Lots of bills? Too much debt? Not enough money? Lots of people struggle financially at some point in their lives. Unforeseen incidents such as hospitalisation, redundancy, as well as divorce, can drastically alter your financial condition. But, when there is no other way to adequately cope with your debts, some folks are forced to file for bankruptcy.
Going bankrupt is never easy. It’s complicated, demanding, and emotional. As a result, lots of people dig themselves a deeper hole before even filing for personal bankruptcy. It is vital that you ask for professional advice pertaining to 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 provide 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 issues is to cease using your credit cards. While it is tempting to make modest purchases like food and petrol, the fact is that credit cards have extravagant fees which only get magnified when you’re not able to make repayments. Alongside this, making substantial purchases with the knowledge that you will shortly be going bankrupt is deemed fraud. Naturally, small purchases are okay, but if you deliberately 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 uncontrolled debt, do not repay any creditors before you file for bankruptcy. While it may sound logical 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 court actions which will ultimately impede your bankruptcy filing and discharge. Each and every 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 undertaken to recuperate the money that was paid to the favoured creditor to ensure it can be spread equally between all creditors.
Lie or Withhold 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 detailed 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’re unclear of something, speak with 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 do not think you can hide anything. You might get away with it in the first instance, 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 myth. As a matter of fact, transferring assets will not shield those assets at all, and may be deciphered as fraudulent activity which comes with criminal repercussions. Selling assets to pay off your debts is, by all means, a legitimate reaction to try to mitigate the financial burden. It’s paramount to remember that your Statement of Financial Affairs is a legal record, so you must be honest with your financial history or confront the potential repercussions 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’ll likewise be asked what you did with the money you gained 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 help in times of need. If you are dealing with financial hardship, it’s normal for friends and family 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 directly income related such as work or dividends. It’s likewise critical to keep work related money and personal money completely separate from each other. All of these activities can produce a great deal of confusion and can bring about claims of fraud when filing for bankruptcy.
As you can see, there are some substantial 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 more details or to speak to someone about your situation, contact Bankruptcy Experts Parramatta on 1300 795 575 or visit http://www.bankruptcyexpertsparramatta.com.au