Too many bills? Too much debt? Not enough money? Many people struggle financially at some point in their lives. Uncontrolled events such as hospitalisation, redundancy, and also divorce, can severely alter your financial condition. Yet, when there is no other way to appropriately handle your debts, some people are forced to file for bankruptcy.
Going bankrupt is never simple. It’s complicated, traumatic, and emotional. Consequently, a lot of individuals dig themselves a deeper hole before even filing for personal bankruptcy. It’s essential that you seek professional advice relating to your bankruptcy options. There are certain financial decisions that should be avoided at all costs to avoid damaging 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 having financial problems is to stop using your credit cards. Even though it is tempting to make small purchases like food and petrol, the reality is that credit cards have inflated fees which only get magnified when you’re incapable to make repayments. In addition to this, making substantial purchases with the knowledge that you will shortly be going bankrupt is considered fraud. Needless to say, small purchases are okay, but if you intentionally max out your credit cards prior to filing for bankruptcy, creditors will investigate and you’ll end up in a substantially worse position.
Repay Favoured Creditors
When you have uncontrollable debt, do not repay any creditors before you file for bankruptcy. Though it may appear to be 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 court actions which will ultimately postpone your bankruptcy filing and discharge. Each creditor holds 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 it can be dispersed equally among all creditors.
Lie or Conceal any Information
Whatever you do, do not lie or conceal any information concerning your financial situation. When you file for bankruptcy, you are required by Law to provide complete and precise information relating to your assets, income, debts, and expenses. Failing to acknowledge an asset, for instance, is considered misrepresentation and you will be liable to criminal prosecution. If you’re unsure of anything, speak with your lawyer and spend the time to investigate to make certain you are providing the correct information. When it involves money, there are electronic trails 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 spare those assets from bankruptcy is a fallacy. In reality, transferring assets will not preserve those assets at all, and may be construed as fraudulent activity which involves criminal consequences. Selling assets to pay off your debts is, of course, a common reaction to attempt to alleviate the financial burden. It’s essential to bear in mind that your Statement of Financial Affairs is a legal record, so you must be completely honest with your financial history or confront the probable consequences 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 before 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
Friends and family are there to help in times of need. If you’re encountering financial adversity, it’s common for family and friends to give money to you to alleviate the burden. Do not deposit any money from friends or relatives into your bank account, or any money that is not directly income related such as work or dividends. It’s also important to keep work related money and personal money entirely separate from each other. All of these activities can create a lot of confusion and can bring about 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. To learn more or to talk to somebody about your situation, contact Bankruptcy Experts Gold Coast on 1300 879 867 or visit http://www.bankruptcyexpertsgoldcoast.com.au