Lots of bills? Too much debt? Not enough money? Lots of people struggle financially at some point in their lives. Unexpected incidents like hospitalisation, redundancy, as well as divorce, can greatly transform 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, traumatic, and emotional. As a result, too many folks dig themselves a deeper hole before even filing for personal bankruptcy. It is essential that you seek professional advice regarding your bankruptcy options. There are particular financial decisions that should be avoided at all costs to avoid ruining 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’re experiencing financial issues is to stop using your credit cards. While it is tempting to make modest purchases like food and fuel, the truth is that credit cards have extravagant fees which only get magnified when you’re not able to make repayments. Alongside this, making substantial purchases with the knowledge that you will soon be going bankrupt is considered fraud. Naturally, small purchases are fine, but if you deliberately max out your credit cards prior to filing for bankruptcy, creditors will investigate and you’ll wind up in a significantly worse position.
Repay Favoured Creditors
When you have uncontrollable debt, do not repay any creditors before you file for bankruptcy. Although it may appear to be reasonable to payoff 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 inevitably postpone your bankruptcy filing and discharge. Every creditor holds 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 that it can be allocated equally between all creditors.
Lie or Conceal any Information
Whatever you do, do not lie or conceal any information relating to your financial situation. When you file for bankruptcy, you are required by Law to provide complete and precise information regarding your assets, income, debts, and expenses. Failing to reveal an asset, for instance, is considered misrepresentation and you will be liable to criminal prosecution. If you are not sure of anything, consult with your lawyer and spend the time to investigate to ensure you’re supplying the correct information. When it concerns 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 haunt you and your case later down the track.
Transfer or Move Assets
Transferring or moving assets to a family member’s name to spare those assets from bankruptcy is a fantasy. As a matter of fact, transferring assets will not protect those assets at all, and may be interpreted as fraudulent activity which involves criminal repercussions. Selling assets to repay your debts is, of course, a legitimate reaction to try to reduce the financial strain. It’s vital to remember that your Statement of Financial Affairs is a lawful document, so you must be honest with your financial history or deal with the probable repercussions 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 also be asked what you did with the money you collected 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 need. If you’re dealing with financial problems, it’s normal for family and friends 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 also essential to keep work related money and personal money entirely separate from each other. All of these activities can create a great deal of confusion and can lead to claims of fraud when filing for bankruptcy.
As you can see, there are some significant 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. For more information or to talk with somebody about your circumstances, contact Bankruptcy Experts Emerald on 1300 795 575 or visit http://www.bankruptcyexpertsemerald.com.au