Too many bills? Too much debt? Not nearly enough money? Most individuals struggle financially at some point in their lives. Uncontrolled situations like hospitalisation, redundancy, as well as divorce, can seriously affect your financial circumstances. Yet, when there’s no other way to suitably handle your debts, some people are forced to file for bankruptcy.
Going bankrupt is never simple. It’s complicated, demanding, and emotional. Consequently, lots of individuals dig themselves a deeper hole before even filing for personal bankruptcy. It is crucial that you ask for professional advice regarding 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 provide some tips on things you should never do before going bankrupt.
Using Credit Cards
The first thing you should do when you are facing financial dilemmas is to stop using your credit cards. Whilst it is tempting to make smaller purchases like food and petrol, the truth is that credit cards have inflated fees which only get magnified when you are unable to make repayments. Along with this, making large purchases with the understanding that you will shortly be going bankrupt is considered fraud. Naturally, small purchases are fine, but if you purposely max out your credit cards prior to filing for bankruptcy, creditors will investigate and you will end up in a significantly worse position.
Repay Favoured Creditors
When you have uncontrollable debt, do not repay any creditors before you file for bankruptcy. Although it may appear to be sensible to settle 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 legal actions which will essentially 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 take legal action against the creditor in what’s called a clawback lawsuit. This is undertaken to recover the money that was paid to the favoured creditor to ensure it can be dispersed equally between all creditors.
Lie or Conceal 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 detailed information regarding your assets, income, debts, and expenses. Failing to reveal an asset, for instance, is regarded as misrepresentation and you will be liable to criminal prosecution. If you’re not sure of something, talk to your lawyer and spend the time to investigate to ensure you’re supplying the correct information. When it concerns money, there are computerised trails everywhere, so don’t think you can hide 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 save those assets from bankruptcy is a delusion. In fact, transferring assets will not protect those assets whatsoever, and may be taken as fraudulent activity which comes with criminal repercussions. Selling assets to pay back your debts is, of course, a normal response to try to reduce the financial strain. It’s important to bear in mind that your Statement of Financial Affairs is a lawful document, so you must be truthful with your financial history or deal with the probable 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 additionally be asked what you did with the money you collected 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
Family and friends are there to help in times of need. If you’re grappling with financial challenges, it’s typical for family and friends to give 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 specifically income related such as work or dividends. It’s also imperative to keep work related money and personal money completely separate from each other. All of these activities can create a lot of confusion and can lead to 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 guarantee you have the best bankruptcy case possible without any legal hiccups, seek professional advice from the experts. For more information or to speak to someone about your circumstances, contact Bankruptcy Experts Adelaide on 1300 795 575 or visit http://www.bankruptcyexpertsadelaide.com.au