Lots of bills? Too much debt? Not nearly enough money? Lots of people struggle financially at some point in their lives. Unanticipated events like hospitalisation, losing a job, or even divorce, can greatly alter your financial circumstances. But, when there is no other way to properly manage your debts, some individuals 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 vital that you seek professional advice regarding your bankruptcy options. There are various financial decisions that should be avoided at all costs to avoid damaging 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 are experiencing financial dilemmas is to stop using your credit cards. While it is tempting to make modest purchases like meals and petrol, the truth is that credit cards have inflated fees which only get compounded when you are incapable to make repayments. Along with this, making big purchases with the understanding that you will soon be going bankrupt is considered fraud. Naturally, small purchases are fine, but if you intentionally max out your credit cards before filing for bankruptcy, creditors will investigate and you will wind up in a considerably worse position.
Repay Favoured Creditors
When you have unmanageable debt, do not repay any creditors before you file for bankruptcy. Although it may seem sensible to repay as much debt as possible, the reality 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 lawsuits which will inevitably postpone 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 file a claim 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 so that it can be spread equally amongst all creditors.
Lie or Withhold 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 provide complete and exact information regarding 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 are unsure of anything, talk to your lawyer and spend the time to investigate to guarantee you’re providing the correct information. When it involves money, there are computerised trails just about everywhere, so do not think you can conceal anything. You might get away with it initially, but it can plague you and your case later down the track.
Transfer or Move Assets
Transferring or moving assets to a family member’s name to rescue those assets from bankruptcy is a fable. As a matter of fact, transferring assets will not shelter those assets at all, and may be construed as fraudulent activity which comes with criminal repercussions. Selling assets to repay your debts is, of course, a typical response to try to ease the financial burden. It’s crucial to remember that your Statement of Financial Affairs is a legal document, so you must be straightforward with your financial history or deal with the potential repercussions of getting caught. You’ll 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 also be asked what you did with the money you collected 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 assist in times of distress. If you are facing financial hardship, it’s normal for family and friends to give money to you to mitigate 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 important to keep work related money and personal money entirely 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 serious consequences for relatively insignificant 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 details or to speak to someone about your situation, contact Bankruptcy Experts Geraldton on 1300 795 575 or visit http://www.bankruptcyexpertsgeraldton.com.au