|March 29, 2017||0|
Too many bills? Too much debt? Not enough money? Many people struggle financially at some point in their lives. Unexpected incidents like hospitalisation, redundancy, as well as divorce, can greatly alter your financial circumstances. But, when there’s no other way to suitably control your debts, some people are forced to file for bankruptcy.
Going bankrupt is never simple. It’s complicated, traumatic, and emotional. Consequently, too many folks dig themselves a deeper hole before even filing for personal bankruptcy. It’s essential that you ask for professional advice concerning your bankruptcy options. There are a number of 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 first thing you should do when you’re having financial problems is to stop using your credit cards. Even though it is tempting to make modest purchases like food and fuel, the fact is that credit cards have excessively high fees which only get exacerbated when you’re unable to make repayments. In addition to this, making big purchases with the knowledge that you will shortly be going bankrupt is deemed fraud. Obviously, small purchases are fine, but if you purposely max out your credit cards before filing for bankruptcy, creditors will investigate and you’ll find yourself in a substantially worse position.
Repay Favoured Creditors
When you have unmanageable debt, do not repay any creditors before you file for bankruptcy. While it may seem practical to settle as much debt as possible, the truth 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 legal actions which will inevitably delay 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 take legal action 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 it can be spread equally amongst all creditors.
Lie or Withhold 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 present complete and exact information concerning your assets, income, debts, and expenses. Failing to acknowledge an asset, for instance, is considered misrepresentation and you will be liable to criminal prosecution. If you’re unsure of anything, speak with your lawyer and spend the time to investigate to ensure you’re supplying the correct information. When it relates to money, there are digital trails pretty much everywhere, so don’t 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 family member’s name to preserve those assets from bankruptcy is a fable. In reality, transferring assets will not shelter those assets in any way, and may be taken as fraudulent activity which comes with criminal repercussions. Selling assets to repay your debts is, needless to say, a common response to try to alleviate the financial burden. It’s important to bear in mind that your Statement of Financial Affairs is a lawful record, so you must be completely honest with your financial history or confront the likely repercussions 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 before filing for bankruptcy. You will likewise be asked what you did with the money you gained 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’re facing financial challenges, it’s typical for family and friends to give 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 completely separate from each other. All of these activities can create a lot of confusion and can lead to claims of fraud when filing for bankruptcy.
As you can see, there are some substantial consequences for relatively trivial 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. For more details or to speak with someone about your circumstances, contact Fresh Start Solutions Canberra on 1300 818 575 or visit https://freshstartsolutions.com.au/bankruptcy-canberra