Too many bills? Too much debt? Not nearly enough money? Most individuals struggle financially at some point in their lives. Unexpected situations such as hospitalisation, job loss, or even divorce, can severely transform your financial condition. Yet, when there’s no other way to adequately manage your debts, some folks are forced to file for bankruptcy.
Going bankrupt is never easy. It’s complicated, demanding, and emotional. Consequently, a lot of individuals dig themselves a deeper hole before even filing for personal bankruptcy. It is crucial that you seek professional advice pertaining 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 very first thing you should do when you are facing financial dilemmas is to stop using your credit cards. Even though it is tempting to make small purchases like meals and petrol, the truth is that credit cards have outrageous fees which only get magnified when you’re incapable to make repayments. Along with this, making big purchases with the understanding that you will shortly be going bankrupt is considered fraud. Needless to say, small purchases are fine, but if you deliberately max out your credit cards before filing for bankruptcy, creditors will investigate and you will end up in a much worse position.
Repay Favoured Creditors
When you have uncontrollable debt, do not repay any creditors before you file for bankruptcy. While it may sound logical to repay as much debt as possible, the fact 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 legal actions which will essentially prolong 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 take legal action against the creditor in what’s called a clawback lawsuit. This is carried out to recuperate the money that was paid to the favoured creditor to ensure it can be distributed equally between 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 exact information regarding your assets, income, debts, and expenses. Failing to reveal an asset, for instance, is regarded as misrepresentation and you will be liable to criminal prosecution. If you are unsure of something, speak with your lawyer and spend the time to investigate to make certain you’re providing the correct information. When it concerns money, there are computerised trails 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 relative’s name to rescue those assets from bankruptcy is a fable. In fact, transferring assets will not protect those assets in any way, and may be interpreted as fraudulent activity which involves criminal consequences. Selling assets to repay your debts is, by all means, a natural response to try to alleviate the financial burden. It’s paramount to keep in mind that your Statement of Financial Affairs is a legal record, so you must be straightforward 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 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 help in times of need. If you’re facing financial adversity, it’s common for friends and family to offer money to you to ease 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 essential 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 severe consequences for relatively trivial financial decisions when you go bankrupt. To guarantee 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 Northern Rivers on 1300 795 575 or visit http://www.bankruptcyexpertsnorthernrivers.com.au