Too many bills? Too much debt? Not enough money? Most individuals struggle financially at some point in their lives. Unanticipated events such as hospitalisation, redundancy, or even divorce, can severely alter your financial circumstances. But, when there is no other way to adequately control your debts, some folks are forced to file for bankruptcy.
Going bankrupt is never simple. It’s complicated, demanding, and emotional. Consequently, a lot of individuals dig themselves a deeper hole before even filing for personal bankruptcy. It is crucial that you ask for professional advice concerning your bankruptcy options. There are certain financial decisions that should be avoided at all costs to avoid damaging your bankruptcy case. This article will offer 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 dilemmas is to cease using your credit cards. While it is tempting to make modest purchases like food and fuel, the fact is that credit cards have extravagant fees which only get exacerbated when you are not able to make repayments. Alongside this, making large purchases with the knowledge that you will soon be going bankrupt is deemed fraud. Of course, small purchases are fine, but if you deliberately max out your credit cards prior to filing for bankruptcy, creditors will investigate and you will end up in a significantly worse position.
Repay Favoured Creditors
When you have unmanageable debt, do not repay any creditors before you file for bankruptcy. Even though it may seem sensible to pay off as much debt as possible, the truth 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 ultimately delay 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 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 to ensure it can be distributed equally among all creditors.
Lie or Conceal any Information
Whatever you do, do not lie or withhold any information pertaining to your financial situation. When you file for bankruptcy, you are required by Law to provide complete and detailed information pertaining to 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 are unsure of anything, speak with your lawyer and spend the time to investigate to guarantee you’re giving the correct information. When it relates to money, there are electronic trails 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 preserve those assets from bankruptcy is a myth. As a matter of fact, transferring assets will not shelter those assets at all, and may be deciphered as fraudulent activity which comes with criminal consequences. Selling assets to settle your debts is, of course, a typical reaction to attempt to alleviate the financial burden. It’s essential to keep in mind that your Statement of Financial Affairs is a legal record, so you must be straightforward with your financial history or deal with the likely consequences of getting caught. You’ll be asked by the trustee if you sold, transferred or gave away any assets, normally for a period of one year before filing for bankruptcy. You’ll even be asked what you did with the money you gained from those transfers, so be careful 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’re dealing with financial problems, it’s typical for friends and family to give 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 directly income related such as work or dividends. It’s likewise vital to keep work related money and personal money completely separate from each other. All of these activities can produce a considerable amount of confusion and can bring about claims of fraud when filing for bankruptcy.
As you can see, there are some severe consequences for relatively insignificant financial decisions when you go bankrupt. To ensure you have the best bankruptcy case possible without any legal hiccups, seek professional advice from the experts. For additional information or to talk with someone about your circumstances, contact Bankruptcy Experts Wangaratta on 1300 795 575 or visit http://www.bankruptcyexpertswangaratta.com.au