Top Things You Should NOT Do Prior to Going Bankrupt
Too many bills? Too much debt? Not enough money? Most individuals struggle financially at some point in their lives. Unanticipated situations such as hospitalisation, redundancy, or even divorce, can drastically transform your financial circumstances. But, when there is no other way to suitably control your debts, some folks are forced to file for bankruptcy.
Going bankrupt is never simple. It’s complicated, traumatic, and emotional. As a result, lots of folks dig themselves a deeper hole before even filing for personal bankruptcy. It is critical that you ask for professional advice relating to your bankruptcy options. There are certain financial decisions that should be avoided at all costs to avoid ruining your bankruptcy case. This article will present some tips on things you should never do before going bankrupt.
Using Credit Cards
The very first thing you should do when you’re experiencing financial issues is to stop using your credit cards. Even though it is tempting to make smaller purchases like meals and petrol, the reality is that credit cards have outrageous fees which only get exacerbated when you’re unable to make repayments. Alongside this, making large purchases with the knowledge that you will shortly be going bankrupt is deemed fraud. Of course, small purchases are fine, but if you intentionally max out your credit cards prior to filing for bankruptcy, creditors will investigate and you’ll find yourself in a substantially worse position.
Repay Favoured Creditors
When you have uncontrolled debt, do not repay any creditors before you file for bankruptcy. Although it may sound logical to pay off 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 court actions which will essentially 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 sue the creditor in what’s called a clawback lawsuit. This is carried out to recuperate the money that was paid to the favoured creditor to ensure that it can be dispersed equally between all creditors.
Lie or Conceal 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 provide complete and proper information pertaining to your assets, income, debts, and expenses. Failing to acknowledge an asset, for example, is regarded as misrepresentation and you will be liable to criminal prosecution. If you are uncertain of anything, consult with your lawyer and spend the time to investigate to ensure you are providing the correct information. When it relates to money, there are computerised trails almost 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 preserve those assets from bankruptcy is a delusion. As a matter of fact, transferring assets will not shield those assets at all, and may be deciphered as fraudulent activity which comes with criminal consequences. Selling assets to repay your debts is, by all means, a legitimate response to attempt to reduce the financial burden. It’s critical to keep in mind that your Statement of Financial Affairs is a lawful document, so you must be truthful with your financial history or confront the likely 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 careful 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 assist in times of distress. If you’re grappling with financial adversity, it’s typical for friends and family to offer 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 likewise essential 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 lead to claims of fraud when filing for bankruptcy.
As you can see, there are some severe consequences for relatively minor financial decisions when you go bankrupt. To make sure you have the best bankruptcy case possible without any legal hiccups, seek professional advice from the experts. For additional information or to speak to someone about your situation, contact Bankruptcy Experts Ipswich on 1300 795 575 or visit http://www.bankruptcyexpertsipswich.com.au