Bankruptcy - yes or no?

londoner1000

Hi,

I'd like some advice on behalf of a friend.

My friend has a lot of debt and i'm not entirely sure how much. I know he owes around £15000 to friends and family. Also, he owes £5500 to his car loan company, several thousands on credit cards, £600 to water company, £1400 to gas/electricity, £3500 arrears on mortgage (which includes an additional £1000 fee for missing a payment last month), and he's £3000 into an overdraft (i presume his overdraft is 3000 and he's used it all). He might even owe more. That's about £30000 of debt.

The car loan company has written to him asking to repossess his car, which can't be worth more than about £1500 now (but which he still owes £5500 on, after already paying £5500 on it), and saying they will deduct the money they make from the amount still owed. I believe debt collectors have been in contact for something else also, but not sure what.

He's just been sentenced to 4 years in prison on a separate issue. Hence why i'm seeking advice on his behalf. He hasn't been honest about his debts for years and i think his friends and family are worried he'll never get them sorted and they will never see a penny back of what he borrowed from them. Nobody can really believe just how much debt he was in as it never 'showed' - i think he just buried his head and let it build up.

His partner is living at his home and paying his mortgage which is an interest-only mortgage thus he won't even be able to sell it to gain some capital. His partner is also worried about bailiffs taking away their belongings and those of their lodger, both of whom have no debts.

After prison, where he is likely to serve about two years, it's unlikely he will earn enough money to pay anything close to a 'reasonable' amount back, and having known him a long time, i don't think he'll ever be able to reduce his debt. We just hope he will be able to live within his means in the future.

I'd like some advice on what his best course of action is.

If he is declared bankrupt, for example, how much does it cost and can it be done without his blessing? Will it reduce his debt to zero? How long does it last? Will there be problems for his partner and his mortgage which she and lodger are paying for currently? Are there any debts that will not go away? Is it best not to mention debt to family/friends to any companies?

Any advice would be appreciated.

silvercar

If it had been him alone to consider then bankruptcy while at her majesty's pleasure wouldn't be that bad an option.

However, if there is equity in the property, then the OR would want to realise the bankrupt's share of the equity.

"Normally" the OR would wait to deal with the bankrupt's home for 3 years, but here the bankrupt has somewhere to live, so I'm not sure the view in this case.