Lots of bills? Too much debt? Not enough money? Many people struggle financially at some point in their lives. Unexpected situations like hospitalisation, redundancy, and even divorce, can seriously reshape your financial circumstances. But, when there is no other way to appropriately cope with your debts, some folks are forced to file for bankruptcy.
Going bankrupt is never easy. It’s complicated, demanding, and emotional. Consequently, lots of individuals dig themselves a deeper hole before even filing for personal bankruptcy. It’s crucial that you seek professional advice concerning your bankruptcy options. There are particular financial decisions that should be avoided at all costs to avoid ruining 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’re facing financial issues is to stop using your credit cards. While it is tempting to make smaller purchases like food and fuel, the reality is that credit cards have exorbitant fees which only get exacerbated when you are incapable to make repayments. Alongside this, making large purchases with the knowledge that you will shortly be going bankrupt is considered fraud. Obviously, small purchases are fine, but if you purposely max out your credit cards before filing for bankruptcy, creditors will investigate and you will end up in a substantially worse position.
Repay Favoured Creditors
When you have uncontrollable debt, do not repay any creditors before you file for bankruptcy. Even though it may sound reasonable to settle as much debt as possible, the fact 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 ultimately impede your bankruptcy filing and discharge. Each 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 undertaken to recoup the money that was paid to the favoured creditor so that it can be spread equally among 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 supply complete and exact information pertaining to your assets, income, debts, and expenses. Failing to acknowledge an asset, for instance, is regarded as misrepresentation and you will be liable to criminal prosecution. If you are not sure of anything, speak to your lawyer and spend the time to investigate to ensure you are giving the correct information. When it concerns money, there are electronic trails just about 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 save those assets from bankruptcy is a fantasy. As a matter of fact, transferring assets will not shelter those assets in any way, and may be construed as fraudulent activity which comes with criminal consequences. Selling assets to pay off your debts is, of course, a legitimate reaction to attempt to reduce the financial strain. It’s critical to keep in mind that your Statement of Financial Affairs is a lawful document, so you must be honest with your financial history or confront the likely 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 acquired 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
Friends and family are there to help in times of need. If you are dealing with financial adversity, it’s common for friends and family to give money to you to relieve 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 essential 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 lead to claims of fraud when filing for bankruptcy.
As you can see, there are some significant consequences for relatively trivial 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 with someone about your circumstances, contact Bankruptcy Experts Gosford on 1300 795 575 or visit http://www.bankruptcyexpertsgosford.com.au