Top Things You Should NOT Do Before Going Bankrupt
Lots of bills? Too much debt? Not nearly enough money? Lots of people struggle financially at some point in their lives. Uncontrolled events such as hospitalisation, losing a job, as well as divorce, can seriously transform your financial condition. But, when there is no other way to adequately handle your debts, some folks are forced to file for bankruptcy.
Going bankrupt is never easy. It’s complicated, traumatic, and emotional. Consequently, lots of folks dig themselves a deeper hole before even filing for personal bankruptcy. It is essential that you seek professional advice relating to your bankruptcy options. There are a number of financial decisions that should be avoided at all costs to avoid ruining 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 having financial issues is to cease using your credit cards. Whilst it is tempting to make modest purchases like meals and petrol, the truth is that credit cards have inflated fees which only get magnified when you are incapable to make repayments. Alongside this, making substantial purchases with the understanding that you will soon be going bankrupt is deemed fraud. Naturally, small purchases are okay, but if you intentionally max out your credit cards before filing for bankruptcy, creditors will investigate and you will end up in a considerably worse position.
Repay Favoured Creditors
When you have uncontrolled debt, do not repay any creditors before you file for bankruptcy. Though it may sound 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 court actions which will inevitably postpone 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 undertaken to recover the money that was paid to the favoured creditor to ensure that it can be spread equally amongst 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 exact information concerning your assets, income, debts, and expenses. Failing to reveal an asset, for example, is regarded as misrepresentation and you will be liable to criminal prosecution. If you are unclear of anything, talk to your lawyer and spend the time to investigate to make sure you are giving the correct information. When it comes to money, there are digital trails just about everywhere, so do not think you can hide 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 family member’s name to rescue those assets from bankruptcy is a fable. In fact, transferring assets will not preserve those assets whatsoever, and may be taken as fraudulent activity which involves criminal consequences. Selling assets to repay your debts is, needless to say, a typical reaction to attempt to mitigate the financial strain. It’s critical to bear in mind that your Statement of Financial Affairs is a legal record, so you must be honest with your financial history or face the possible repercussions of getting caught. You’ll 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 will also be asked what you did with the money you obtained 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
Friends and family are there to help in times of need. If you’re experiencing financial challenges, 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 specifically income related such as work or dividends. It’s likewise crucial to keep work related money and personal money entirely separate from each other. All of these activities can create a lot of confusion and can bring about claims of fraud when filing for bankruptcy.
As you can see, there are some significant 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 more details or to speak to someone about your situation, contact Bankruptcy Experts Joondalup on 1300 795 575 or visit http://www.bankruptcyexpertsjoondalup.com.au