View Full Version : Understanding bankruptcy
Hi all,
All this talk of the credit crunch and potential for financial armageddon has got me thinking about what could happen to me in the worst case scenario.
Me and the Mrs own a property outside of the UK (Bulgaria) with no mortgage secured on it. We have got quite a lot of debt in the UK which is both unsecured (loans + c/card) or secured (mortgage) on our UK property.
If we were to go bankrupt in the UK, the Uk property would be siezed by the bank as a repossession and the unsecured debts would I suppose be wiped out and we would get an awful credit rating in the UK.
If that happened would we be able to move to Bulgaria and live there mortgage free (i.e. no debts in that country)? I'm not sure if bankruptcy would only apply to the UK or would it affect someone no matter where they lived in the world?
Please note: I'm not planning on doing this and it would take a catastrophic chain of events for this to happen like us both losing our jobs + interest rates rocketing - just wondered what would happen if this were to occur. :thinking:
Thanks in advance.
Oafy
DanWilde1966
02-10-2008, 10:43
*Stands well back...*
*Stands well back...*
lol i'm fearing a flaming for posting this but I do wonder if the UK courts would be able to repossess assets that are not in this country?
expect we would have to own up to a complete statement of affairs but is foreign property outside of uk institutions power to repossess?
pyrogena
02-10-2008, 10:53
First thoughts would have to be - how much is the Bulgarian property worth? Before even starting to think about bankruptcy, surely sell that first?
LooneyJetman
02-10-2008, 10:54
* subscribes to thread.
I don't know the answer to this, but I think the general interpretation of what you're asking on this forum will be "Me and the Mrs have run up a load of debt in the UK and are planning to do a runner back to Bulgaria. Can we do this without the authorities chasing us and reposessing our other house."
Are you originally from Bulgaria or have you just bought a house over there at some point in the past?
First thoughts would have to be - how much is the Bulgarian property worth? Before even starting to think about bankruptcy, surely sell that first?
yes, this is actually what we would do if we had serious problems paying back the UK commitments. a sale would free up quite a good amount of cash to pay off the uk debt.
http://www.myiva-adviser.com/blog/bankruptcy.php
Back to the drawing board, I think.
The Official Receiver may also wish to consider other assets such as time-shares, cars, stocks and shares, investments, caravans, overseas property or any other luxury goods.
You could, like, just not tell them and do a runner anyway. Live there for 6 years and come back with a clean credit rating :thumbs:
(not entirely serious)
* subscribes to thread.
I don't know the answer to this, but I think the general interpretation of what you're asking on this forum will be "Me and the Mrs have run up a load of debt in the UK and are planning to do a runner back to Bulgaria. Can we do this without the authorities chasing us and reposessing our other house."
Are you originally from Bulgaria or have you just bought a house over there at some point in the past?
hi! i appreciate that it might be interpreted that way but it's extremely unlikely to happen - I intend to stay in the UK and would look to sell the bulgarian flat if we got in serious difficulty.
i'm not from bulgaria but we decided to buy the flat as it is in an area we use for skiing - it is rented out most of the year and provides an income - plus can be used for holidays.
First thoughts would have to be - how much is the Bulgarian property worth? Before even starting to think about bankruptcy, surely sell that first?
apartment is worth about £90-100k by the way
http://www.myiva-adviser.com/blog/bankruptcy.php
Back to the drawing board, I think.
You could, like, just not tell them and do a runner anyway. Live there for 6 years and come back with a clean credit rating :thumbs:
(not entirely serious)
ok so this is interesting!
what if you don't go bankrupt and just leave the uk.... what happens to the debts that you have in the UK?
are you automatically declared bankruipt after a number of years not being in the country and servicing your debts and would the authorities sieze all your assets (in uk and abroad)
pyrogena
02-10-2008, 11:12
ok so this is interesting!
what if you don't go bankrupt and just leave the uk.... what happens to the debts that you have in the UK?
are you automatically declared bankruipt after a number of years not being in the country and servicing your debts and would the authorities sieze all your assets (in uk and abroad)
Are you asking if you can flee the country and leave your debts behind? Then return in a few years time scott free? :suspect:
EDIT - May I also add that if you have a property worth 90-100K (clear and free of debt) and you're thinking about declaring yourself bankrupt (or skipping the country)...you should sell said property now and clear your debts. If that property doesn't start to touch those debts, then you're in a whole world of trouble.
Are you asking if you can flee the country and leave your debts behind? Then return in a few years time scott free? :suspect:
More and more students are doing just that. They leave university and declare themselves bankrupt, they have no assets so their debt is wiped out, go abroad travelling and after 12 months they're discharged so they come home and start afresh.
More and more students are doing just that. They leave university and declare themselves bankrupt, they have no assets so their debt is wiped out, go abroad travelling and after 12 months they're discharged so they come home and start afresh.
how does that work exactly? I mean presumably you'd have to show that you are self dependant and not reliant on your parents, otherwise everybody living at home could just declare themselves bankrupt?
