|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 incidents like hospitalisation, redundancy, or even divorce, can significantly reshape your financial situation. But, when there is no other way to properly control your debts, some people 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 seek professional advice relating to your bankruptcy options. There are particular financial decisions that should be avoided at all costs to avoid damaging your bankruptcy case. This article will present some tips on things you should never do before going bankrupt.
Using Credit Cards
The first thing you should do when you are facing financial troubles is to cease using your credit cards. Although it is tempting to make modest purchases like food and fuel, the truth is that credit cards have enormous fees which only get compounded when you’re unable to make repayments. In addition to this, making large purchases with the knowledge that you will shortly be going bankrupt is considered fraud. Naturally, small purchases are fine, but if you deliberately max out your credit cards prior to filing for bankruptcy, creditors will investigate and you will end up in a much 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 repay as much debt as possible, the fact 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 essentially delay 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 recuperate the money that was paid to the favoured creditor to ensure that it can be spread equally between all creditors.
Lie or Withhold 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 detailed information regarding your assets, income, debts, and expenses. Failing to reveal an asset, for instance, is regarded as misrepresentation and you will be liable to criminal prosecution. If you’re not sure of anything, speak with your lawyer and spend the time to investigate to make certain you are supplying the correct information. When it comes to money, there are digital trails almost everywhere, so do not think you can conceal anything. You might get away with it initially, but it can haunt 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 misconception. As a matter of fact, transferring assets will not preserve those assets whatsoever, and may be construed as fraudulent activity which comes with criminal repercussions. Selling assets to settle your debts is, of course, a legitimate reaction to try to relieve the financial burden. It’s paramount to remember that your Statement of Financial Affairs is a lawful record, so you must be truthful with your financial history or deal with the possible repercussions 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 before filing for bankruptcy. You’ll additionally be asked what you did with the money you acquired 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
Family and friends are there to assist in times of need. If you are dealing with financial difficulty, it’s common 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 imperative to keep work related money and personal money totally separate from each other. All of these activities can produce a considerable amount of confusion and can trigger claims of fraud when filing for bankruptcy.
As you can see, there are some significant consequences for relatively insignificant 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 Gold Coast on 1300 818 575 or visit https://freshstartsolutions.com.au/bankruptcy-goldcoast