|March 29, 2017||Comments Closed|
Too many bills? Too much debt? Not enough money? Most people struggle financially at some point in their lives. Unexpected incidents like hospitalisation, redundancy, and even divorce, can drastically reshape your financial condition. Yet, when there’s no other way to effectively cope with your debts, some people are forced to file for bankruptcy.
Going bankrupt is never easy. It’s complicated, demanding, and emotional. As a result, a lot of individuals dig themselves a deeper hole before even filing for personal bankruptcy. It’s imperative that you seek professional advice regarding your bankruptcy options. There are certain financial decisions that should be avoided at all costs to avoid ruining 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 problems is to cease using your credit cards. Whilst it is tempting to make modest purchases like meals and petrol, the truth is that credit cards have extravagant fees which only get exacerbated when you’re unable to make repayments. Alongside this, making big purchases with the understanding that you will shortly be going bankrupt is considered fraud. Needless to say, small purchases are fine, but if you purposely 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 uncontrolled debt, do not repay any creditors before you file for bankruptcy. While it may seem sensible to repay as much debt as possible, the truth 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 essentially 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 recuperate the money that was paid to the favoured creditor so that it can be distributed equally between 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 relating to 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’re unsure of something, speak to your lawyer and spend the time to investigate to make sure that you’re providing the correct information. When it concerns money, there are computerised trails almost everywhere, so don’t think you can conceal anything. You might get away with it initially, 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 preserve those assets from bankruptcy is a fantasy. In reality, transferring assets will not shield those assets in any way, and may be deciphered as fraudulent activity which comes with criminal repercussions. Selling assets to settle your debts is, needless to say, a natural reaction to try to mitigate the financial strain. It’s vital to remember that your Statement of Financial Affairs is a legal record, so you must be completely honest with your financial history or confront the likely repercussions of getting caught. You’ll 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 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 need. If you’re experiencing financial hardship, it’s typical for friends and family to offer 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 specifically income related such as work or dividends. It’s also essential to keep work related money and personal money entirely 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 make certain you have the best bankruptcy case possible without any legal hiccups, seek professional advice from the experts. For more information or to speak with somebody about your circumstances, contact Bankruptcy Bendigo on 1300 818 575 or visit http://www.bankruptcy-bendigo.com.au/