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a question about bankruptcy

A friend of mine asked a strange/cheeky question and I didn't know the answer, so I thought I will post it here.

His question is: Lets say, a person who earns about 40K+ per annum but he has a debt of £11K. Can that person declare bankrupt? He is just being cheeky because he has got enough money to payoff the debt pretty quickly but he doesn't want to payback the money he borrowed. His point is that he feels banks are charging too much interest and getting away with. So he is justifying that the same way by saying if there is a loophole then he wants to get away with it the same way by not paying the debt.

My answer to him was, you won't be able to get bankrupt because, bankrupcy is for people who can't afford to pay but you can afford it. Also they will check a person's financial status before they determine whether a person can afford it or not and he would get caught when they see a decent monthly income going to his bank account. Also I told him, if you are declared bankrupt then he won't get any credit from banks/building society for many many years. Also he won't get any mortgage from any company.

His answer to my response was, I will first get a mortgage and pay extra sum of the salary towards mortgage and show not enough balance being left out in the bank account, hence not being able to pay debt, then declare bankrupt and get away with it by not paying the debt. After the bankrupcy, he will pay the regular payments to mortgage and have savings.

He says, he is not going to declare bankrupcy but its just a question of "What If"

At this point, I really I got confused. Can he get away with it like that?

Comments

  • Ask him is he ready to go to JAIL if he gets caught out for fraud?

    Bankruptcy should never been see as a "easy way" to get out of debt. it should be a last resort.

    wont he have to put down a deposit for the house? if he gets a mortgage and a house they will reposses the house and you lose the deposit? im sure that the case.

    also it isnt soemthing he can do overnight, it would surly be over a sustained period of time.

    and do he really think that OR's havent dealt with cases ike this before? one mistake and you've had it.
  • Not really.

    If he buys a house he will lose the house.

    If he has a regular income the OR can take an amount of that over the duration of the bankruptcy to cover some of the debt.

    Add the hassle of filling in forms and around £500 in fees and he's better off just paying the debt back. If he cuts back he could do this in a matter of months.
  • louisa79 wrote:
    Not really.

    If he buys a house he will lose the house.

    If he has a regular income the OR can take an amount of that over the duration of the bankruptcy to cover some of the debt.
    .

    that is correct, also the OR can get access to any of his previous bank statements. banks have all the history stored on there systems.

    he would have to pay money for 3 years on regular income after expenses etc. called a IPA.
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