March 31, 2017Comments Closed

Top Things You Should NOT Do Prior to Going Bankrupt

Posted by:admin onMarch 31, 2017

Too many bills? Too much debt? Not enough money? Most individuals struggle financially at some point in their lives. Unexpected incidents such as hospitalisation, losing a job, or even divorce, can significantly alter your financial circumstances. But, when there is no other way to properly manage your debts, some folks are forced to file for bankruptcy.

Going bankrupt is never easy. It’s complicated, demanding, and emotional. As a result, too many individuals dig themselves a deeper hole before even filing for personal bankruptcy. It is imperative that you ask for professional advice regarding your bankruptcy options. There are certain financial decisions that should be avoided at all costs to avoid wreaking havoc on 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 problems is to cease using your credit cards. Even though it is tempting to make modest purchases like meals and fuel, the reality is that credit cards have outrageous fees which only get compounded when you are unable to make repayments. Along with this, making big purchases with the knowledge that you will shortly be going bankrupt is considered fraud. Obviously, 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 considerably worse position.

Repay Favoured Creditors

When you have uncontrollable debt, do not repay any creditors before you file for bankruptcy. Although it may appear to be practical to settle 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 lawsuits which will consequently 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 carried out to recover 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 conceal any information concerning your financial situation. When you file for bankruptcy, you are required by Law to provide complete and detailed information pertaining to 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 make certain you are giving the correct information. When it concerns money, there are computerised trails almost everywhere, so do not 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 preserve those assets from bankruptcy is a misconception. In fact, transferring assets will not protect those assets whatsoever, and may be taken as fraudulent activity which comes with criminal repercussions. Selling assets to pay off your debts is, needless to say, a normal reaction to try to mitigate the financial strain. It’s important to remember that your Statement of Financial Affairs is a legal document, 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, 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, particularly with friends and family members.

Deposit Non-Income Earning Money Into Your Bank Account

Family and friends are there to help in times of need. If you’re grappling with financial challenges, it’s typical for family and friends to offer 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 essential 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 result in 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 guarantee you have the best bankruptcy case possible without any legal hiccups, seek professional advice from the experts. To learn more or to talk to somebody about your circumstances, contact Bankruptcy Experts Mount Isa on 1300 795 575 or visit http://www.bankruptcyexpertsmountisa.com.au

 

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