Lots of bills? Too much debt? Not nearly enough money? Lots of people struggle financially at some point in their lives. Unexpected incidents such as hospitalisation, redundancy, or even divorce, can significantly alter your financial circumstances. But, when there is no other way to appropriately cope with your debts, some individuals are forced to file for bankruptcy.
Going bankrupt is never simple. It’s complicated, demanding, and emotional. Consequently, a lot of folks dig themselves a deeper hole before even filing for personal bankruptcy. It is imperative that you seek professional advice concerning your bankruptcy options. There are certain financial decisions that should be avoided at all costs to avoid wreaking havoc on your bankruptcy case. This article will present 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 issues is to stop using your credit cards. Whilst it is tempting to make smaller purchases like food and fuel, the truth is that credit cards have enormous fees which only get compounded when you are incapable to make repayments. In addition to this, making big purchases with the knowledge that you will soon be going bankrupt is deemed fraud. Of course, small purchases are fine, but if you purposely max out your credit cards prior to filing for bankruptcy, creditors will investigate and you’ll end up in a considerably worse position.
Repay Favoured Creditors
When you have uncontrolled debt, do not repay any creditors before you file for bankruptcy. Even though it may appear to be reasonable to repay as much debt as possible, the reality 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 court actions which will ultimately 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 done to recuperate the money that was paid to the favoured creditor to ensure it can be dispersed equally amongst all creditors.
Lie or Conceal any Information
Whatever you do, do not lie or conceal any information pertaining to your financial situation. When you file for bankruptcy, you are required by Law to provide complete and specific information relating to your assets, income, debts, and expenses. Failing to disclose an asset, for example, is considered misrepresentation and you will be liable to criminal prosecution. If you are not sure of something, talk to your lawyer and spend the time to investigate to make sure you’re supplying the correct information. When it involves money, there are digital trails pretty much everywhere, so do not 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 relative’s name to preserve those assets from bankruptcy is a fantasy. In fact, transferring assets will not shield those assets whatsoever, and may be taken as fraudulent activity which involves criminal repercussions. Selling assets to pay back your debts is, of course, a normal response to attempt to relieve the financial burden. It’s paramount to bear in mind that your Statement of Financial Affairs is a lawful document, so you must be truthful with your financial history or deal with the possible 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 likewise be asked what you did with the money you gained from those transfers, so be wary 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 help in times of distress. If you’re grappling with financial problems, it’s typical 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 produce 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 speak with someone about your circumstances, contact Bankruptcy Experts Sunshine Coast on 1300 795 575 or visit http://www.bankruptcyexpertssunshinecoast.com.au