NicolaUK
02-10-2008, 11:27
Personal responsibility rocks :thumbs:
Are you asking if you can flee the country and leave your debts behind? Then return in a few years time scott free? :suspect:
It worked for the canoe man...
how does that work exactly? I mean presumably you'd have to show that you are self dependant and not reliant on your parents, otherwise everybody living at home could just declare themselves bankrupt?
I'm not quite sure, it was on a TV documentary a while back but I remember they followed some students who had taken out loans, overdrafts etc while they were at university. When their course was finished they declared themselves bankrupt then went travelling, after 12 months their bankruptcy was discharged so they came back. They did still have a very bad credit rating and had to declare that they were discharged bankrupts but it meant that they'd had all of their debts wiped out.
Here's an old link from 2004, back then student loans were wiped out if you went bankrupt but I think they've changed that now:
http://news.bbc.co.uk/1/hi/education/3453263.stm
KennyVader
02-10-2008, 11:45
More and more students are doing just that. They leave university and declare themselves bankrupt, they have no assets so their debt is wiped out, go abroad travelling and after 12 months they're discharged so they come home and start afresh.
Not quite afresh, I don't think student loans get wiped out that easily.
Plus having BEEN bankrupt, discharged or not, a person will find themselves ineligible for certain job sectors, and looking at using specialist lenders for credit cards / mortgages etc (basically means paying a higher rate of interest than anyone else). I should imagine it also harms or delays any applications for residency in other countries (e.g. US, Canada, Australia etc) later in life. That may not appear important while still aged 21 but moving overseas might be something they want to do at 28 or 38 or 58 years old. Even if it doesn't harm visa applications now, there's no saying that it won't in 5 or 10 years time as rules get changed.
I think it would be a very foolish person to potentially close many doors in their later life for the sake of relatively small debts run up on a credit card or bank loan while at university.
I'm not quite sure, it was on a TV documentary a while back but I remember they followed some students who had taken out loans, overdrafts etc while they were at university. When their course was finished they declared themselves bankrupt then went travelling, after 12 months their bankruptcy was discharged so they came back. They did still have a very bad credit rating and had to declare that they were discharged bankrupts but it meant that they'd had all of their debts wiped out.
Here's an old link from 2004, back then student loans were wiped out if you went bankrupt but I think they've changed that now:
http://news.bbc.co.uk/1/hi/education/3453263.stm
interesting, thanks :)
pyrogena
02-10-2008, 11:51
Some basic info here - http://www.direct.gov.uk/en/MoneyTaxAndBenefits/ManagingDebt/CourtClaimsAndBankruptcy/DG_10023215
I think it would be a very foolish person to potentially close many doors in their later life for the sake of relatively small debts run up on a credit card or bank loan while at university.
Oh I agree. Sadly some people just see the quick fix of getting rid of their debts they don't think about the problems that come afterwards.
Since 2004 the government have closed the loophole that allowed student loans to be wiped, now if you go bankrupt you've still got to pay them along with things like fines & council tax arrears.
Are you asking if you can flee the country and leave your debts behind? Then return in a few years time scott free? :suspect:
EDIT - May I also add that if you have a property worth 90-100K (clear and free of debt) and you're thinking about declaring yourself bankrupt (or skipping the country)...you should sell said property now and clear your debts. If that property doesn't start to touch those debts, then you're in a whole world of trouble.
hi, yeah i'd intend to sell and clear the debts.
but i am interested to know what happens if someone just leaves the country to never return and has a load of debt in the UK. can they be pursued for the debt if they took up residency in Brazil for example?
hi, yeah i'd intend to sell and clear the debts.
but i am interested to know what happens if someone just leaves the country to never return and has a load of debt in the UK. can they be pursued for the debt if they took up residency in Brazil for example?
They WILL find you ANYWHERE and, just about, every Country has recipricle debt collecting agreements in place. I imagine Bulgarian Debt collectors aren't as "nice" as ours either. . . .
NicolaUK
02-10-2008, 12:18
but i am interested to know what happens if someone just leaves the country to never return and has a load of debt in the UK. can they be pursued for the debt if they took up residency in Brazil for example?
Why?
Seriously, do you think if that is possible that it is acceptable?
pyrogena
02-10-2008, 12:19
Quoted from here - http://www.whatprice.co.uk/borrowing/UK-debt.html
"A reciprocal agreement in the UK means a UK Court can enforce a CCJ (County Court Judgment) using the legal system of the other country. If there is no such agreement in place, a debt creditor can sell a debt to an agency in the relevant country and debt recovery procedures will commence under the law of that land."
You seem to be looking for the easy way out. If you head off to Bulgaria and a debt agency there takes on your debt I don't think you'll be whizzing down the ski slopes much. At least, not until your kneecaps have healed.
