Too many bills? Too much debt? Not enough money? Lots of people struggle financially at some point in their lives. Unanticipated incidents like hospitalisation, losing a job, and also divorce, can drastically transform your financial condition. But, when there’s no other way to properly cope with your debts, some individuals are forced to file for bankruptcy.
Going bankrupt is never easy. It’s complicated, demanding, and emotional. As a result, a lot of folks dig themselves a deeper hole before even filing for personal bankruptcy. It’s imperative that you ask for professional advice regarding your bankruptcy options. There are various 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 very first thing you should do when you’re having financial troubles is to cease using your credit cards. Even though it is tempting to make small purchases like meals and fuel, the fact is that credit cards have excessively high fees which only get magnified when you are incapable to make repayments. Alongside this, making large purchases with the knowledge that you will shortly be going bankrupt is deemed fraud. Naturally, small purchases are fine, but if you intentionally max out your credit cards before 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. Although it may appear to be reasonable to payoff as much debt as possible, the truth is that it can land you in a great deal of trouble! If one creditor is treated favourably over another, it is called ‘preferential transfer’ and will attract court actions which will essentially postpone 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 recover the money that was paid to the favoured creditor to ensure that it can be distributed equally amongst all creditors.
Lie or Withhold any Information
Whatever you do, do not lie or conceal any information concerning 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 disclose an asset, for instance, is considered misrepresentation and you will be liable to criminal prosecution. If you’re not sure of something, talk with your lawyer and spend the time to investigate to ensure you are supplying the correct information. When it concerns money, there are digital trails just about everywhere, so don’t think you can hide 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 save those assets from bankruptcy is a fallacy. As a matter of fact, transferring assets will not protect those assets in any way, and may be taken as fraudulent activity which comes with criminal repercussions. Selling assets to pay back your debts is, needless to say, a natural response to attempt to ease the financial strain. It’s vital 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 probable consequences of getting caught. You will be asked by the trustee if you sold, transferred or gave away any assets, normally for a period of one year prior to filing for bankruptcy. You will likewise 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
Friends and family are there to assist in times of distress. If you’re experiencing financial hardship, it’s typical for family and friends to offer money to you to mitigate 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 crucial to keep work related money and personal money totally separate from each other. All of these activities can create a considerable amount of confusion and can trigger 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 make sure you have the best bankruptcy case possible without any legal hiccups, seek professional advice from the experts. For additional information or to talk with somebody about your situation, contact Bankruptcy Australia on 1300 795 575 or visit http://www.bankruptcy-australia.net.au