|March 29, 2017||0|
Too many bills? Too much debt? Not nearly enough money? Most people struggle financially at some point in their lives. Unexpected events such as hospitalisation, job loss, or even divorce, can drastically affect your financial circumstances. Yet, when there is no other way to effectively 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, too many people dig themselves a deeper hole before even filing for personal bankruptcy. It is crucial that you ask for professional advice pertaining to your bankruptcy options. There are various 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 very first thing you should do when you are having financial issues is to cease using your credit cards. Although it is tempting to make smaller purchases like meals and petrol, the fact is that credit cards have outrageous fees which only get compounded when you are unable to make repayments. Along with this, making large purchases with the understanding 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 before filing for bankruptcy, creditors will investigate and you’ll end up in a substantially worse position.
Repay Favoured Creditors
When you have uncontrolled debt, do not repay any creditors before you file for bankruptcy. While it may appear to be sensible to pay off as much debt as possible, the fact 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 ultimately prolong your bankruptcy filing and discharge. Each and every 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 done 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 provide complete and specific information pertaining to your assets, income, debts, and expenses. Failing to disclose an asset, for example, is considered misrepresentation and you will be liable to criminal prosecution. If you’re not sure of something, talk with your lawyer and spend the time to investigate to make sure you’re giving the correct information. When it relates to money, there are digital trails pretty much everywhere, so do not think you can conceal anything. You might get away with it initially, 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 fantasy. In fact, transferring assets will not shelter those assets whatsoever, and may be taken as fraudulent activity which involves criminal consequences. Selling assets to pay off your debts is, needless to say, a typical reaction to try to alleviate the financial strain. It’s crucial to bear in mind that your Statement of Financial Affairs is a legal document, so you must be honest with your financial history or deal with the probable repercussions of getting caught. You’ll be asked by the trustee if you sold, transferred or gave away any assets, normally for a period of one year prior to filing for bankruptcy. You’ll also be asked what you did with the money you gained from those transfers, so be wary 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 assist in times of need. If you are facing financial adversity, it’s common for friends and family to give money to you to mitigate 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 important to keep work related money and personal money entirely separate from each other. All of these activities can create a great deal 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 make sure you have the best bankruptcy case possible without any legal hiccups, seek professional advice from the experts. For additional information or to talk to somebody about your circumstances, contact Fresh Start Solutions Sydney on 1300 818 575 or visit http://freshstartsolutions.com.au/bankruptcy-sydney