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Old 02-10-2008, 10:35   #1
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Question Understanding bankruptcy

Hi all,

All this talk of the credit crunch and potential for financial armageddon has got me thinking about what could happen to me in the worst case scenario.

Me and the Mrs own a property outside of the UK (Bulgaria) with no mortgage secured on it. We have got quite a lot of debt in the UK which is both unsecured (loans + c/card) or secured (mortgage) on our UK property.

If we were to go bankrupt in the UK, the Uk property would be siezed by the bank as a repossession and the unsecured debts would I suppose be wiped out and we would get an awful credit rating in the UK.

If that happened would we be able to move to Bulgaria and live there mortgage free (i.e. no debts in that country)? I'm not sure if bankruptcy would only apply to the UK or would it affect someone no matter where they lived in the world?

Please note: I'm not planning on doing this and it would take a catastrophic chain of events for this to happen like us both losing our jobs + interest rates rocketing - just wondered what would happen if this were to occur.

Thanks in advance.

Oafy
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Old 02-10-2008, 10:43   #2
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Old 02-10-2008, 10:49   #3
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lol i'm fearing a flaming for posting this but I do wonder if the UK courts would be able to repossess assets that are not in this country?

expect we would have to own up to a complete statement of affairs but is foreign property outside of uk institutions power to repossess?
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Old 02-10-2008, 10:53   #4
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First thoughts would have to be - how much is the Bulgarian property worth? Before even starting to think about bankruptcy, surely sell that first?
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Old 02-10-2008, 10:54   #5
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I don't know the answer to this, but I think the general interpretation of what you're asking on this forum will be "Me and the Mrs have run up a load of debt in the UK and are planning to do a runner back to Bulgaria. Can we do this without the authorities chasing us and reposessing our other house."

Are you originally from Bulgaria or have you just bought a house over there at some point in the past?
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Old 02-10-2008, 11:01   #6
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Quote:
Originally Posted by pyrogena View Post
First thoughts would have to be - how much is the Bulgarian property worth? Before even starting to think about bankruptcy, surely sell that first?
yes, this is actually what we would do if we had serious problems paying back the UK commitments. a sale would free up quite a good amount of cash to pay off the uk debt.
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Old 02-10-2008, 11:03   #7
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http://www.myiva-adviser.com/blog/bankruptcy.php

Back to the drawing board, I think.

Quote:
The Official Receiver may also wish to consider other assets such as time-shares, cars, stocks and shares, investments, caravans, overseas property or any other luxury goods.
You could, like, just not tell them and do a runner anyway. Live there for 6 years and come back with a clean credit rating

(not entirely serious)

Last edited by KRW; 02-10-2008 at 11:05.
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Old 02-10-2008, 11:04   #8
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I don't know the answer to this, but I think the general interpretation of what you're asking on this forum will be "Me and the Mrs have run up a load of debt in the UK and are planning to do a runner back to Bulgaria. Can we do this without the authorities chasing us and reposessing our other house."

Are you originally from Bulgaria or have you just bought a house over there at some point in the past?
hi! i appreciate that it might be interpreted that way but it's extremely unlikely to happen - I intend to stay in the UK and would look to sell the bulgarian flat if we got in serious difficulty.

i'm not from bulgaria but we decided to buy the flat as it is in an area we use for skiing - it is rented out most of the year and provides an income - plus can be used for holidays.
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Old 02-10-2008, 11:05   #9
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First thoughts would have to be - how much is the Bulgarian property worth? Before even starting to think about bankruptcy, surely sell that first?
apartment is worth about £90-100k by the way
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Old 02-10-2008, 11:07   #10
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Originally Posted by KRW View Post
http://www.myiva-adviser.com/blog/bankruptcy.php

Back to the drawing board, I think.



You could, like, just not tell them and do a runner anyway. Live there for 6 years and come back with a clean credit rating

(not entirely serious)

ok so this is interesting!

what if you don't go bankrupt and just leave the uk.... what happens to the debts that you have in the UK?

are you automatically declared bankruipt after a number of years not being in the country and servicing your debts and would the authorities sieze all your assets (in uk and abroad)
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Old 02-10-2008, 11:12   #11
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Originally Posted by fatoaf View Post
ok so this is interesting!

what if you don't go bankrupt and just leave the uk.... what happens to the debts that you have in the UK?

are you automatically declared bankruipt after a number of years not being in the country and servicing your debts and would the authorities sieze all your assets (in uk and abroad)
Are you asking if you can flee the country and leave your debts behind? Then return in a few years time scott free?

