Bankruptcy

[Bootsox]

http://forums.moneysavingexpert.com/showth...ht=repossession

Above link takes you to an MSE forum asking folks to disclose how much they owed before declaring bankruptcy. Not necessarily vast sums but typically £40k +/- £20k.

Despite an assumption that most of it must have gone on plasma TVs etc, many claim that this was not the case and in reality they have little in the way of tangibles to show for their former debt. Many of these people say it just went on day to day living, food, utility bills, etc.

Not sure exactly how, but somehow under NuLabour the cost of living has crept up and up. Could it be the trickle down effect of the many stealth taxes (a list of 150 such taxes can be found by following the link below)?

http://myweb.tiscali.co.uk/garbagegate/item2/stealth.htm

[the anti krust]

How ? Because Labour are fecking clueless.

[tiggerthetiger]

From the forum, A nervous mother said :

My Total is around £158,000 give or take a few 1p's.

Northern Rock 136,000.00 (why is it called a shortfall? nothing short about it)

Abbey Loan 20,000

O/D 2,000

Peachy price replies : Yes, but £136K wasn't your doing, it would have been far far less if it weren't for the stupidity of NR.

Another respondent : Just shy of 151K of unsecured debt. All on credit cards, loans and overdrafts. Got nothing to show for it either!?

Go figure!

Edited June 29, 2009 by tiggerthetiger

[SNACR]

From the forum, A nervous mother said :

My Total is around £158,000 give or take a few 1p's.

Northern Rock 136,000.00 (why is it called a shortfall? nothing short about it)

Abbey Loan 20,000

O/D 2,000

Peachy price replies : Yes, but �136K wasn't your doing, it would have been far far less if it weren't for the stupidity of NR.

Another respondent : Just shy of 151K of unsecured debt. All on credit cards, loans and overdrafts. Got nothing to show for it either!?

Go figure!

These are really the sort of figures you'd only expect to see from a business bankruptcy.

[interestrateripoff]

There has to be thousands in this position.

Does the taxpayer pick up the tab for this and we get to show nothing for it as well.

Excellent.

[ChinaReader]

There has to be thousands in this position.

Does the taxpayer pick up the tab for this and we get to show nothing for it as well.

Excellent.

For Northern Rock loans, yes, the taxpayer.

But for debts to other businesses, the shareholders ultimately lose out don't they.

[carrera]

There has to be thousands in this position.

Does the taxpayer pick up the tab for this and we get to show nothing for it as well.

Excellent.

It gets worse ... people have a very poor understanding how bankruptcy works and what the future holds - unsecured debt can easily become secured debt and bankrutpcy and secured debts don`t mix ... you could be under restrictions and ducking debt collection people for 12 years or even more.

Plus some entrepreneur will no doubt come up with a company to chase bad debts at a knock down fee for banks and institutions ... employ minimum wage people and offer incentives based upon amount recovered .... I can see it now ... "Virgin debt recovery" ....

[SNACR]

It gets worse ... people have a very poor understanding how bankruptcy works and what the future holds - unsecured debt can easily become secured debt and bankrutpcy and secured debts don`t mix ... you could be under restrictions and ducking debt collection people for 12 years or even more.

Plus some entrepreneur will no doubt come up with a company to chase bad debts at a knock down fee for banks and institutions ... employ minimum wage people and offer incentives based upon amount recovered .... I can see it now ... "Virgin debt recovery" ....

Can you clarify this. Presently the only debts excluded from bankruptcy, I believe, are court fines and student loans (cunning the last one). You can't pursue 12 year old debts other than I think, again, student loans.

[athom]

It gets worse ... people have a very poor understanding how bankruptcy works and what the future holds - unsecured debt can easily become secured debt and bankrutpcy and secured debts don`t mix ... you could be under restrictions and ducking debt collection people for 12 years or even more.

Plus some entrepreneur will no doubt come up with a company to chase bad debts at a knock down fee for banks and institutions ... employ minimum wage people and offer incentives based upon amount recovered .... I can see it now ... "Virgin debt recovery" ....

So you've got some commission only debt recovery thugs (executives) on your tail. The intimidation is getting serious. There is so much of it about the police aren't interested even if you haven't got any CCJs outstanding and can go to them, you need to keep moving. You have a wife and 2 children. You are in a world of misery. Worth living like someone with 150k of disposable income for a couple of years? Not even close.

A lot of people are going to try doing Reggie Perrins

[ShedDweller]

Can you clarify this. Presently the only debts excluded from bankruptcy, I believe, are court fines and student loans (cunning the last one). You can't pursue 12 year old debts other than I think, again, student loans.

