Too many bills? Too much debt? Not enough money? Most individuals struggle financially at some point in their lives. Unexpected events like hospitalisation, losing a job, and even divorce, can severely transform your financial circumstances. Yet, when there is no other way to properly manage your debts, some folks are forced to file for bankruptcy.
Going bankrupt is never simple. It’s complicated, demanding, and emotional. Consequently, lots of folks dig themselves a deeper hole before even filing for personal bankruptcy. It is essential that you seek professional advice concerning your bankruptcy options. There are a number of 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 very first thing you should do when you’re facing financial troubles is to stop using your credit cards. Whilst it is tempting to make smaller purchases like food and petrol, the fact is that credit cards have outrageous fees which only get intensified when you are unable to make repayments. In addition to this, making large purchases with the knowledge that you will soon 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’ll end up in a considerably 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 practical to settle 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 lawsuits which will consequently impede 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 recoup the money that was paid to the favoured creditor to ensure that it can be dispersed equally among 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 supply complete and precise information regarding your assets, income, debts, and expenses. Failing to acknowledge an asset, for example, is regarded as 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 are giving the correct information. When it involves money, there are computerised trails almost everywhere, so don’t think you can hide anything. You might get away with it in the first instance, but it can plague you and your case later down the track.
Transfer or Move Assets
Transferring or moving assets to a family member’s name to preserve those assets from bankruptcy is a fallacy. As a matter of fact, transferring assets will not shelter those assets at all, and may be deciphered as fraudulent activity which comes with criminal repercussions. Selling assets to pay off your debts is, of course, a typical response to try to relieve the financial burden. It’s imperative to keep in mind that your Statement of Financial Affairs is a lawful record, so you must be honest with your financial history or confront the possible consequences 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’ll likewise be asked what you did with the money you gained 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 distress. If you are facing financial challenges, it’s common for family and friends to offer 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 crucial to keep work related money and personal money entirely separate from each other. All of these activities can produce a lot of confusion and can bring about 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 make sure you have the best bankruptcy case possible without any legal hiccups, seek professional advice from the experts. To learn more or to talk with somebody about your situation, contact Bankruptcy Experts Dubbo on 1300 795 575 or visit http://www.bankruptcyexpertsdubbo.com.au