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Bankruptcy Proceedings - Another One Bites The Dust?

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I have just heard that a family friend is considering going bankrupt. She has no assets and owes 58k (CC and loans) :o .

I have advised her to approach the CAB in the first instance before making a decision. Can anyone else offer any other helpful, unhelful or funny suggestions? Also, does anyone have a link for that site where posters from HPC often go to see the reality of such situations?

Thanks

BB

Edited by Buffer Bear

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Bankrupcy is prob her best option. A legal loophole has made it a popular domestic choice when of course it was designed to make it easier for business people to resurface and try again after failure.

The stigma of bankrupcy isnt as bad as people say.

That programme "Bank of Mum and Dad" had a lot of follow up info about the topic, you might try finding that website and seeing if they offer links of advice, etc? Think it was an ITV programme so may be on their website somewhere.....

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Yes - its disgusting how easy it is. And why should the rest of us have to pay for her extravagance when she defaults on her debt.

Sorry to sound unsympathetic but no one needs to get £58k into debt on credit cards and loans. Budget - its very simple!

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Also, does anyone have a link for that site where posters from HPC often go to see the reality of such situations?

The 'Dealing with Debt' board on the Motley Fool is a disturbing insight into how much debt people can accumulate.

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Yes - its disgusting how easy it is. And why should the rest of us have to pay for her extravagance when she defaults on her debt.

Sorry to sound unsympathetic but no one needs to get £58k into debt on credit cards and loans. Budget - its very simple!

I spoke with a lawyer friend last night, who told me that there are severe constraints on what you can do for the two years when you go bankrupt, eg no holidays, they have first dibs on your income etc..

Does anyone have any evidence that bankruptcy really is the joyride it's portrayed to be on here?

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I never said it was fun - but nor is only spending what you can afford and paying off your credit card bills.

Its symptomatic of the lax approach we have to credit in this country - how does someone with no assets get £60k in debt in the first place?

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Can filing for bankruptcy really be so easy? If so, I am gonna buy that DB7 on credit!!

Moneysavingsexpert is the link I referred to and found it by chance on another thread for today.

Thanks for the responses so far. Gonna start my research for my 'family' member now that I have a vested interest :) .

I never said it was fun - but nor is only spending what you can afford and paying off your credit card bills.

Its symptomatic of the lax approach we have to credit in this country - how does someone with no assets get £60k in debt in the first place?

I have no idea but when I find out the details, I will let you know. I do know that she has one child but is not the main carer and has been employed for as long as I can remember. She doesn't strike me as particularly extravagant but as they say "never judge a book by its cover."

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All crap. Secured loans (as well as student loans!) are exempt from relief from bankruptcy - homeowners can still be pursued for the debts (even if the house is sold). The bank can wait until the nest time ti sell too.

If you have assets (your DB7 etc) they can be attached too so don't imagine it is easy. If you re a chav with no assets then fine - soak us all with your irresponsibility but most normal people could not cope with no credit for a few years.

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I have just heard that a family friend is considering going bankrupt. She has no assets and owes 58k (CC and loans) :o .

I have advised her to approach the CAB in the first instance before making a decision. Can anyone else offer any other helpful, unhelful or funny suggestions? Also, does anyone have a link for that site where posters from HPC often go to see the reality of such situations?

Thanks

BB

I have not gone bankrupt myself, but being in business for the last 25 years a lot of my colleges/associates have

My advice would be the following and is not so much my opinion and I am not considering the morals, etc, - just what I have experienced

For a simple bankruptcy (under approx 1 million) there are probably three unofficial categories

1. People that have gone bust owing banks, companies etc,

2. People that have gone bust owing money to the general public

3. People that have gone bust deliberately and are taking the p*ss out of the receiver and the system

Your friend sounds like she fits into the first category. As long as she doesn’t take that for granted, acts apologetic/shameful to the receiver, it should be plain sailing.

Another piece of advice would be, if she has any credit rating left, stall it for a few more months, get more credit (to the max) – pull the money out in cash and at least she will have something left to make up for the inconvenience

Going bust for 58K or 100K if you fit into the first category makes NO DIFFERENCE

Sadly, even if you’re one of the ‘others’, the reality is,. all the receiver can do is give you a harder time. They know that that brand new Ferrari in your wife’s name is BS, but it was transferred last year and their is f*ck all they can do

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2 years - dont make me laugh ya fool.

everyone knows bankrupcys are over in 6 months now...

even if they caught you for fraud, there is no room in prison..

stealing is the easy way - Look to Labour and idiot see, idiot do!

