|March 29, 2017||0|
Lots of bills? Too much debt? Not nearly enough money? Lots of people struggle financially at some point in their lives. Uncontrolled events like hospitalisation, job loss, and also divorce, can seriously affect your financial situation. But, when there is no other way to effectively control your debts, some people are forced to file for bankruptcy.
Going bankrupt is never simple. It’s complicated, stressful, and emotional. As a result, lots of folks dig themselves a deeper hole before even filing for personal bankruptcy. It is crucial that you seek professional advice regarding your bankruptcy options. There are various 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 first thing you should do when you are having financial issues is to cease using your credit cards. Even though it is tempting to make modest purchases like food and fuel, the reality is that credit cards have exorbitant fees which only get compounded when you’re unable to make repayments. Along with this, making substantial 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 considerably worse position.
Repay Favoured Creditors
When you have unmanageable debt, do not repay any creditors before you file for bankruptcy. Though it may seem practical to pay off as much debt as possible, the reality 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 postpone your bankruptcy filing and discharge. Each and every creditor holds the same weight under Australian Law, so if you completely repay one over another, the bankruptcy trustee will take legal action against the creditor in what’s called a clawback lawsuit. This is carried out to recover the money that was paid to the favoured creditor to ensure that it can be dispersed equally amongst all creditors.
Lie or Conceal any Information
Whatever you do, do not lie or conceal any information pertaining to your financial situation. When you file for bankruptcy, you are required by Law to supply complete and proper information pertaining to your assets, income, debts, and expenses. Failing to acknowledge an asset, for example, is considered misrepresentation and you will be liable to criminal prosecution. If you are unclear of something, talk to your lawyer and spend the time to investigate to guarantee you are providing the correct information. When it relates to money, there are electronic trails just about everywhere, so don’t think you can hide 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 protect those assets from bankruptcy is a myth. In fact, transferring assets will not shelter those assets whatsoever, and may be deciphered as fraudulent activity which involves criminal repercussions. Selling assets to pay off your debts is, needless to say, a legitimate response to try to reduce the financial strain. It’s imperative 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 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 even be asked what you did with the money you received 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 need. If you are grappling with financial challenges, it’s typical for family and friends 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 directly income related such as work or dividends. It’s also crucial to keep work related money and personal money entirely separate from each other. All of these activities can produce a lot of confusion and can result in 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 guarantee you have the best bankruptcy case possible without any legal hiccups, seek professional advice from the experts. For more information or to speak to someone about your situation, contact Fresh Start Solutions Hobart on 1300 818 575 or visit http://freshstartsolutions.com.au/bankruptcy-hobart