EDIT - May I also add that if you have a property worth 90-100K (clear and free of debt) and you're thinking about declaring yourself bankrupt (or skipping the country)...you should sell said property now and clear your debts. If that property doesn't start to touch those debts, then you're in a whole world of trouble.

Last edited by pyrogena; 02-10-2008 at 11:14.
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Old 02-10-2008, 11:17   #12
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Originally Posted by pyrogena View Post
Are you asking if you can flee the country and leave your debts behind? Then return in a few years time scott free?
More and more students are doing just that. They leave university and declare themselves bankrupt, they have no assets so their debt is wiped out, go abroad travelling and after 12 months they're discharged so they come home and start afresh.
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Old 02-10-2008, 11:22   #13
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Originally Posted by anguk View Post
More and more students are doing just that. They leave university and declare themselves bankrupt, they have no assets so their debt is wiped out, go abroad travelling and after 12 months they're discharged so they come home and start afresh.
how does that work exactly? I mean presumably you'd have to show that you are self dependant and not reliant on your parents, otherwise everybody living at home could just declare themselves bankrupt?
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Old 02-10-2008, 11:27   #14
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Personal responsibility rocks
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Old 02-10-2008, 11:36   #15
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Are you asking if you can flee the country and leave your debts behind? Then return in a few years time scott free?
It worked for the canoe man...
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Old 02-10-2008, 11:38   #16
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Quote:
Originally Posted by bumfrog View Post
how does that work exactly? I mean presumably you'd have to show that you are self dependant and not reliant on your parents, otherwise everybody living at home could just declare themselves bankrupt?
I'm not quite sure, it was on a TV documentary a while back but I remember they followed some students who had taken out loans, overdrafts etc while they were at university. When their course was finished they declared themselves bankrupt then went travelling, after 12 months their bankruptcy was discharged so they came back. They did still have a very bad credit rating and had to declare that they were discharged bankrupts but it meant that they'd had all of their debts wiped out.

Here's an old link from 2004, back then student loans were wiped out if you went bankrupt but I think they've changed that now:
http://news.bbc.co.uk/1/hi/education/3453263.stm

Last edited by anguk; 02-10-2008 at 11:42.
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Old 02-10-2008, 11:45   #17
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Quote:
Originally Posted by anguk View Post
More and more students are doing just that. They leave university and declare themselves bankrupt, they have no assets so their debt is wiped out, go abroad travelling and after 12 months they're discharged so they come home and start afresh.
Not quite afresh, I don't think student loans get wiped out that easily.

Plus having BEEN bankrupt, discharged or not, a person will find themselves ineligible for certain job sectors, and looking at using specialist lenders for credit cards / mortgages etc (basically means paying a higher rate of interest than anyone else). I should imagine it also harms or delays any applications for residency in other countries (e.g. US, Canada, Australia etc) later in life. That may not appear important while still aged 21 but moving overseas might be something they want to do at 28 or 38 or 58 years old. Even if it doesn't harm visa applications now, there's no saying that it won't in 5 or 10 years time as rules get changed.

I think it would be a very foolish person to potentially close many doors in their later life for the sake of relatively small debts run up on a credit card or bank loan while at university.

Last edited by KennyVader; 02-10-2008 at 11:50.
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Old 02-10-2008, 11:48   #18
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Quote:
Originally Posted by anguk View Post
I'm not quite sure, it was on a TV documentary a while back but I remember they followed some students who had taken out loans, overdrafts etc while they were at university. When their course was finished they declared themselves bankrupt then went travelling, after 12 months their bankruptcy was discharged so they came back. They did still have a very bad credit rating and had to declare that they were discharged bankrupts but it meant that they'd had all of their debts wiped out.

Here's an old link from 2004, back then student loans were wiped out if you went bankrupt but I think they've changed that now:
http://news.bbc.co.uk/1/hi/education/3453263.stm
interesting, thanks
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Old 02-10-2008, 11:51   #19
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Some basic info here - http://www.direct.gov.uk/en/MoneyTax...cy/DG_10023215
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Old 02-10-2008, 11:55   #20
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Originally Posted by KennyVader View Post
I think it would be a very foolish person to potentially close many doors in their later life for the sake of relatively small debts run up on a credit card or bank loan while at university.
Oh I agree. Sadly some people just see the quick fix of getting rid of their debts they don't think about the problems that come afterwards.

Since 2004 the government have closed the loophole that allowed student loans to be wiped, now if you go bankrupt you've still got to pay them along with things like fines & council tax arrears.
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