|March 29, 2017||0|
Lots of bills? Too much debt? Not nearly enough money? Most people struggle financially at some point in their lives. Unexpected events such as hospitalisation, redundancy, or even divorce, can greatly affect your financial condition. Yet, when there is no other way to adequately manage 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 people dig themselves a deeper hole before even filing for personal bankruptcy. It’s critical 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 offer 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 dilemmas is to stop using your credit cards. While it is tempting to make small purchases like meals and fuel, the fact is that credit cards have outrageous fees which only get magnified when you are incapable to make repayments. Along with this, making large purchases with the understanding that you will shortly be going bankrupt is considered fraud. Obviously, small purchases are fine, but if you intentionally max out your credit cards before filing for bankruptcy, creditors will investigate and you’ll wind up in a substantially worse position.
Repay Favoured Creditors
When you have uncontrollable debt, do not repay any creditors before you file for bankruptcy. Though it may seem logical to settle 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 legal actions which will inevitably impede your bankruptcy filing and discharge. Every 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 done to recoup the money that was paid to the favoured creditor to ensure it can be spread equally amongst all creditors.
Lie or Conceal any Information
Whatever you do, do not lie or withhold any information relating to your financial situation. When you file for bankruptcy, you are required by Law to present complete and specific information regarding 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’re not sure of anything, consult with your lawyer and spend the time to investigate to make sure that you are supplying the correct information. When it relates to money, there are computerised trails 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 delusion. In reality, transferring assets will not shelter those assets whatsoever, and may be interpreted as fraudulent activity which comes with criminal consequences. Selling assets to pay off your debts is, needless to say, a normal reaction to try to ease the financial burden. It’s vital to remember that your Statement of Financial Affairs is a legal document, so you must be honest with your financial history or face the probable repercussions of getting caught. You will be asked by the trustee if you sold, transferred or gave away any assets, typically for a period of one year prior to filing for bankruptcy. You’ll even 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 need. If you are encountering financial distress, it’s normal for family and friends to give 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 directly income related such as work or dividends. It’s likewise important to keep work related money and personal money totally 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 certain you have the best bankruptcy case possible without any legal hiccups, seek professional advice from the experts. To learn more or to talk with someone about your circumstances, contact Fresh Start Solutions Darwin on 1300 818 575 or visit https://freshstartsolutions.com.au/bankruptcy-darwin