Lots of bills? Too much debt? Not nearly enough money? Many people struggle financially at some point in their lives. Unexpected incidents such as hospitalisation, job loss, and even divorce, can greatly reshape your financial situation. But, when there is no other way to effectively cope with your debts, some folks are forced to file for bankruptcy.
Going bankrupt is never simple. It’s complicated, traumatic, and emotional. As a result, a lot of people dig themselves a deeper hole before even filing for personal bankruptcy. It is crucial that you ask for professional advice relating to your bankruptcy options. There are various financial decisions that should be avoided at all costs to avoid ruining 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 issues is to cease using your credit cards. Although it is tempting to make smaller purchases like meals and petrol, the truth is that credit cards have extravagant fees which only get compounded when you’re incapable to make repayments. In addition to this, making substantial purchases with the knowledge that you will soon be going bankrupt is deemed fraud. Of course, small purchases are fine, but if you purposely max out your credit cards prior to filing for bankruptcy, creditors will investigate and you’ll wind up in a considerably worse position.
Repay Favoured Creditors
When you have uncontrolled debt, do not repay any creditors before you file for bankruptcy. While it may seem practical to pay off as much debt as possible, the reality 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 lawsuits which will consequently postpone 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 undertaken to recover the money that was paid to the favoured creditor to ensure that it can be allocated 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 exact information pertaining to your assets, income, debts, and expenses. Failing to disclose an asset, for instance, is considered 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 make certain you are providing the correct information. When it concerns money, there are computerised trails just about everywhere, so don’t 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 save those assets from bankruptcy is a misconception. As a matter of fact, transferring assets will not protect those assets in any way, and may be taken as fraudulent activity which comes with criminal consequences. Selling assets to settle your debts is, obviously, a common reaction to try to mitigate the financial strain. It’s vital to bear in mind that your Statement of Financial Affairs is a lawful document, so you must be straightforward with your financial history or deal with the potential repercussions of getting caught. You will be asked by the trustee if you sold, transferred or gave away any assets, normally for a period of one year before filing for bankruptcy. You will likewise be asked what you did with the money you acquired from those transfers, so be careful 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 help in times of distress. If you are dealing with financial difficulty, it’s typical for friends and family to give money to you to lessen 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 critical to keep work related money and personal money totally 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 substantial 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. To learn more or to talk to somebody about your circumstances, contact Bankruptcy Experts Brisbane on 1300 795 575 or visit http://www.bankruptcyexpertsbrisbane.com.au