Top Things You Should NOT Do Before Going Bankrupt
Too many bills? Too much debt? Not enough money? Many people struggle financially at some point in their lives. Unanticipated events like hospitalisation, redundancy, or even divorce, can greatly alter your financial situation. Yet, when there’s no other way to adequately cope with your debts, some individuals are forced to file for bankruptcy.
Going bankrupt is never easy. It’s complicated, stressful, and emotional. As a result, too many 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 certain 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 facing financial dilemmas is to cease using your credit cards. While it is tempting to make modest purchases like food and fuel, the truth is that credit cards have enormous fees which only get magnified when you are unable to make repayments. In addition to this, making substantial purchases with the understanding that you will soon be going bankrupt is considered fraud. Obviously, small purchases are fine, but if you deliberately max out your credit cards before filing for bankruptcy, creditors will investigate and you will end up in a much worse position.
Repay Favoured Creditors
When you have unmanageable debt, do not repay any creditors before you file for bankruptcy. Although it may sound practical to pay off as much debt as possible, the fact 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 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 file a claim against the creditor in what’s called a clawback lawsuit. This is undertaken to recoup the money that was paid to the favoured creditor to ensure it can be dispersed equally among 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 specific information pertaining to your assets, income, debts, and expenses. Failing to disclose an asset, for instance, is considered 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 you are providing the correct information. When it comes to money, there are computerised trails pretty much everywhere, so do not think you can conceal 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 myth. In fact, transferring assets will not shelter those assets in any way, and may be taken as fraudulent activity which comes with criminal consequences. Selling assets to pay back your debts is, by all means, a legitimate reaction to try to relieve the financial strain. It’s vital to bear in mind that your Statement of Financial Affairs is a legal record, so you must be completely honest 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 prior to filing for bankruptcy. You’ll additionally be asked what you did with the money you acquired from those transfers, so be careful of a preferential transfer, particularly with friends and family members.
Deposit Non-Income Earning Money Into Your Bank Account
Friends and family are there to help in times of distress. If you’re dealing with financial problems, it’s normal for family and friends to offer 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 directly income related such as work or dividends. It’s likewise important to keep work related money and personal money totally 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 insignificant 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 information or to speak with someone about your situation, contact Bankruptcy Experts Tablelands on 1300 795 575 or visit http://www.bankruptcyexpertstablelands.com.au