Lots of bills? Too much debt? Not nearly enough money? Most people struggle financially at some point in their lives. Unexpected events such as hospitalisation, redundancy, as well as divorce, can drastically affect your financial circumstances. But, when there’s no other way to properly manage your debts, some people are forced to file for bankruptcy.
Going bankrupt is never easy. It’s complicated, traumatic, and emotional. As a result, lots of individuals 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 particular 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 are having financial issues is to cease using your credit cards. Although it is tempting to make smaller purchases like meals and petrol, the reality is that credit cards have exorbitant fees which only get compounded when you’re incapable to make repayments. Along with this, making big purchases with the understanding that you will shortly be going bankrupt is deemed 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 wind up in a considerably worse position.
Repay Favoured Creditors
When you have unmanageable debt, do not repay any creditors before you file for bankruptcy. While it may sound sensible to repay as much debt as possible, the reality is that it can land you in a lot 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. Every creditor carries the same weight under Australian Law, so if you completely repay one over another, the bankruptcy trustee will take legal action against the creditor in what’s called a clawback lawsuit. This is undertaken to recover the money that was paid to the favoured creditor to ensure that it can be distributed equally among all creditors.
Lie or Withhold 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 accurate information relating to your assets, income, debts, and expenses. Failing to acknowledge an asset, for example, is considered misrepresentation and you will be liable to criminal prosecution. If you’re uncertain of anything, consult with your lawyer and spend the time to investigate to guarantee you are giving the correct information. When it involves money, there are digital trails almost everywhere, so do not think you can conceal 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 preserve those assets from bankruptcy is a misconception. In reality, transferring assets will not protect those assets in any way, and may be deciphered as fraudulent activity which involves criminal repercussions. Selling assets to pay back your debts is, needless to say, a common reaction to attempt to alleviate the financial strain. It’s important to bear in mind that your Statement of Financial Affairs is a legal record, so you must be straightforward with your financial history or deal with the probable 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 will additionally 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 distress. If you’re grappling with financial adversity, it’s common for family and friends to give money to you to reduce 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 vital to keep work related money and personal money totally separate from each other. All of these activities can produce a great deal of confusion and can result in claims of fraud when filing for bankruptcy.
As you can see, there are some significant consequences for relatively insignificant financial decisions when you go bankrupt. To make certain 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 Shellharbour on 1300 795 575 or visit http://www.bankruptcyexpertsshellharbour.com.au