I heard (correctly or incorrectly) that there are groups of people buying up mortgage debt .. for less than a penny in the pound, regardless of bankruptcy (either impending or actual) on the off chance (cue ERIC !!) that the borrower may have made false statements in order to get the loan.

The basis is that bankruptcy cannot include any funds obtained fraudulently, and that even people on benefit can afford to pay back £100 a week. It's a very very nasty business ..

Someone who has bought into this idea was explaining to me that the best bit is that once you have proved fraud .. You are guaranteed 100% of the shortfall. and if the person does a runner after you have caught up with them then it's a police matter. Police won't follow it up ? Take the local police force to the high court .. There has been a fraud and there is a victim .. The police have to act when presented with the evidence ..

The genius part fo the whole scheme is that if the government decides to issue an amnesty then the holders of the mortgages get compensated.

This conversation was one of the most frightening I've ever had ..

[wild card]

Through the grapevine I heard that Northern Rock had asked the OR's to check what the incomes of potential bankrupts would have been at the time they took out their mortgages and report back to NR.

If these incomes did not match the incomes on the application forms and bankruptcy was granted, this would allow NR to chase the shortfall.

The OR's refused.

ShedDweller, how likely do you think a mortgage debt amnesty is? It is not something I had considered.

[Robert Federer]

I am an insolvency administrator and can say that secured debts always fall outside of all official insolvency procedures, ie bankruptcy, compulsory liquidation etc.

The secured creditors rights continue regardless of how unsecured debts are being dealt with by the insolvency practitioner.

[SNACR]

I am an insolvency administrator and can say that secured debts always fall outside of all official insolvency procedures, ie bankruptcy, compulsory liquidation etc.

The secured creditors rights continue regardless of how unsecured debts are being dealt with by the insolvency practitioner.

Surely, this just means they are the beneficiary of the sale of the asset the loan is secured against when the official receiver disposes of it.

Others are suggesting that creditors can continue to pursue debts post-bankruptcy. I always thought that all creditors bar student loans and court fines get wiped out and have to deal with the OR.

I think these people buying up mortgage debt they believe fall outside a bankruptcy are mugs who'll waste a lot of time and energy. They might be able to intimidate a few people into coughing something up but if it was during the insolvency procedure I'd have though they'd have the OR after them trying to get the money back.

[SNACR]

I heard (correctly or incorrectly) that there are groups of people buying up mortgage debt .. for less than a penny in the pound, regardless of bankruptcy (either impending or actual) on the off chance (cue ERIC !!) that the borrower may have made false statements in order to get the loan.

The basis is that bankruptcy cannot include any funds obtained fraudulently, and that even people on benefit can afford to pay back £100 a week. It's a very very nasty business ..

Someone who has bought into this idea was explaining to me that the best bit is that once you have proved fraud .. You are guaranteed 100% of the shortfall. and if the person does a runner after you have caught up with them then it's a police matter. Police won't follow it up ? Take the local police force to the high court .. There has been a fraud and there is a victim .. The police have to act when presented with the evidence ..

The genius part fo the whole scheme is that if the government decides to issue an amnesty then the holders of the mortgages get compensated.

This conversation was one of the most frightening I've ever had ..

I have to say this sounds a bit unlikely. If someone lied on their mortgage form it'd be very difficult to prove in court that the information wasn't correct to the best of their knowledge e&oe. It would be reasonable to expect the bank to do due dilligence. If the mortgagee had fabricated some inflated payslips and given them to the bank then possibly.

[Robert Federer]

Surely, this just means they are the beneficiary of the sale of the asset the loan is secured against when the official receiver disposes of it.

Others are suggesting that creditors can continue to pursue debts post-bankruptcy. I always thought that all creditors bar student loans and court fines get wiped out and have to deal with the OR.

I think these people buying up mortgage debt they believe fall outside a bankruptcy are mugs who'll waste a lot of time and energy. They might be able to intimidate a few people into coughing something up but if it was during the insolvency procedure I'd have though they'd have the OR after them trying to get the money back.

The OR, and later an insolvency practitioner who becomes Trustee in bankruptcy, can generally only sell one asset that has a secured loan against it - the bankrupt's house. He also has to do this within 3 years or lose the chance to sell forever.

Firms can and do buy mortgage debt - its secured and falls outside of the insolvency (bankruptcy) procedure until the trustee wants to realise the property for the benefits of creditors.

