Lots of bills? Too much debt? Not enough money? Most people struggle financially at some point in their lives. Unanticipated situations such as hospitalisation, job loss, or even divorce, can greatly affect your financial condition. But, when there is no other way to effectively handle your debts, some folks are forced to file for bankruptcy.
Going bankrupt is never easy. It’s complicated, traumatic, and emotional. Consequently, too many individuals dig themselves a deeper hole before even filing for personal bankruptcy. It is vital that you ask for professional advice concerning your bankruptcy options. There are various 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 having financial troubles is to stop using your credit cards. Although it is tempting to make small purchases like meals and petrol, the truth is that credit cards have inflated fees which only get compounded when you’re not able to make repayments. In addition to this, making large purchases with the knowledge that you will soon be going bankrupt is deemed fraud. Naturally, small purchases are fine, but if you purposely max out your credit cards prior to filing for bankruptcy, creditors will investigate and you will find yourself in a significantly worse position.
Repay Favoured Creditors
When you have uncontrollable debt, do not repay any creditors before you file for bankruptcy. While it may sound practical to pay off 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 legal actions which will inevitably impede your bankruptcy filing and discharge. Each and every creditor holds 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 recover the money that was paid to the favoured creditor so that it can be distributed equally amongst all creditors.
Lie or Conceal any Information
Whatever you do, do not lie or withhold any information regarding your financial situation. When you file for bankruptcy, you are required by Law to provide complete and specific information regarding your assets, income, debts, and expenses. Failing to reveal an asset, for example, is regarded as misrepresentation and you will be liable to criminal prosecution. If you’re unclear of anything, talk to your lawyer and spend the time to investigate to guarantee you are giving the correct information. When it relates to money, there are electronic trails almost everywhere, so do not think you can hide anything. You might get away with it initially, but it can torment 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 misconception. As a matter of fact, transferring assets will not shield those assets at all, and may be interpreted as fraudulent activity which involves criminal consequences. Selling assets to settle your debts is, needless to say, a common response to attempt to relieve the financial strain. It’s imperative to keep in mind that your Statement of Financial Affairs is a legal document, so you must be honest with your financial history or confront the possible repercussions of getting caught. You will be asked by the trustee if you sold, transferred or gave away any assets, typically for a period of one year before filing for bankruptcy. You’ll even be asked what you did with the money you obtained 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
Friends and family are there to assist in times of need. If you are dealing with financial challenges, it’s typical 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 important to keep work related money and personal money completely separate from each other. All of these activities can produce a considerable amount of confusion and can lead to claims of fraud when filing for bankruptcy.
As you can see, there are some severe consequences for relatively trivial 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 talk to somebody about your situation, contact Bankruptcy Experts Rockhampton on 1300 795 575 or visit http://www.bankruptcyexpertsrockhampton.com.au