Too many bills? Too much debt? Not enough money? Many people struggle financially at some point in their lives. Uncontrolled incidents such as hospitalisation, losing a job, and also divorce, can drastically transform your financial situation. Yet, when there’s no other way to properly manage your debts, some individuals are forced to file for bankruptcy.
Going bankrupt is never easy. It’s complicated, demanding, and emotional. As a result, too many folks dig themselves a deeper hole before even filing for personal bankruptcy. It’s imperative that you ask for professional advice concerning your bankruptcy options. There are a number of financial decisions that should be avoided at all costs to avoid ruining your bankruptcy case. This article will present some tips on things you should never do before going bankrupt.
Using Credit Cards
The first thing you should do when you are facing financial dilemmas is to cease using your credit cards. While it is tempting to make smaller purchases like food and fuel, the reality is that credit cards have outrageous fees which only get magnified when you are not able to make repayments. Along with this, making big purchases with the understanding that you will shortly be going bankrupt is considered 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 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 sensible to payoff 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 consequently prolong 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 sue the creditor in what’s called a clawback lawsuit. This is carried out to recover the money that was paid to the favoured creditor to ensure that it can be distributed equally between 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 precise information pertaining to your assets, income, debts, and expenses. Failing to acknowledge an asset, for example, is regarded as misrepresentation and you will be liable to criminal prosecution. If you’re uncertain of anything, talk to your lawyer and spend the time to investigate to make certain you are supplying the correct information. When it comes to money, there are digital trails almost everywhere, so do not think you can hide anything. You might get away with it in the first instance, 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 protect those assets from bankruptcy is a fantasy. As a matter of fact, transferring assets will not shelter those assets at all, and may be taken as fraudulent activity which involves criminal repercussions. Selling assets to pay back your debts is, obviously, a natural reaction to try to mitigate the financial strain. It’s important to bear in mind that your Statement of Financial Affairs is a legal record, so you must be truthful with your financial history or confront the possible 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 before filing for bankruptcy. You will also be asked what you did with the money you acquired 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 experiencing financial hardship, it’s normal for family and friends to give 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 directly income related such as work or dividends. It’s likewise crucial to keep work related money and personal money completely separate from each other. All of these activities can produce a great deal of confusion and can lead to claims of fraud when filing for bankruptcy.
As you can see, there are some substantial 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 additional information or to talk with someone about your situation, contact Bankruptcy Experts Shepparton on 1300 795 575 or visit http://www.bankruptcyexpertsshepparton.com.au