Too many bills? Too much debt? Not enough money? Most individuals struggle financially at some point in their lives. Unanticipated events like hospitalisation, job loss, and also divorce, can significantly reshape your financial situation. Yet, when there’s no other way to properly handle your debts, some folks are forced to file for bankruptcy.
Going bankrupt is never simple. It’s complicated, stressful, and emotional. As a result, a lot of people dig themselves a deeper hole before even filing for personal bankruptcy. It’s critical that you ask for professional advice regarding 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 very first thing you should do when you’re having financial issues is to stop using your credit cards. While it is tempting to make small purchases like meals and petrol, the truth is that credit cards have outrageous fees which only get magnified when you’re incapable to make repayments. Along with this, making substantial purchases with the understanding that you will shortly be going bankrupt is deemed fraud. Obviously, small purchases are okay, but if you intentionally max out your credit cards prior to filing for bankruptcy, creditors will investigate and you’ll end up in a substantially worse position.
Repay Favoured Creditors
When you have uncontrolled debt, do not repay any creditors before you file for bankruptcy. While it may appear to be logical to payoff as much debt as possible, the fact 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 lawsuits which will inevitably postpone your bankruptcy filing and discharge. Each creditor carries the same weight under Australian Law, so if you completely repay one over another, the bankruptcy trustee will sue the creditor in what’s called a clawback lawsuit. This is done to recover the money that was paid to the favoured creditor to ensure that it can be allocated equally among all creditors.
Lie or Withhold any Information
Whatever you do, do not lie or withhold any information concerning 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 acknowledge an asset, for instance, 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 make certain you’re providing the correct information. When it involves money, there are computerised trails 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 family member’s name to save those assets from bankruptcy is a fable. In fact, transferring assets will not protect those assets whatsoever, and may be construed as fraudulent activity which involves criminal consequences. Selling assets to pay back your debts is, by all means, a normal reaction to attempt to ease the financial burden. It’s imperative to bear in mind that your Statement of Financial Affairs is a legal record, so you must be honest with your financial history or confront the likely consequences of getting caught. You’ll be asked by the trustee if you sold, transferred or gave away any assets, usually for a period of one year prior to filing for bankruptcy. You will even 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 assist in times of need. If you are facing financial difficulty, it’s common for family and friends 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 directly income related such as work or dividends. It’s likewise important 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 serious 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 talk to somebody about your circumstances, contact Bankruptcy Experts Tennant Creek on 1300 795 575 or visit http://www.bankruptcyexpertstennantcreek.com.au