asked by the trustee if you sold, transferred or gave away any assets, usually for a period of one year before filing for bankruptcy. You’ll likewise be asked what you did with the money you gained from those transfers, so be careful 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 are facing financial difficulty, it’s typical for friends and family to give money to you to alleviate 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 critical to keep work related money and personal money entirely separate from each other. All of these activities can create a lot of confusion and can trigger claims of fraud when filing for bankruptcy.
As you can see, there are some substantial 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 talk with someone about your situation, contact Bankruptcy Experts Tweed Coast on 1300 795 575 or visit Bankruptcy Tweedcoast