You may be right about sudent loans and court fines though - to be honest my job is so boring I don't exactly want to read up on it at night

[SNACR]

The OR, and later an insolvency practitioner who becomes Trustee in bankruptcy, can generally only sell one asset that has a secured loan against it - the bankrupt's house. He also has to do this within 3 years or lose the chance to sell forever.

Firms can and do buy mortgage debt - its secured and falls outside of the insolvency (bankruptcy) procedure until the trustee wants to realise the property for the benefits of creditors.

You may be right about sudent loans and court fines though - to be honest my job is so boring I don't exactly want to read up on it at night

Fair dos

[ShedDweller]

Through the grapevine I heard that Northern Rock had asked the OR's to check what the incomes of potential bankrupts would have been at the time they took out their mortgages and report back to NR.

If these incomes did not match the incomes on the application forms and bankruptcy was granted, this would allow NR to chase the shortfall.

The OR's refused.

ShedDweller, how likely do you think a mortgage debt amnesty is? It is not something I had considered.

To clarify .. the "amnesty" I was talking about would only be a decriminalisation of mortgage fraud .. (ie you don't go to prison for it) ..

(my understanding and I may be wrong) is that whatever the OR says or does .. if the mortgage application was fraudulent then bankruptcy does not come into it ..

[ShedDweller]

I have to say this sounds a bit unlikely. If someone lied on their mortgage form it'd be very difficult to prove in court that the information wasn't correct to the best of their knowledge e&oe. It would be reasonable to expect the bank to do due dilligence. If the mortgagee had fabricated some inflated payslips and given them to the bank then possibly.

Exactly what I thought .. I thought the nastyness might not be matched by the legal reality .. but apparently it does not matter .. about due diligence if a false statement is made to obtain money however stupid or outlandish it may seem it remains fraud, and if the victim is an old granny who knew no better or a bank who should .. it makes no difference ..

[carrera]

Someone beat me to the request for clarification ... thank you that man.

But is it any surprise that charging orders are up 700% !

Court judgements (criminal) and Student loans are also outside of bankrutcy according to a a friend of mine - there was a loop hole at one point but this has now been closed.

Civil court judgments may more often than not succumb to bankruptcy rules, hence why immediate enforcement action should always be taken to secure it.

[Mr Yogi]

The perception that all bankruptcies are the result of irresponsible people maxing out their credit cards and spunking it all on plasma tellies and holidays on the Costa Chav is a bit of a myth.

The majority of personal bankruptcies are as a result of business failures, and a very common scenario is where a director of a company has had to give a personal guarantee to a landlord or the bank.

An annual rent of £25k or servicing an overdraft of £100k can be very affordable when your company is turning over £1m+, but if the company fails and you find youself personally liable for these guaranteed debts bankruptcy is often inevitable. Landlords especially can be real bastards and will often demand full immediate payment of the remainder of the lease, plus delapidations.

When I had to sign such guarantees, I was fortunate enough not to have any assets; the house was in Mrs Yogi's name. Going bankrupt to avoid the resultant liabilities following my company's liquidation was therefore completely painless.

My advice would be never to sign a personal guarantee without having divested yourself of any assets first!

Edited June 30, 2009 by Mr Yogi

[Mr Yogi]

I heard (correctly or incorrectly) that there are groups of people buying up mortgage debt .. for less than a penny in the pound, regardless of bankruptcy (either impending or actual) on the off chance (cue ERIC !!) that the borrower may have made false statements in order to get the loan.

The basis is that bankruptcy cannot include any funds obtained fraudulently, and that even people on benefit can afford to pay back £100 a week. It's a very very nasty business ..

Someone who has bought into this idea was explaining to me that the best bit is that once you have proved fraud .. You are guaranteed 100% of the shortfall. and if the person does a runner after you have caught up with them then it's a police matter. Police won't follow it up ? Take the local police force to the high court .. There has been a fraud and there is a victim .. The police have to act when presented with the evidence ..

The genius part fo the whole scheme is that if the government decides to issue an amnesty then the holders of the mortgages get compensated.

This conversation was one of the most frightening I've ever had ..

I've just asked a mate of mine about this who is an insolvency practitioner and he tells me it is total bollock$.

A debt is a debt. Irrespective of how a debt is incurred, bankruptcy blitzes it. The worst that could happen is that a Bankruptcy Restriction Order could be made which extends the period until discharge and/or that criminal proceedings were brought in respect of the original fraudulent mortgage application.

The debt however, disappears.

As for secured debt, it is only secured upto the value of the asset on which it is secured. Any shortfall after the asset is sold is an unsecured debt and is treated as such by the bankruptcy.

