Top Things You Should NOT Do Prior to Going Bankrupt
Lots of bills? Too much debt? Not enough money? Many people struggle financially at some point in their lives. Uncontrolled incidents like hospitalisation, redundancy, and even divorce, can severely reshape your financial situation. Yet, when there’s no other way to adequately handle your debts, some individuals are forced to file for bankruptcy.
Going bankrupt is never simple. It’s complicated, traumatic, and emotional. Consequently, lots of individuals dig themselves a deeper hole before even filing for personal bankruptcy. It is essential that you ask for professional advice relating to your bankruptcy options. There are a number of financial decisions that should be avoided at all costs to avoid wreaking havoc on your bankruptcy case. This article will provide some tips on things you should never do before going bankrupt.
Using Credit Cards
The very first thing you should do when you’re having financial dilemmas is to cease using your credit cards. Although it is tempting to make smaller purchases like meals and fuel, the reality is that credit cards have excessively high fees which only get exacerbated when you are not able to make repayments. Along with this, making substantial purchases with the knowledge that you will shortly be going bankrupt is considered fraud. Of course, small purchases are okay, but if you intentionally max out your credit cards prior to filing for bankruptcy, creditors will investigate and you’ll find yourself in a much worse position.
Repay Favoured Creditors
When you have uncontrolled debt, do not repay any creditors before you file for bankruptcy. Even though it may appear to be reasonable to repay 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 court actions which will ultimately postpone your bankruptcy filing and discharge. Each 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 undertaken to recoup the money that was paid to the favoured creditor to ensure that 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 present complete and proper information pertaining to your assets, income, debts, and expenses. Failing to reveal an asset, for example, is regarded as misrepresentation and you will be liable to criminal prosecution. If you’re not sure of anything, talk to your lawyer and spend the time to investigate to make sure you’re supplying the correct information. When it involves money, there are computerised trails just about everywhere, so don’t think you can conceal anything. You might get away with it initially, 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 protect those assets from bankruptcy is a fable. As a matter of fact, transferring assets will not preserve those assets whatsoever, and may be construed as fraudulent activity which involves criminal consequences. Selling assets to settle your debts is, of course, a normal response to attempt to mitigate the financial burden. It’s critical to remember that your Statement of Financial Affairs is a lawful document, so you must be completely honest with your financial history or deal with the probable consequences 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 will likewise be asked what you did with the money you gained 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 distress. If you are grappling with financial challenges, it’s normal for friends and family to offer money to you to ease 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 important 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 lead to claims of fraud when filing for bankruptcy.
As you can see, there are some substantial consequences for relatively minor 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 situation, contact Bankruptcy Experts Sydney on 1300 795 575 or visit http://www.bankruptcyexpertssydney.com.au