Lots of bills? Too much debt? Not enough money? Many people struggle financially at some point in their lives. Uncontrolled events such as hospitalisation, redundancy, or even divorce, can seriously reshape your financial situation. Yet, when there’s no other way to adequately control your debts, some individuals are forced to file for bankruptcy.
Going bankrupt is never simple. It’s complicated, demanding, and emotional. As a result, a lot of folks dig themselves a deeper hole before even filing for personal bankruptcy. It is critical that you seek professional advice relating to 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’re having financial issues is to stop using your credit cards. Even though it is tempting to make small purchases like meals and fuel, the fact is that credit cards have exorbitant fees which only get exacerbated when you are unable to make repayments. Along with this, making large purchases with the understanding that you will soon be going bankrupt is deemed fraud. Needless to say, small purchases are okay, but if you purposely max out your credit cards before filing for bankruptcy, creditors will investigate and you’ll wind up in a much 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 sensible to payoff as much debt as possible, the reality is that it can land you in a great deal of trouble! If one creditor is treated favourably over another, it is called ‘preferential transfer’ and will attract lawsuits which will consequently impede 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 take legal action against the creditor in what’s called a clawback lawsuit. This is done 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 concerning your financial situation. When you file for bankruptcy, you are required by Law to present complete and exact information regarding your assets, income, debts, and expenses. Failing to reveal an asset, for example, is regarded as misrepresentation and you will be liable to criminal prosecution. If you are uncertain of something, consult with your lawyer and spend the time to investigate to make sure that you’re giving the correct information. When it comes to money, there are electronic 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 myth. In reality, transferring assets will not shelter those assets whatsoever, and may be deciphered as fraudulent activity which comes with criminal repercussions. Selling assets to pay back your debts is, obviously, a natural response to try to alleviate the financial strain. It’s essential to keep in mind that your Statement of Financial Affairs is a legal record, so you must be truthful with your financial history or face the likely 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 prior to filing for bankruptcy. You’ll also be asked what you did with the money you collected 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 assist in times of distress. If you’re encountering financial distress, 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 likewise important to keep work related money and personal money completely separate from each other. All of these activities can produce a lot of confusion and can trigger claims of fraud when filing for bankruptcy.
As you can see, there are some substantial consequences for relatively minor 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 additional information or to talk to someone about your circumstances, contact Gold Coast Bankruptcy Centre on 1300 795 575 or visit http://www.goldcoastbankruptcycentre.com.au