Friend being made Bankrupt

BrownTrout

a friend not a "friend" has a creditor who for around 14K is being made  Bankrupt because of the way they have been messed, this actually works out well for the person concerned
a question they asked me and i thought it was a big NO NO, their hearing is in May and they asked about taking out credit before this and then including that in any BO?
Is this a bad idea ?( ive said its not to be done), but wanted advice from people who are in the "know" so to speak.

fatbelly

Is this person intending to borrow 14k to pay this debt, or some other sum for some other purpose?

If this person is a homeowner then a statutory demand can be a big threat and paying the petitioning debt down below 5k can be a good tactic.

Need more detail really

BrownTrout

Sorry wasnt clear1
no they owe quite a bit more on top, not a home owner and no assets or savings etc,
What they have asked is "could i take more credit out in the meantime and then include it in the Bankruptcy order?

2021BJ

BrownTrout said:

Sorry wasnt clear1
no they owe quite a bit more on top, not a home owner and no assets or savings etc,
What they have asked is "could i take more credit out in the meantime and then include it in the Bankruptcy order?

Probably end up with a BRO if the OR figures out what they did.

Sonic101

2021BJ said:

BrownTrout said:

Sorry wasnt clear1
no they owe quite a bit more on top, not a home owner and no assets or savings etc,
What they have asked is "could i take more credit out in the meantime and then include it in the Bankruptcy order?

Probably end up with a BRO if the OR figures out what they did.

Yes. Taking taking out more credit knowing they won't be able to pay back would be frowned upon and could possibly be seen as fraud. A would probably get away with something small if it could be justified (such as bunging a groceries on a credit card because they were broke and had no other means of paying), but a big spend on a credit card or taking on a new credit card or loan is a no-no. 

MalMonroe

Do you mean that a friend is actually being made bankrupt by a creditor? If that is the case then I'm not sure that any new credit will be taken into account at the hearing. You may wish to show the information in this link from Citizens Advice to your friend - https://www.citizensadvice.org.uk/debt-and-money/debt-solutions/bankruptcy-2/creditors-making-you-bankrupt/creditor-trying-to-make-you-bankrupt/

If I were your friend I'd contact Citizens Advice as soon as I could, too because they will be able to advise what to do next. Taking out more credit would probably not be a priority. Nobody really actually wants to be made bankrupt, it's a very serious situation to be in. Please ask your friend to seek expert help from the experts.  

BrownTrout

Thanks i did say this was a bad idea, when it was first mooted
Being made bankcrupt is actually suitable in their situation as they have no assets have quite a lot of combined debt 

fatbelly

Still not clear.
How much are they intending to borrow between now and the hearing.? What are they planning to do with the money?

There are two issues here. One is taking out credit when insolvent. That is enough to get a BRO.

The other is hiding assets if they cannot give a satisfactory account of where the money went.

At best that is a longer BRO. They may be looking at criminal charges

https://www.citizensadvice.org.uk/debt-and-money/debt-solutions/bankruptcy-2/bankruptcy-offences/

I believe there is a maximum jail term of 7 years

BrownTrout

They are not borrowing anything now after this was confirmed on here.
And they do not have any assets

cymruchris

BrownTrout said:

They are not borrowing anything now after this was confirmed on here.
And they do not have any assets

That's wise. Usually a bankruptcy lasts 12 months before discharge - but if there's any funny business detected they can put a restriction in place for up to 15 years. It's not worth the risk. They might have seen it as a way to get a new iPad before the bankruptcy hit - but when the OR examines all of the accounts, if it was picked up, then who knows how long they'd have to wait before getting a clear credit file. (Bankruptcy in itself of course is going to come with its own challenges around very limited credit availability over the 6 years it's on their credit file - and even beyond that they'll still have to likely take time building back a positive history).