Too many bills? Too much debt? Not enough money? Lots of people struggle financially at some point in their lives. Uncontrolled situations such as hospitalisation, losing a job, or even divorce, can significantly alter your financial circumstances. But, when there’s no other way to effectively cope with your debts, some individuals are forced to file for bankruptcy.
Going bankrupt is never simple. It’s complicated, stressful, and emotional. As a result, lots of people dig themselves a deeper hole before even filing for personal bankruptcy. It is essential 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 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 first thing you should do when you are experiencing financial dilemmas is to cease using your credit cards. Although it is tempting to make smaller purchases like food and petrol, the fact is that credit cards have extravagant fees which only get magnified when you’re not able to make repayments. In addition to this, making large purchases with the knowledge that you will shortly be going bankrupt is deemed fraud. Needless to say, small purchases are fine, but if you intentionally max out your credit cards prior to filing for bankruptcy, creditors will investigate and you’ll find yourself in a substantially worse position.
Repay Favoured Creditors
When you have uncontrolled debt, do not repay any creditors before you file for bankruptcy. Although it may seem reasonable to payoff as much debt as possible, the truth 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 ultimately prolong 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 recoup the money that was paid to the favoured creditor to ensure that it can be dispersed equally amongst all creditors.
Lie or Withhold 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 exact information concerning your assets, income, debts, and expenses. Failing to acknowledge an asset, for instance, is regarded as misrepresentation and you will be liable to criminal prosecution. If you are unsure of something, talk to your lawyer and spend the time to investigate to make sure that you are providing the correct information. When it comes to money, there are digital trails almost everywhere, so don’t think you can conceal anything. You might get away with it initially, but it can haunt 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 fallacy. As a matter of fact, transferring assets will not shield those assets in any way, and may be deciphered as fraudulent activity which comes with criminal consequences. Selling assets to pay back your debts is, by all means, a legitimate response to try to mitigate the financial strain. It’s critical to keep in mind that your Statement of Financial Affairs is a lawful document, so you must be honest with your financial history or deal with the likely consequences 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 will likewise be asked what you did with the money you received 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
Family and friends are there to assist in times of distress. If you are experiencing financial problems, 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 likewise essential to keep work related money and personal money totally separate from each other. All of these activities can create a considerable amount of confusion and can lead to claims of fraud when filing for bankruptcy.
As you can see, there are some serious consequences for relatively trivial financial decisions when you go bankrupt. To ensure you have the best bankruptcy case possible without any legal hiccups, seek professional advice from the experts. For more details or to speak with someone about your circumstances, contact Bankruptcy Experts Cairns on 1300 795 575 or visit http://www.bankruptcyexpertscairns.com.au