bankruptcy queries

credit_crunch

evening everyone.

my partner & i are considering bankruptcy & letting our home be repossessed (still deep in thought at this stage)

what we are wondering is, say we pay the deposit for our wedding reception on a credit card, or take out a loan, then go bankrupt in 6-12months - is this deemed fraud?

we both have a few cards nearly maxed out, plus credit union loans, approx £50k negative equity, plus we have our individual overdrafts then our joint acc overdraft.

we are not struggling too much with repayments yet, but a lot of day to day spending is goin on credit cards :-( plus if the interest rates rise, then we will not be able to afford our mortgage payments ( we are on svr at 1.4% above base rate)

i appreciate there are a lot of 'ifs and buts' but we just dont want to prolong the inevitable! and the fact that we hate the area we live in doesnt help either.

we have spoken briefly to cab, and cccs (due to have the proper interview with cccs on xmas eve)

so sorry for the long winded half life story but my main questions is the risk of fraud? the last thing we want is to have our home repossessed, go BR and end up in prison!!!

debtinfo

The quick answer if that if you spend money that you dont intend to pay back then that could be considered fraud

Scad

credit_crunch, I don't mean to be judgemental but morally do you think this is acceptable?

In summary, you want a discounted wedding at everyone elses expense?

Seriously?

Hanky3

To put it mildly.

BB&B

I'm not going to delve into the morality of the OPs post, but the most you would get is a Bankruptcy Restriction Undertaking or Order, for being financially irresponsible. This is a current failing with the system!

Please read these:

http://www.insolvency.gov.uk/pdfs/guidanceleafletspdf/bro.pdf

http://www.insolvency.gov.uk/freedomofinformation/technical/BROBRU.HTM

You will not end up going to prison, you will not get a criminal record.

Tim

credit_crunch

thanks everyone. im not setting out to get more credit then go bankrupt.

i have paid for some things relating to my wedding on my credit cards, and i was concerned that they could be affected seeing as they were paid by credit card.

i dont necessarily plan on going bankrupt - but i/we might have to get a loan to buy the other half of our house from the shared ownership scheme. this would allow us to sell the house, leaving us with less negative equity meaning we shouldnt have to go bankrupt.

do you all see what i mean? if for whatever reason we cant sell the house, then it may be repossesed leaving the mortgage & loan we took out to buy out the shared ownership scheme.

i am just thinking worst case scenario, and if we do have to go BR, I doubt it will happen or be necessary until at least 12 months time.

thanks for all the opinions though

nuttyp

So you will be treading water for say a year, then you will consider it?? If you have quite a few debts now, how will you be able to get a loan to buy the other share in your shared equity home, surely you would be deamed a risk if you owed alot.

The OR can check all of your spending, be very careful on what you use it for. Paying 1 debt but not another can frowned upon. As can overuse of credit facilities. On 2 of my cards i had to provide statements for the previous year. Just thought i would warn you.

BR isnt an easy choice, and it is something that can effect you job prospects in the future along with other major decisions. Some jobs are not able to be done by BR people, and i stil have to declare i am discharged due to working with large money sums.

credit_crunch

thanks nutty, we arent missing payments, and arent in arrears with any bills or payments.

we are gettin to the stage that we need to move house as the area is horrible, and quite intimidating. so we thought if we could get a loan to buy out our share of the property, then sell the property, we would possibly clear the loan or possibly be left with around a £10k shortfall (from the mortgage and/or loan) - this is opposed to the shortfall of say £50k if we tried to sell now, owning only 50% of our property - no doubt this would lead to repossession as we cant afford a £50k loan, which surely then lead us to bankruptcy.

sorry if it seems like im rambling a bit, i just want anyone who is reading this to know my exact way of think around the whole thing.

kepar

IMO from your first post you are in financial difficulty, and are using credit cards to live. So how do you think you are going to get a £50k loan to buy the other half. You will be getting a secured loan, and as you are up to the hilt in debt already the majority of lenders if not all would not touch you.
IMO you need to go and get advice from any of the debt charities as you seem to be denying the problem you are in.

silvercar

Can you post some values. What is the property worth as a whole? What is the 50% share worth?

this is opposed to the shortfall of say £50k if we tried to sell now, owning only 50% of our property -

Doesn't really make sense. If you are saying the whole property could be sold for the value of the new mortgage plus loan but half share would leave you with a 50k shortfall, why has the shortfall disappeared just because you bought the other half?

I think you are confusing repossession with bankruptcy - one doesn't have to lead to the other.

credit_crunch

thanks for the advice so far guys. i have spoken to cab & briefly to cccs - they are due to ring me back 2moro to discuss things in depth.

we bought the house for £130k nearly 3 years. our mortgage was for £65k so the co ownership PAID £65K for their half. We are due to get the co own valuer out asap to see what they value their half at. They look at it with todays market value and then decide on how much our half should cost.

We thought we would be better buying out the co ownership half first and seeing how we go from there. we are recently engaged so are trying to factor in trying to get married and starting a family while our finances may be in tatters! we dont want to delay this whole process to long, as we feel if we have started a family we will never be in a position to sell the house or go BR.

Im sure once I have had the chat with CCCS 2moro, and make an appointment with CAB for a proper sit down chat with OH it will hopefully become a bit more clearer.

I agree to a certain extent that I may be in denial - the response from CAB yest was basically as we arent in arrears or havent missed payments then our situation isnt too bad at the moment.

Its tough tryin to be a responsible grown up lol!!

thanks again for the advice so far, and for not judging me :-)