DeadYankee
02-10-2008, 12:19
Ok, so he's got enough resources to buy a 2nd home in Bulgaria and goes ski-ing, and he wants to go bankrupt and let the rest of the world foot the bill for his lifestyle, but hell, at least he isn't on benefts and spending £30 on some second hand dvds
Why?
Seriously, do you think if that is possible that it is acceptable?
absolutely not! i've always paid everything back i've borrowed and have an good credit rating. i'm currently paying back all commitments in the UK and intend (and always have done) to stay here and pay my way.
i'm interested to know the position though as it's popped up a couple of times while chatting at work - i.e. someone was telling me that he has a friend who moved to Australia as he had debts in the UK - said friend is not coming back to the UK ever to avoid paying the debts back. another guy i know has several friends in Thailand working as teachers who are in a similar position.
I know what they are doing isn't fair but can someone get away with it? Aus guy is not bankrupt (as far as i know) in the UK. so will he be pursued by the Aus or British courts? from what people are saying he should, quite rightly, be made to pay back the debts but I'm not sure he could be found and forced to and I think it's a fair question to debate what should & could happen to someone leaving the country to avoid paying back debt...?
Quoted from here - http://www.whatprice.co.uk/borrowing/UK-debt.html
"A reciprocal agreement in the UK means a UK Court can enforce a CCJ (County Court Judgment) using the legal system of the other country. If there is no such agreement in place, a debt creditor can sell a debt to an agency in the relevant country and debt recovery procedures will commence under the law of that land."
You seem to be looking for the easy way out. If you head off to Bulgaria and a debt agency there takes on your debt I don't think you'll be whizzing down the ski slopes much. At least, not until your kneecaps have healed.
ok, this seems to answer the question - you are going to get done no matter what country you move to so that is interesting regarding the other people that we were discussing who live in Aus and Thailand.
I definitely value my kneecaps more than some bricks and mortar so wouldn't want to risk them!
simion_levi
02-10-2008, 12:32
It's a shame so many Official Receivers offices are overloaded with cases, if a student acquires debt with no realistic means to repay and declares bankrupcy they could find that 12 month discharge becomes a Bankrupcy Restriction Order of several years instead.
I always find it very strange to hear of people who have credit card debt which is probably being charged at some ridiculous rates yet they have the means to pay it off (albeit these means would need to be turned into cash).
Using secured loans and cash advances on lots of credit cards to buy a flat abroad outright! Great idea that, might try that meself:D
Altho it wouldnt be in a place like Bulgaria.
Using secured loans and cash advances on lots of credit cards to buy a flat abroad outright! Great idea that, might try that meself:D
Altho it wouldnt be in a place like Bulgaria.
ah well, to be honest that was not the idea all along. we had intended to pay for the final 50% of the property with a bulgarian mortgage.
we did pay the first two payments (25% each) as cash, but since the credit crunch hit mortgages became scarce and we had no choice but to get uk finance to complete the purchase. if we had pulled out midway through construction (its a new build) then we would have stood to lose the money we had already put into the property.
based on this experience I'd only recommend doing a purchase abroad if you have 100% of the cash to hand, so you are not relient on getting finance from a foreign bank to complete.
Why not sell the property and keep the money somewhere else. Then after a short while declare yourself bankrupt and wait for the 12 month discharge.
Im guessing unless youve got a paper trail to the property and rent payments it would be quite difficult for the or to track it down.
I can see this being an option for someone with negative equity.
So in other words, commit fraud you mean?
So in other words, commit fraud you mean?
you could call it that :lol:
pyrogena
03-10-2008, 23:52
Why not sell the property and keep the money somewhere else. Then after a short while declare yourself bankrupt and wait for the 12 month discharge.
Im guessing unless youve got a paper trail to the property and rent payments it would be quite difficult for the or to track it down.
I can see this being an option for someone with negative equity.
Massive debt, bankrupt AND a jail sentance. Keep the good ideas coming :thumbs:
DVDlife84
04-10-2008, 09:41
what if you don't go bankrupt and just leave the uk.... what happens to the debts that you have in the UK?
I think you still have to pay them.:thinking:
Vulcan101
04-10-2008, 12:10
Certain debts are exempt from bankruptcy protection ie they still stand even after being made bankrupt.
Student loans are just such a debt. There used to be a loophole relating to students being able to go for a IVA but this was closed when they changed the law in (iirc) 2001.
Massive debt, bankrupt AND a jail sentance. Keep the good ideas coming :thumbs:
So my comment was similar to the op comment. Why did you not feel the need to point that out? I know its because of the love :lol:
I was only commenting on how you could do it, ie only if there wasnt a paper trail linking the rent payments you bank accounts. Didnt say it was right or that they should do it.
Certain debts are exempt from bankruptcy protection ie they still stand even after being made bankrupt.
Student loans are just such a debt. There used to be a loophole relating to students being able to go for a IVA but this was closed when they changed the law in (iirc) 2001.
Student loans are included in a bankruptcy. Unless that is what you were saying?
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