Loan before bankruptcy

mushio

How would getting a loan approved before declaring bankruptcy sit with the OR.

Need some funds fairly quick and have been accepted albeit for a high rate but not too bothered as I'm planning on going BR this year to clear my debts for a fresh start.

Mushio.

fermi

http://www.bis.gov.uk/insolvency/personal-insolvency/bros-and-brus

What conduct may lead to a BRO/BRU?

When deciding whether to make a BRO/BRU the court and the official receiver may take into account the individual’s conduct before and after the making of the bankruptcy order.
Below are some examples of dishonest or blameworthy conduct that could lead to a BRO/BRU. The list is not exhaustive, so any behaviour that the official receiver considers to be suspect may be the subject of a BRO application and should be investigated.

• Failing to keep or produce records which would explain a loss of money or property.
• Giving away assets or selling them at less than their value.
• Deliberately paying off some creditors in preference to others.
• Failing to supply goods or services which have been paid for (taking deposits).
• Carrying on a business when you knew or ought to have known you could not pay your debts (trading with knowledge of insolvency).
• Incurring debts which you knew you had no reasonable chance of repaying.
• Gambling or making rash speculations or being unreasonably extravagant.
• Causing your debts to increase by neglecting your business affairs.
• Behaving fraudulently, e.g. making a false claim to obtain credit.
• Not co-operating with the official receiver or trustee.

TheGardener

You could pretty much guarantee you will be subject to a BRO if you do that and that wouldn't be much of a "fresh start" would it? I wouldn't advise you do that at all - not least because I suspect it is fraudulent - in accepting the loan you are promising to repay it while knowing you will not be able to.

mushio

Ok I see where your coming from.
Let me ask you this. I'm coming to the end of a lengthy tax investigation in which there will be a bill of around 15k according to my accountant.
I will not be able to afford this so would I be better of letting the HMRC make me bankrupt.
That way I never did it so as far as I was aware I was going to pay the loan back.

TheGardener

I appreciate you are in a bit of a tight spot now - but please, do not underestimate the powers and reach of the OR and their examiners. If you are not in a position to repay the loan, then it will be irrelevant how you become BR.
The OR's investigation of your financial affairs (which will go back as far as they want to and will be very thorough) will soon make it clear that you have accepted the loan at a time when you knew you were likely to be unable to repay. The very fact that you know you are going to become insolvent when your tax assessment is made is sufficient evidence that you knew you had no reasonable chance of repaying the loan. Your OR will contact both the banks and your accountant for information and neither of them will be 'economical with the truth' where an OR is concerned.

samtoby

How would you feel if someone borrowed money from you and then went bankrupt months later and did not repay it. Bad idea.

alastairq

mushio wrote: »

Ok I see where your coming from.
Let me ask you this. I'm coming to the end of a lengthy tax investigation in which there will be a bill of around 15k according to my accountant.
I will not be able to afford this so would I be better of letting the HMRC make me bankrupt.
That way I never did it so as far as I was aware I was going to pay the loan back.

So, it isn't about you petitioning for BR, but about a suspicion that, eventually, HMRC may well seek to BR you?

Are you currently insolvent?


IE, can you meet your current debts as they fall due?

If you are currently solvent, then applying for credit now can be done in good faith. If, eventually, you are made BR by...for example, HMRC, then the OR will look at your financial situation when taking out the credit, to see if..at that time, you were solvent, or knowingly insolvent.

If , currently, you only suspect HMRC might eventually petition your BR, then that isn't a foreseen fact, is it?

However, be aware, HMRC have powers to retrieve monies owed by other means, other than by BR.

Of course, if you are currently insolvent [and an awful lot of folk are, if they but knew it]....and BR is an option you know you will have to face at some point [although, it cannot be 'officially' planned for, ahead of time]....then worst case scenario, taking out credit now might elicit a BRO [not the end of the world, is it?]

Is it a large credit amount, or a small amount? And, what might it be for?

mushio

Hi there,

The loan is only for 3k and to be honest it won't be a problem paying it back in a year.
It's when the tax bill comes in that the problems will start.
HRMC fined me for 2009/2010 and then went back 3 extra years without much investigating and said that I probably underpaid in those years as well.
House is in negative equity by 20k so I guess I'm safe with that one, can't see it increasing in value by that much anytime soon.

Looks like BR for me. Please be assured it's not something I'm looking forward too, I have been to CAB and spoken to other debt charities regarding it.

Mushio.

mushio

Sorry,

Meant to add that at present I meet all required debts and that the loan is for some home improvements.

Mushio.

adpod

If you are planning on going BR chances are you will lose your home, why bother making home improvements and increasing your debt just to give it back to the bank

luvchocolate

That is not true, if there is no equity in your home and you say there is not and you are making payments there is no reason for you to loose your home.
please read about this on the insolvency service website.