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- March 30, 2017
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Too many bills? Too much debt? Not enough money? Most people struggle financially at some point in their lives. Unforeseen incidents such as hospitalisation, redundancy, and also divorce, can drastically affect your financial circumstances. Yet, when there’s no other way to properly manage your debts, some folks are forced to file for bankruptcy.
Going bankrupt is never simple. It’s complicated, demanding, and emotional. As a result, a lot of individuals dig themselves a deeper hole before even filing for personal bankruptcy. It’s critical that you seek 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 present some tips on things you should never do before going bankrupt.
Using Credit Cards
The first thing you should do when you are experiencing financial dilemmas is to stop using your credit cards. Whilst it is tempting to make small purchases like meals and fuel, the reality is that credit cards have excessively high fees which only get compounded when you’re not able to make repayments. Alongside this, making substantial purchases with the knowledge that you will shortly be going bankrupt is considered fraud. Of course, small purchases are fine, but if you deliberately max out your credit cards prior to filing for bankruptcy, creditors will investigate and you will find yourself in a considerably worse position.
Repay Favoured Creditors
When you have uncontrolled debt, do not repay any creditors before you file for bankruptcy. Although it may sound reasonable to settle 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 court actions which will consequently delay 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 file a claim against the creditor in what’s called a clawback lawsuit. This is done to recuperate the money that was paid to the favoured creditor to ensure that it can be dispersed equally between 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 supply complete and accurate 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 uncertain of something, consult with your lawyer and spend the time to investigate to guarantee you are providing the correct information. When it involves money, there are electronic trails 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 relative’s name to protect those assets from bankruptcy is a fantasy. In reality, transferring assets will not shield those assets at all, and may be construed as fraudulent activity which comes with criminal repercussions. Selling assets to pay back your debts is, by all means, a common reaction to attempt to ease the financial burden. It’s crucial to keep in mind that your Statement of Financial Affairs is a lawful record, so you must be truthful with your financial history or confront the probable consequences 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 prior to filing for bankruptcy. You’ll additionally be asked what you did with the money you obtained from those transfers, so be wary 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’re grappling with financial difficulty, it’s typical for family and friends to offer money to you to relieve 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 also 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 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 guarantee you have the best bankruptcy case possible without any legal hiccups, seek professional advice from the experts. For more details or to talk to somebody about your circumstances, contact Bankruptcy Experts Gladstone on 1300 795 575 or visit http://www.bankruptcyexpertsgladstone.com.au