It disappears! Anyone going bankrupt will not be persued for any mortgage shortfall after the house has been sold. Bankruptcy blitzes all debts, with the exceptions of court fines and student loans.

[eric pebble]

I heard (correctly or incorrectly) that there are groups of people buying up mortgage debt .. for less than a penny in the pound, regardless of bankruptcy (either impending or actual) on the off chance (cue ERIC !!) that the borrower may have made false statements in order to get the loan.

The basis is that bankruptcy cannot include any funds obtained fraudulently, and that even people on benefit can afford to pay back £100 a week. It's a very very nasty business ..

Someone who has bought into this idea was explaining to me that the best bit is that once you have proved fraud .. You are guaranteed 100% of the shortfall. and if the person does a runner after you have caught up with them then it's a police matter. Police won't follow it up ? Take the local police force to the high court .. There has been a fraud and there is a victim .. The police have to act when presented with the evidence ..

The genius part fo the whole scheme is that if the government decides to issue an amnesty then the holders of the mortgages get compensated.

This conversation was one of the most frightening I've ever had ..

Jeezssss -- This is truly frightening.... It will be interesting to see how it all turns out, because, surely, in the end, WHERE are the debtors going to get the "money" from? ?

[Moo]

Despite an assumption that most of it must have gone on plasma TVs etc, many claim that this was not the case and in reality they have little in the way of tangibles to show for their former debt. Many of these people say it just went on day to day living, food, utility bills, etc.

Hmm, not sure about that. I'd say at least half of them are essentially saying they wee'd it up the wall on pointless stuff.

[SNACR]

Someone beat me to the request for clarification ... thank you that man.

But is it any surprise that charging orders are up 700% !

Court judgements (criminal) and Student loans are also outside of bankrutcy according to a a friend of mine - there was a loop hole at one point but this has now been closed.

Civil court judgments may more often than not succumb to bankruptcy rules, hence why immediate enforcement action should always be taken to secure it.

There are thousands of unsatisfied CCJs out there that are not enforced of pursued to bankruptcy. If you force the debtor to declare bankruptcy you'll get nothing. If by 'enforce' you mean send the court bailiff round they'll usually help the debtor fill in a form to get a hearing to have the judgement set aside. On some judgements, over £750, I think, you can have them sent to the High Court so a sheriff can enforce. They get much more results in terms of seizing goods etc but, after their costs, you'll be unlikely to see very much.

My experience with CCJs is that, if when you send the claim they manage to cough up something they can pay and just weren't prioritising your debt. If they don't pay and allow it to proceed to judgement they can't pay and you'll just waste a lot of time or energy.

My advice, after years of chasing outstanding invoices, is to arrange some sort of repayment plan and get money coming in. Another, good, constructive route is they pay you £1000 and you let them have £500 of goods and take £500 from their debt. This enables them to carry on trading and getting money in. However, if you need the money, desperately, to pay a bill yourself it's a different kettle of fish. I would say, though, that there's endless received wisdom out there about credit control that's nonsense.

I've just asked a mate of mine about this who is an insolvency practitioner and he tells me it is total bollock$.

A debt is a debt. Irrespective of how a debt is incurred, bankruptcy blitzes it. The worst that could happen is that a Bankruptcy Restriction Order could be made which extends the period until discharge and/or that criminal proceedings were brought in respect of the original fraudulent mortgage application.

The debt however, disappears.

As for secured debt, it is only secured upto the value of the asset on which it is secured. Any shortfall after the asset is sold is an unsecured debt and is treated as such by the bankruptcy.

It disappears! Anyone going bankrupt will not be persued for any mortgage shortfall after the house has been sold. Bankruptcy blitzes all debts, with the exceptions of court fines and student loans.

That's what I thought. That's why, I thought, it's generally understood that for creditors to push people into bankruptcy is a very bad idea.

I said on another thread that I think business bankruptcies should be separated from private individuals who've p1ssed it away on consumer goods. They should be perhaps renamed to something like personal administation to ensure the stigma remains with those who've behaved recklessly and lived beyond their means.

[Zngland]

Anecdotally , in India during the early 20th century people (farmers) became so indebted that the only 'just' thing to do was to write off their debt it happened in our area. People still talk about it today.The winners were the profligate but debt was killing them literally - suicide etc.

This i think is going to happen,which means things have been screwed up so much that us we bears(at this economic period) may find it's really is different this time--WHERE'S MY FUXIN CREDIT CARD AND MY PASSPORT I'M OFF TO DAM.