Lots of bills? Too much debt? Not enough money? Many people struggle financially at some point in their lives. Unexpected situations like hospitalisation, redundancy, and also divorce, can greatly alter your financial situation. But, when there is no other way to appropriately 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, 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 particular financial decisions that should be avoided at all costs to avoid damaging 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 are having financial troubles is to cease using your credit cards. Even though it is tempting to make small purchases like meals and fuel, the fact is that credit cards have outrageous fees which only get magnified when you’re incapable to make repayments. Alongside this, making large purchases with the knowledge that you will soon be going bankrupt is considered fraud. Needless to say, small purchases are okay, but if you deliberately max out your credit cards prior to 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. Even though it may seem reasonable to settle as much debt as possible, the truth 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 court actions which will consequently prolong your bankruptcy filing and discharge. Each creditor holds the same weight under Australian Law, so if you completely repay one over another, the bankruptcy trustee will sue 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 spread equally among all creditors.
Lie or Withhold any Information
Whatever you do, do not lie or conceal any information relating to your financial situation. When you file for bankruptcy, you are required by Law to supply complete and proper information regarding your assets, income, debts, and expenses. Failing to disclose an asset, for instance, is regarded as misrepresentation and you will be liable to criminal prosecution. If you are not sure of anything, speak to your lawyer and spend the time to investigate to guarantee you’re providing the correct information. When it concerns money, there are computerised trails everywhere, so do not think you can conceal 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 spare those assets from bankruptcy is a delusion. In 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 pay back your debts is, by all means, a typical reaction to attempt to reduce the financial strain. It’s crucial to remember that your Statement of Financial Affairs is a lawful document, so you must be completely honest with your financial history or face the probable repercussions 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 before filing for bankruptcy. You’ll likewise be asked what you did with the money you obtained 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 help in times of need. If you’re encountering financial difficulty, it’s typical for friends and family to offer money to you to alleviate 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 likewise crucial to keep work related money and personal money completely separate from each other. All of these activities can produce a considerable amount of confusion and can result in claims of fraud when filing for bankruptcy.
As you can see, there are some significant 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 to someone about your situation, contact Bankruptcy Experts Mildura on 1300 795 575 or visit http://www.bankruptcyexpertsmildura.com.au