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Yes - its disgusting how easy it is. And why should the rest of us have to pay for her extravagance when she defaults on her debt.

Sorry to sound unsympathetic but no one needs to get £58k into debt on credit cards and loans. Budget - its very simple!

I understand your position, but in the big scheme of things, this is a predictable consequence of this current credit boom and has already been factored in

This sort of reckless spending is what has been keeping our economy going (and for that matter this crazy house price boom)

The system, I agree is at fault, but not always the individual

Plus this individual has either been indirectly helping to keep you in a job and if not you, certainly some of your friends and relatives

58K of extra unearned income into the economy is certainly helping someone

Long term - it’s a f*ck up, but hey we have a socialist government, who could want more!

All crap. Secured loans (as well as student loans!) are exempt from relief from bankruptcy - homeowners can still be pursued for the debts (even if the house is sold). The bank can wait until the nest time ti sell too.

If you have assets (your DB7 etc) they can be attached too so don't imagine it is easy. If you re a chav with no assets then fine - soak us all with your irresponsibility but most normal people could not cope with no credit for a few years.

If you earn under about 50K a year, to write off 58K for the sake of the inconvenience of no credit for a couple of years is a sensible/pragmatic option

Granted more financially sensible/prudent/nervous people may struggle with a sub prime credit rating, but then they would never be 58K in debt in the first place

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I have not gone bankrupt myself, but being in business for the last 25 years a lot of my colleges/associates have

My advice would be the following and is not so much my opinion and I am not considering the morals, etc, - just what I have experienced

For a simple bankruptcy (under approx 1 million) there are probably three unofficial categories

1. People that have gone bust owing banks, companies etc,

2. People that have gone bust owing money to the general public

3. People that have gone bust deliberately and are taking the p*ss out of the receiver and the system

Your friend sounds like she fits into the first category. As long as she doesn’t take that for granted, acts apologetic/shameful to the receiver, it should be plain sailing.

Another piece of advice would be, if she has any credit rating left, stall it for a few more months, get more credit (to the max) – pull the money out in cash and at least she will have something left to make up for the inconvenience

Going bust for 58K or 100K if you fit into the first category makes NO DIFFERENCE

Sadly, even if you’re one of the ‘others’, the reality is,. all the receiver can do is give you a harder time. They know that that brand new Ferrari in your wife’s name is BS, but it was transferred last year and their is f*ck all they can do

People are just laughing at the system. Just one ! year now before the bankruptcy is dissolved. My ex was declared bankrupt and didn't loose car and after a few months after being dissolved all the credit cards came through the post-box again and then they ran up £1000's more debt. It is that easy.

Please read this article below, because in my experience this is exactly how much effect it has on some people. Not much at all. Z list celeb Anthea Turner's sister and sister's husband both declared bankrupt last year and she was joking about how they still shopped at Waitrose and they hadn't lost their house, all in some naff interview that she obviously got paid for! Off course people do loose their houses but a lot of young people are living for today and a bad credit rating is last of their worries! Many students see it as a way out of all the debt and with credit cards so easy to get it will just get worse. edit* noticed someone mentioned student loans are except ? the actual loan may be, but debts certainly are not, as that is when my ex ran up the debt, when studying to be a school teacher. Could laugh if it wasn't so tragic!!!!

Article from http://www.fool.co.uk/news/comment/2006/c0...ioodftxt0010001

Among the many fascinating discussions posted on our Dealing with Debt board, a subject that crops up with increasing regularity is bankruptcy. There are people contemplating it and are terrified, people who have taken the plunge and post about what it's like, and then there are those who have been there, done that, got the T shirt.

The thing I've noticed about these discussions is that just about everyone going through the process of bankruptcy has found the courts and the Official Receiver (OR) pretty sympathetic. Surprisingly so.

The fact is, bankruptcy doesn't carry the stigma that it used to and recent changes to the law have made it a much quicker process. Bankruptcy simply frees you from overwhelming debts so you can make a fresh start and ensures that your assets are shared out fairly among your creditors. This may include your house but not always.

The worst bit about it is probably the paperwork which starts with completing a Debtors Petition in triplicate and a Statement of Affairs in duplicate. You present your petition to your local county court in person handing over a cheque for the cost of it while you're at it. At the moment it costs £475, which is made up of a £150 court fee (which you don't need to pay if you're on benefits), and £325 which goes towards paying for the administration of your bankruptcy.

