|March 29, 2017||0|
Lots of bills? Too much debt? Not enough money? Most individuals struggle financially at some point in their lives. Uncontrolled situations such as hospitalisation, losing a job, and also divorce, can drastically alter your financial condition. But, when there’s no other way to adequately manage your debts, some individuals are forced to file for bankruptcy.
Going bankrupt is never easy. It’s complicated, demanding, and emotional. As a result, lots of folks dig themselves a deeper hole before even filing for personal bankruptcy. It is vital that you ask for professional advice pertaining 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 facing financial issues is to cease using your credit cards. Even though it is tempting to make small purchases like meals and fuel, the fact is that credit cards have extravagant fees which only get compounded when you’re unable 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 prior to filing for bankruptcy, creditors will investigate and you’ll find yourself in a significantly 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 logical to repay as much debt as possible, the truth 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 impede 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 recover the money that was paid to the favoured creditor to ensure that it can be allocated equally among 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 present complete and precise 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, speak to your lawyer and spend the time to investigate to guarantee you’re supplying the correct information. When it concerns money, there are computerised trails pretty much everywhere, so don’t think you can hide anything. You might get away with it in the first instance, but it can plague you and your case later down the track.
Transfer or Move Assets
Transferring or moving assets to a relative’s name to save those assets from bankruptcy is a myth. As a matter of fact, transferring assets will not shield those assets in any way, and may be interpreted as fraudulent activity which involves criminal repercussions. Selling assets to settle your debts is, by all means, a legitimate reaction to try to alleviate the financial strain. It’s essential to bear in mind that your Statement of Financial Affairs is a legal record, so you must be truthful with your financial history or deal with 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’ll likewise be asked what you did with the money you obtained 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 need. If you are dealing with financial distress, it’s normal for friends and family to offer money to you to alleviate 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 imperative to keep work related money and personal money entirely separate from each other. All of these activities can create a lot of confusion and can trigger 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 ensure 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 Fresh Start Solutions Adelaide on 1300 818 575 or visit http://freshstartsolutions.com.au/bankruptcy-adelaide