payday loan prior to bankruptcy

russfred1

Hi all,

Not long to wait till we declare ourselves bankrupt however what with moving house and the cost of a deposit, rent upfront and 2 young kids we are really short of money before we get paid at the end of the month.
I know that taking credit out once you have decided to go bankrupt is a no no in the OR's eyes but as a means to get the shopping in and feed us would this be ok?

Thanks

woodformoretrees

I'd delay bankruptcy until you're on a bit of an even keel. Taking out loans to basically survive suggests a situation that bankruptcy could never repair. IMHO .

russfred1

Hi,

We will be fine once we get past this month as we won't be paying and creditors and no rental deposit to pay. Bankruptcy will see us much better off financially as we literally have been living off beans, bread and noodles the past year or so to enable us to pay our debts. It come to a point where enough was enough. Just wanted to know if the OR would be understanding towards the loan as it's for food not a blow out on luxuries.

fermi

They may be understanding, but could consider a BRO/U for taking out a new line of credit with no reasonable prospect of paying it back. Could you spend on current credit cards or overdraft instead? Not advising that as OK either, but the OR tends to be more lenient if you are just using an existing facility.

woodformoretrees

One of the experts on here will know - I know that raking funds together by not paying current loans is par for the course, but actually embarking on a new loan with the full intention of not paying it back might not be acceptable.
Hopefully someone knows the legal position and can advise you x


Edited to add: As Fermi said above.

fermi

woodformoretrees wrote: »

One of the experts on here will know - I know that raking funds together by not paying current loans is par for the course,

It is, but I sort of assumed they were already doing that and were still short? Hopefully the OP can confirm.

Bridge1

Taking out a pay day loan, even if it is for food when you know you have no intention of repaying it is immoral at best and is definitely not something you should be contemplating as it is misconduct in the eyes of the Official Receiver, as is continuing to use an existing facility. The OR is no more lenient when you do this rather than taking out a new loan as it is still obtaining credit with no reasonable expectation of repaying it.

alastairq

Bridge1 wrote: »

Taking out a pay day loan, even if it is for food when you know you have no intention of repaying it is immoral at best and is definitely not something you should be contemplating as it is misconduct in the eyes of the Official Receiver, as is continuing to use an existing facility. The OR is no more lenient when you do this rather than taking out a new loan as it is still obtaining credit with no reasonable expectation of repaying it.

Morality isn't taken into account in the financial world....and one man's morality is another man's business sense.

The Bankruptcy petition is not, and cannot be pre-ordained.

It is but one solution to the issue of insolvency.

If one has an overdraught, which one continually uses, then one petitions BR, it is doubtful an OR will raise even an eyebrow.....the individual is fighting a losing battle trying to make ends meet.

Indeed, in the past, folk have used overdraughts to find the fees....without anything being said by the OR.

I suspect , in the case of a payday loan, it will be for a nominal amount in the big scheme of things.....and..if no other source of funds is immediately available, I would take advantage, no problems.

The important thing is, to make scheduled re-payments to the payday loan...until everything is sorted, domestically.

This shows an 'intention to pay'.....and bills, etc, will show an OR tat taking such credit at this time was for essential living expenses...and the OR will have seen that a thousand times over.

''Oh dear, that was naughty' is about as far as an OR will reasonable go with regards to rebukes, I suspect.

Bridge1

The reason I mention it is that the OR can impose a bankruptcy restricion on the individual in question which will effect them for much longer than the period of bankruptcy. The proof required is to show that the bankrupt was insolvent and they they knew or should have known they were insolvent at the time of taking the loan out.

I've seen seen restrictions of 4 years or more given to people for doing exactly what this person is considering. I just think people should be aware of what might happen rather than believing no one will be bothered.

antrobus

See this thread;
https://forums.moneysavingexpert.com/discussion/1968437

The Fraud Act 2006 is mentioned.

fermi

alastairq wrote: »

''Oh dear, that was naughty' is about as far as an OR will reasonable go with regards to rebukes, I suspect.

Yes, that is the reaction to most similar cases I've seen. Not possible to say what any given examiner will do though.