No one plans on getting into legal trouble, but sometimes financial problems can lead to bad decisions that result in criminal charges. Many people are unaware of the options available when they struggle with money and end up making choices that land them in hot water.
If you want to avoid ending up in court, here are some tips to help you avoid trouble.
1. Don’t commit fraud.
This may seem obvious, but you would be surprised how many people commit fraud when they are in a difficult financial situation. Whether fudging numbers on your taxes or lying on a loan application, fraud is a serious crime that can land you in jail. If facing financial difficulties, be honest and upfront with everyone involved.
For one, it’s the right thing to do. But secondly, if you are caught lying, you will end up in much deeper trouble than if you had just been honest from the beginning. You should also avoid any kind of fraud or scam, even if you aren’t the one committing it. If caught up in something like this, you could be charged as an accessory, even if you didn’t know what was happening.
2. Don’t neglect your taxes.
If you are having trouble making ends meet, putting off filing your taxes or paying your tax bill can be tempting. But this is a huge mistake. The HMRC is not something you want to mess with; if you neglect your taxes, you could face serious consequences.
If you can’t pay your taxes all at once, reach out to the HMRC and see if you can set up a payment plan. This way, you can avoid penalties and interest and get your tax bill paid off without putting yourself in further financial jeopardy. You should also ensure that you are filing your taxes on time, even if you can’t pay them immediately. The penalties for late filing are much less severe than those for not paying.
Many businesses benefit from working with chartered accountants who can help with tax planning and ensure they are up to date on their taxes. If you are self-employed or have a small business, you should consider this.
3. Don’t bounce cheques.
Bouncing a cheque is a criminal offence in the UK and can land you a fine of up to £500. If you are having trouble keeping up with your bills, talk to your bank about setting up a direct debit or standing order. This way, you can ensure your bills are paid on time and avoid penalties.
It would be best if you also were careful about using cheques as a form of payment, as they can be easily lost or stolen. If you use cheques, keep them in a safe place and get them banked as soon as possible. You should also keep track of your chequebook balance so you don’t accidentally bounce a cheque.
Some companies will also charge you a fee if you pay by cheque, so it’s always worth checking before you write one out.
4. Don’t ignore debt collectors.
Many entrepreneurs are surprised to learn that debt collectors are regulated by the Financial Conduct Authority (FCA). This means that they have to follow specific rules when they are trying to collect a debt from you.
If debt collectors are harassing you, you can make a complaint to the FCA. You can also contact a debt charity for advice on dealing with debt collectors. But if you are actively avoiding debt collectors, that’s a different story.
If you ignore their calls and letters, they may eventually take legal action against you. This could result in a court order, which would give them the right to seize your assets or garnish your wages. If you are having trouble paying your debts, it’s better to talk to your creditors and devise a repayment plan.
5. Don’t default on your loans.
Defaulting on a loan can have serious consequences. Not only will it damage your credit score, but your lender could also sue you. Talk to your lender about your options if you struggle to make your loan payments. You may be able to extend the term of your loan or get a forbearance, which would allow you to stop making payments temporarily.
You should also make sure you know the terms of your loan so you know when you are technically in default. If you are ever in doubt, it’s always best to consult with an attorney or financial advisor.
Financial problems can often lead to legal issues, but there are ways to avoid this. Make sure you stay current on your taxes, don’t bounce cheques, and don’t ignore debt collectors. If you have trouble making your loan payments, talk to your lender about your options. Following these tips can help you avoid financial problems that can lead to legal issues.