Too many bills? Too much debt? Not nearly enough money? Most individuals struggle financially at some point in their lives. Unanticipated events like hospitalisation, redundancy, and also divorce, can severely transform your financial situation. 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, stressful, and emotional. Consequently, too many folks dig themselves a deeper hole before even filing for personal bankruptcy. It’s crucial that you ask for professional advice regarding your bankruptcy options. There are particular financial decisions that should be avoided at all costs to avoid wreaking havoc on 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 are facing financial troubles is to cease using your credit cards. Even though it is tempting to make small purchases like food and fuel, the fact is that credit cards have enormous fees which only get compounded when you are unable to make repayments. In addition to this, making big purchases with the understanding that you will shortly be going bankrupt is deemed 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 will find yourself in a considerably worse position.
Repay Favoured Creditors
When you have uncontrollable debt, do not repay any creditors before you file for bankruptcy. Though it may appear to be practical to settle 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 lawsuits which will consequently postpone your bankruptcy filing and discharge. Each and every creditor holds the same weight under Australian Law, so if you completely repay one over another, the bankruptcy trustee will take legal action against the creditor in what’s called a clawback lawsuit. This is undertaken to recover 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 withhold any information relating to your financial situation. When you file for bankruptcy, you are required by Law to supply complete and proper information regarding your assets, income, debts, and expenses. Failing to disclose an asset, for example, is regarded as misrepresentation and you will be liable to criminal prosecution. If you are unclear of something, talk to your lawyer and spend the time to investigate to guarantee you’re supplying the correct information. When it relates 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 relative’s name to preserve 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 interpreted as fraudulent activity which comes with criminal consequences. Selling assets to pay off your debts is, needless to say, a natural response to attempt to ease the financial strain. It’s essential to remember that your Statement of Financial Affairs is a legal record, so you must be straightforward with your financial history or deal with the probable repercussions 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 prior to filing for bankruptcy. You will also 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 need. If you’re dealing with financial challenges, it’s typical for friends and family 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 specifically income related such as work or dividends. It’s also critical to keep work related money and personal money entirely separate from each other. All of these activities can produce a lot of confusion and can lead to claims of fraud when filing for bankruptcy.
As you can see, there are some serious consequences for relatively insignificant 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 someone about your circumstances, contact Bankruptcy Experts Hobart on 1300 795 575 or visit http://www.bankruptcyexpertshobart.com.au