Too many bills? Too much debt? Not nearly enough money? Many people struggle financially at some point in their lives. Unexpected events such as hospitalisation, losing a job, and even divorce, can severely reshape your financial circumstances. Yet, when there’s no other way to effectively control your debts, some folks are forced to file for bankruptcy.
Going bankrupt is never simple. It’s complicated, stressful, and emotional. As a result, too many individuals dig themselves a deeper hole before even filing for personal bankruptcy. It’s critical that you seek professional advice relating to 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 offer 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 problems is to stop using your credit cards. Whilst it is tempting to make modest purchases like food and fuel, the reality is that credit cards have inflated fees which only get exacerbated when you are unable to make repayments. Alongside this, making substantial purchases with the understanding that you will soon be going bankrupt is deemed fraud. Of course, small purchases are fine, but if you intentionally max out your credit cards before filing for bankruptcy, creditors will investigate and you will end up in a significantly worse position.
Repay Favoured Creditors
When you have uncontrollable debt, do not repay any creditors before you file for bankruptcy. 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 court actions which will inevitably 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 file a claim against the creditor in what’s called a clawback lawsuit. This is done to recoup the money that was paid to the favoured creditor so that it can be distributed equally among all creditors.
Lie or Withhold any Information
Whatever you do, do not lie or conceal any information relating to your financial situation. When you file for bankruptcy, you are required by Law to present complete and accurate information concerning 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, talk with your lawyer and spend the time to investigate to make sure that you’re giving the correct information. When it concerns money, there are computerised trails everywhere, so don’t think you can conceal 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 spare those assets from bankruptcy is a fable. In fact, transferring assets will not shelter those assets at all, and may be interpreted as fraudulent activity which comes with criminal repercussions. Selling assets to repay your debts is, by all means, a common reaction to try to alleviate the financial strain. It’s critical to bear in mind that your Statement of Financial Affairs is a lawful document, so you must be honest with your financial history or confront the probable repercussions of getting caught. You’ll be asked by the trustee if you sold, transferred or gave away any assets, typically for a period of one year prior to filing for bankruptcy. You will even be asked what you did with the money you received from those transfers, so be wary of a preferential transfer, especially 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’re experiencing financial adversity, it’s normal for friends and family to offer 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 critical to keep work related money and personal money completely separate from each other. All of these activities can create a lot of confusion and can trigger claims of fraud when filing for bankruptcy.
As you can see, there are some serious 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 somebody about your circumstances, contact Bankruptcy Experts Coffs Harbour on 1300 795 575 or visit http://www.bankruptcyexpertscoffsharbour.com.au