Too many bills? Too much debt? Not enough money? Most individuals struggle financially at some point in their lives. Unexpected events such as hospitalisation, job loss, and even divorce, can seriously reshape your financial circumstances. Yet, when there’s no other way to suitably manage your debts, some individuals are forced to file for bankruptcy.
Going bankrupt is never simple. It’s complicated, traumatic, and emotional. As a result, too many people dig themselves a deeper hole before even filing for personal bankruptcy. It is vital that you ask for professional advice concerning 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 first thing you should do when you’re experiencing financial troubles is to cease using your credit cards. Even though it is tempting to make small purchases like meals and petrol, the truth is that credit cards have extravagant fees which only get magnified when you are not able to make repayments. Alongside this, making big purchases with the understanding that you will shortly be going bankrupt is considered fraud. Obviously, 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 uncontrollable debt, do not repay any creditors before you file for bankruptcy. Although it may seem practical to payoff 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 legal actions which will consequently prolong 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 done to recoup the money that was paid to the favoured creditor so that it can be allocated equally amongst all creditors.
Lie or Conceal any Information
Whatever you do, do not lie or conceal any information regarding your financial situation. When you file for bankruptcy, you are required by Law to provide complete and exact 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’re uncertain of anything, speak to your lawyer and spend the time to investigate to make sure that you’re providing the correct information. When it concerns money, there are computerised trails just about everywhere, so don’t think you can hide 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 protect those assets from bankruptcy is a fallacy. As a matter of fact, transferring assets will not shield those assets whatsoever, and may be interpreted as fraudulent activity which involves criminal repercussions. Selling assets to repay your debts is, needless to say, a typical reaction to attempt to ease the financial burden. It’s important to keep in mind that your Statement of Financial Affairs is a lawful record, so you must be honest 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, typically for a period of one year prior to filing for bankruptcy. You’ll additionally be asked what you did with the money you acquired 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 assist in times of need. If you are facing financial problems, it’s common for family and friends to offer 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 specifically income related such as work or dividends. It’s likewise crucial 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 substantial consequences for relatively minor 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. To learn more or to talk to somebody about your circumstances, contact Bankruptcy Experts Dandenong on 1300 795 575 or visit http://www.bankruptcyexpertsdandenong.com.au