Lots of bills? Too much debt? Not enough money? Most people struggle financially at some point in their lives. Unexpected situations such as hospitalisation, redundancy, or even divorce, can severely affect your financial circumstances. But, when there’s no other way to appropriately cope with your debts, some folks are forced to file for bankruptcy.
Going bankrupt is never simple. It’s complicated, demanding, and emotional. Consequently, too many individuals dig themselves a deeper hole before even filing for personal bankruptcy. It’s vital that you seek professional advice pertaining to your bankruptcy options. There are certain 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 very first thing you should do when you are experiencing financial problems is to stop using your credit cards. Even though it is tempting to make modest purchases like meals and petrol, the fact is that credit cards have exorbitant fees which only get intensified when you are incapable to make repayments. Along with this, making large purchases with the knowledge that you will soon be going bankrupt is deemed fraud. Of course, small purchases are okay, but if you purposely max out your credit cards before filing for bankruptcy, creditors will investigate and you’ll end up in a substantially 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 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 inevitably postpone your bankruptcy filing and discharge. Each and 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 done to recover the money that was paid to the favoured creditor to ensure it can be spread equally between all creditors.
Lie or Conceal any Information
Whatever you do, do not lie or withhold any information pertaining to 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 reveal an asset, for example, is considered misrepresentation and you will be liable to criminal prosecution. If you are unsure of something, talk with your lawyer and spend the time to investigate to make sure you’re providing the correct information. When it relates to money, there are electronic trails almost everywhere, so don’t think you can hide 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 family member’s name to rescue those assets from bankruptcy is a misconception. As a matter of fact, transferring assets will not preserve those assets at all, and may be deciphered as fraudulent activity which comes with criminal repercussions. Selling assets to repay your debts is, of course, a normal reaction to attempt to reduce the financial strain. It’s essential to remember that your Statement of Financial Affairs is a lawful record, 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, typically for a period of one year before filing for bankruptcy. You’ll even 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
Friends and family are there to assist in times of need. If you’re facing financial problems, it’s typical for family and friends to offer money to you to reduce the burden. Do not deposit any money from friends or relatives into your bank account, or any money that is not directly income related such as work or dividends. It’s also crucial 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 severe 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 additional information or to talk to somebody about your circumstances, contact Bankruptcy Experts Mackay on 1300 795 575 or visit http://www.bankruptcyexpertsmackay.com.au