Is bankruptcy really an option?

daxon

A very good friend of mine is having a really bad time.
To cut a long story short, he has had to leave his wife and children. He is currently staying with his sister. His family home is in his name and so is the mortgage. So is a lot of other debt which he has put in the hands of one of the charities?

He can see no way out of his problems as he is sinking further and further into trouble. He is getting very depressed and I am trying to help him without just lending him money which I can't afford and which he is in no position to pay back. I do however have time to research hopeful ways to help him.
I have just spoken to him and someone has suggested he takes out a loan secured on the house to pay back some of his debts and then goes bankrupt.

My questions if anyone can help please are these:
If he does this will his wife and children be thrown out of the house? (not an option.)
Which of his debts would be written off if any if he does go bankrupt?
How long would it be before he was (I think it's called) 'discharged' and what are the implications for his future?
How does he go about getting a definitive list of his debts?

It frightened the living daylights out of me when he started talking bankruptcy because I have always been brought up to believe it is wrong. Is it his only option? Is there life after bankruptcy? I would love to receive any advice on his behalf.
Thank you

Toomuchdebt

Why take out a loan secured on the house if he is going to go bankrupt?

daxon

He wants to pay back money to family and friends at least. He doesn't want them to be out of pocket.

moozie_2

daxon wrote:

My questions if anyone can help please are these:
If he does this will his wife and children be thrown out of the house? (not an option.)

It is hard to offer any advice without the full facts but on the point you made above, I am pretty sure the house would be taken away from him if he went bankrupt.

If he's in touch with one of the debt councelling charities, he should be receiving all the information he needs.

Well done for being there for your friend but be wary of advising him without knowing the full story.

lynzpower

its a criminal offence to apply for debt with the knowledge that you intend to go bankrupt i believe

Toomuchdebt

lynzpower wrote:

its a criminal offence to apply for debt with the knowledge that you intend to go bankrupt i believe

Yes I thought that too

Emmzi

daxon,

he can't take new loans now knowing he has no way of repaying. It's some category of fraud, can't remember which, so very serious.

He also CANNOT favour some creditors over others, family or not. They have to take their loss just like the banks etc.

His best bet is to talk to CCCS/Payplan about IVA/ debt management plans, with all the financial info to hand.

Richard_S

wrote:

hi daxon,

My wife and I were recently declared bankrupt by a property company that we guaranteed a business lease to. It's not an easy option and it does depend on an individual's personal circumstances at to whether an IVA (Individual Voluntary Arrangement) or bankruptcy is the best route.

Your friend should not consider doing something like taking out a loan knowing that he intends to declare bankruptcy or there was no reasonable chance of hime being able to repay the debt; that's a criminal offence.

The official receiver that interviewed us was extremely thorough and even though we'd done nothing wrong in terms of fraudulently obtaining funds he went through every bank and card transaction. It's not all over for us even now and the interview was almost six hours long; he wants to make further investigations and then have us interviewed by a more experienced colleague (that's guaranteed to keep you awake in the early hours).

Your friend needs some expert advice, CCCS are good and there are others. One thing that I missed though was not being able to speak to somebody who had actually experienced the process personally and was prepared to talk openly about it. Solicitors, accountants and debt advisors have their professional reputation to consider and obviously won't talk off the record.

The questions you pose I can answer from our own experience but the problem is the answers would pose a whole new set of questions.

1. Yes the house is at risk, but there are things you can do to improve the situation.

2. All debts are written off with the exception of Student Loans, but the official receiver (O.R) will sell all his assets.

3. You can be discharged after 12 months unless there's evidence of fraud or that you were aware that you'd be unable to repay debt.

4. There are negative implications for the future but at this point we're hopeful that we'll cope. We have actually lost our house although we're still living it - bit complicated.

5. You could help your friend to calculate his debts - plenty of files, folders, hole punches, get all his paperwork filed by company, date order, when you get to the stage of struggling to meet yopur debts there's no shortage of letters telling you how much you owe.

There is life after bankruptcy (I'm a hopeless optimist) I just wish I could suggest some sort of support group that he could contact but to my knowledge there isn't one.

Kind regards

Richard

daxon

Thank you for all your suggestions - Of course I am very wary of suggesting anything without being thoroughly qualified - unlike some of the people who appear to have been 'advising' him!
I see myself more as a 'braking sysyem' stopping himself before he does anything rash.

missk_ensington

lynzpower wrote:

its a criminal offence to apply for debt with the knowledge that you intend to go bankrupt i believe

And how would you go about proving this? Last I heard there isn't a scan available to read your thoughts.

Ethically/legally it is wrong, but morally I can see where he is coming from as I too would be distraught at the thought my family were out of pocket because of me.

lynzpower

Could I recommend then that you stop lending him money he is unable to repay, as this is likely to make him feel worse in the long run