You then see a judge for about two minutes who, if satisfied that a bankruptcy order is appropriate, will agree to make an order at which point you are declared bankrupt.

The next step is to meet the OR who goes through your paperwork with you to establish the sequence of events that led to your bankruptcy and work out a repayment schedule called an Income Payment Order based on what you can afford. This will last for three years even after you have been discharged.

Although bankruptcy can last for up to a year, the OR can discharge you even earlier if s/he think it's appropriate so at some point you'll get a letter and questionnaire asking for an update of your personal circumstances.

Once the questionnaire is returned the OR contacts your creditors to inform them that you may be granted an early discharge so s/he can consider any objections they may have. If no-one objects, or if any objections are without merit, the OR can apply for an early discharge.

Note than when you're declared bankrupt you have to immediately stop using any bank accounts or credit cards that you might have. You can open a new bank account immediately after being declared bankrupt but it makes sense to withdraw enough cash to see you through the next month before you present your petition.

Obviously your credit rating will be ruined but you're not allowed to borrow more than £500 without declaring that you're a bankrupt anyway - and, besides, it'll have been the borrowing that probably got you into trouble in the first place so you'll want to avoid repeating the mistake! As a former bankrupt declared on our Dealing with Debt board: "Apart from the credit rating side of things, I have found the rest of my life to be quite unaffected by being a bankrupt. Life just seems to go on pretty much as it always did". END ARTICLE

If the worse bit about it is the paper work.....bring it on. no wonder more and more are going this route.

Edited by beenhearingthisforyears

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£58K is a heck of a lot to try and pay off..........I can't see how shes got any option but to go bankrupt.

Trying to come to agreeable terms and pay off will take her a lifetime.....going bankrupt will be a bit of pain for 2 years max.

Bankruptcy seems common-place these days.........so who is picking up the tab for all these defaulted loans? Higher insurance premiums/loan rates I guess....which in turn leads to.......more defaults :huh:

Sign of the times I guess...the "me me me" and "lifes for living" attitude.....after all Carol Vorderman says it is on the first plus loan adverts.

firstplus.gif

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Guest Vim Fuego

People are just laughing at the system. Just one ! year now before the bankruptcy is dissolved. My ex was declared bankrupt and didn't loose car and after a few months after being dissolved all the credit cards came through the post-box again and then they ran up £1000's more debt. It is that easy.

Please read this article below, because in my experience this is exactly how much effect it has on people. Not much at all. Z list celeb Anthea Turner's sister and sister's husband both declared bankrupt last year and she was joking about how they still shopped at Waitrose and they hadn't lost their house, all in some naff interview that she obviously got paid for! Off course people do loose their houses but a lot of young people are living for today and a bad credit rating is last of their worries! Many students see it as a way out of all the debt and with credit cards so easy to get it will just get worse. edit* noticed someone mentioned student loans are except ? the actual loan may be, but debts certainly are not, as that is when my ex ran up the debt, when studying to be a school teacher. Could laugh if it wasn't so tragic!!!!

Article from http://www.fool.co.uk/news/comment/2006/c0...ioodftxt0010001

Among the many fascinating discussions posted on our Dealing with Debt board, a subject that crops up with increasing regularity is bankruptcy. There are people contemplating it and are terrified, people who have taken the plunge and post about what it's like, and then there are those who have been there, done that, got the T shirt.

The thing I've noticed about these discussions is that just about everyone going through the process of bankruptcy has found the courts and the Official Receiver (OR) pretty sympathetic. Surprisingly so.

The fact is, bankruptcy doesn't carry the stigma that it used to and recent changes to the law have made it a much quicker process. Bankruptcy simply frees you from overwhelming debts so you can make a fresh start and ensures that your assets are shared out fairly among your creditors. This may include your house but not always.

The worst bit about it is probably the paperwork which starts with completing a Debtors Petition in triplicate and a Statement of Affairs in duplicate. You present your petition to your local county court in person handing over a cheque for the cost of it while you're at it. At the moment it costs £475, which is made up of a £150 court fee (which you don't need to pay if you're on benefits), and £325 which goes towards paying for the administration of your bankruptcy.

You then see a judge for about two minutes who, if satisfied that a bankruptcy order is appropriate, will agree to make an order at which point you are declared bankrupt.

The next step is to meet the OR who goes through your paperwork with you to establish the sequence of events that led to your bankruptcy and work out a repayment schedule called an Income Payment Order based on what you can afford. This will last for three years even after you have been discharged.

Although bankruptcy can last for up to a year, the OR can discharge you even earlier if s/he think it's appropriate so at some point you'll get a letter and questionnaire asking for an update of your personal circumstances.

