Top Things You Should NOT Do Prior to Going Bankrupt
Too many bills? Too much debt? Not nearly enough money? Most individuals struggle financially at some point in their lives. Unexpected incidents like hospitalisation, redundancy, and also divorce, can severely affect your financial circumstances. But, when there’s no other way to appropriately handle your debts, some people are forced to file for bankruptcy.
Going bankrupt is never easy. It’s complicated, stressful, and emotional. As a result, too many folks dig themselves a deeper hole before even filing for personal bankruptcy. It is critical 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 provide some tips on things you should never do before going bankrupt.
Using Credit Cards
The first thing you should do when you’re having financial dilemmas is to stop using your credit cards. While it is tempting to make small purchases like food and petrol, the reality is that credit cards have extravagant fees which only get intensified when you’re incapable to make repayments. Along with this, making big purchases with the understanding that you will shortly be going bankrupt is deemed fraud. Of course, small purchases are fine, but if you purposely max out your credit cards before filing for bankruptcy, creditors will investigate and you will wind up in a much worse position.
Repay Favoured Creditors
When you have uncontrolled debt, do not repay any creditors before you file for bankruptcy. Though it may seem sensible to pay off as much debt as possible, the truth is that it can land you in a considerable amount of trouble! If one creditor is treated favourably over another, it is called ‘preferential transfer’ and will attract legal actions which will ultimately impede your bankruptcy filing and discharge. Every 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 recover 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 withhold any information regarding your financial situation. When you file for bankruptcy, you are required by Law to supply complete and proper information concerning 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 unclear of anything, speak to your lawyer and spend the time to investigate to make certain you’re providing the correct information. When it comes to money, there are digital trails almost everywhere, so do not think you can conceal anything. You might get away with it in the first instance, but it can haunt you and your case later down the track.
Transfer or Move Assets
Transferring or moving assets to a relative’s name to rescue those assets from bankruptcy is a fable. As a matter of fact, transferring assets will not preserve those assets whatsoever, and may be deciphered as fraudulent activity which comes with criminal consequences. Selling assets to repay your debts is, by all means, a normal response to try to mitigate the financial burden. It’s essential to keep in mind that your Statement of Financial Affairs is a lawful record, so you must be honest with your financial history or confront the potential consequences of getting caught. You will be asked by the trustee if you sold, transferred or gave away any assets, usually for a period of one year prior to filing for bankruptcy. You will additionally 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 distress. If you’re facing financial adversity, it’s typical for family and friends 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 likewise crucial to keep work related money and personal money totally separate from each other. All of these activities can produce a great deal of confusion and can trigger 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 make certain you have the best bankruptcy case possible without any legal hiccups, seek professional advice from the experts. To learn more or to talk with someone about your circumstances, contact Bankruptcy Experts Tamworth on 1300 795 575 or visit http://www.bankruptcyexpertstamworth.com.au