Once the questionnaire is returned the OR contacts your creditors to inform them that you may be granted an early discharge so s/he can consider any objections they may have. If no-one objects, or if any objections are without merit, the OR can apply for an early discharge.

Note than when you're declared bankrupt you have to immediately stop using any bank accounts or credit cards that you might have. You can open a new bank account immediately after being declared bankrupt but it makes sense to withdraw enough cash to see you through the next month before you present your petition.

Obviously your credit rating will be ruined but you're not allowed to borrow more than £500 without declaring that you're a bankrupt anyway - and, besides, it'll have been the borrowing that probably got you into trouble in the first place so you'll want to avoid repeating the mistake! As a former bankrupt declared on our Dealing with Debt board: "Apart from the credit rating side of things, I have found the rest of my life to be quite unaffected by being a bankrupt. Life just seems to go on pretty much as it always did". END ARTICLE

If the worse bit about it is the paper work.....bring it on. no wonder more and more are going this route.

Sorry for being a simpleton...but who actually pays for the bankrupts debt? Is it the taxpayer? Who? Do the debts ever get paid...cos if they don't and there are no penalties...WHAT ARE WE WAITING FOR?!! LET'S ALL BUY A FERRARI TOMORROW....surely it can't be that simple...or can it?

Edited by Vim Fuego

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Sorry for being a simpleton...but who actually pays for the bankrupts debt? Is it the taxpayer? Who? Do the debts ever get paid...cos if they don't and there are no penalties...WHAT ARE WE WAITING FOR?!! LET'S ALL BUY A FERRARI TOMORROW....surely it can't be that simple...or can it?

I would never have believed it until i discovered that my ex was a pathalogical liar and had wardrobes and wardobes of designers clothing. And a flat decked out with all the latest gadgets/furniture. All on credit which they just walked away from. Nothing was repossesed.why?? not the car/furniture all the designer clothing. Declared for £60k. And had to pay something pathetic like £5 per weeks because they were on teacher training salary. Then got loads more credit cards and started on the spending spree again. I eventually found the cards and the statements. I can not believe it happened but it did, and they ran up another £9k in 12 weeks with no way of paying it. How the feck did they get the cards the 2nd time?? This person honestly just laughed about it. And they still went on holiday etc, etc. Just in my experience for what its worth....

Edited by beenhearingthisforyears

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Sorry for being a simpleton...but who actually pays for the bankrupts debt? Is it the taxpayer? Who? Do the debts ever get paid...cos if they don't and there are no penalties...WHAT ARE WE WAITING FOR?!! LET'S ALL BUY A FERRARI TOMORROW....surely it can't be that simple...or can it?

The creditor, and in some cases it can have a domino effect, the creditor can fold as well.

Directors of limited companies going bust simply walk away (as long as no illigality).

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Guest Vim Fuego

The creditor, and in some cases it can have a domino effect, the creditor can fold as well.

Directors of limited companies going bust simply walk away (as long as no illigality).

So is there no real legal penalty for the bankruptee? Apart from stigma? (I think I could live with stigma myself so long as I could walk away from my debts) Nah...it can't be that easy! Surely!

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So is there no real legal penalty for the bankruptee? Apart from stigma? (I think I could live with stigma myself so long as I could walk away from my debts) Nah...it can't be that easy! Surely!

If as a business you extend credit to an individual or company, you take a commercial risk. Credit controllers will normally have a budget, and will earn a bonus if they keep bad debt bellow the budget. What I find unforgiveable is debtors that deliberately take deposits etc, knowing they will not be able to deliver the goods.

Recent example:-

getmetickets.net

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Guest Vim Fuego

If as a business you extend credit to an individual or company, you take a commercial risk. Credit controllers will normally have a budget, and will earn a bonus if they keep bad debt bellow the budget. What I find unforgiveable is debtors that deliberately take deposits etc, knowing they will not be able to deliver the goods.

Recent example:-

getmetickets.net

Thanks for the insight......I suppose I am kinda hoping that there is 'some' legal penalty.... in the same way that I hope that drug peddlars/barons get their million pound houses taken away....otherwise...what's the point in being honourable and going straight?

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It was not always like this. My grandad went bankrupt in the late 60s from a failed business. They lost everything, house, car, furniture, house contents, the lot. Then the shame of it was so awful that they emigrated and did not come back to the UK for 10 years. They were quite poor in their final years. I only found out about it after they had both died.

frugalista

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