The Law Intentional bankruptcy

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Smiling Buddha said:
Sorry, I thought you were implying that the sucker who buys the debt is in some way a victim of my friend's plan to not pay back the banks. If I have misunderstood your angle then please carry on.
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That's not what I meant. More that the banks are immune from your friend's actions - they'll have an expected default rate, his defaulting on the debt won't change it appreciably, and they will probably sell his debt on to someone further along the chain.

If people started defaulting en masse that might change things, however that happened to an extent in 2007 in the US. And the result was a bailout that made bankers even richer. So the banks never lose (just like in Monopoly).

Furthermore, credit rating is a meaningless thing in such an environment. To exist banks must lend money so if everyone had a bad credit rating they would just change the definition of what bad meant.
 

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So while all your other mates end up with their own homes, your 'friend' is set for a lifetime of shared accomodation. Oh how they will envy him. :rolleyes:
 
clogged said:
SB, why go intentionally bankrupt in the pursuit of consumer goods instead of assets? Either way, the banks will probably see your mate coming, package up his bad credit into a security of some sort, and sell it to some sucker down the line. Choosing to use the credit on goods just makes someone else in the system rich, using it on assets potentially makes him rich.
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I have absolutely no sympathy for organisations like Dunn & Bradstreet, they know the risk of buying bad debt and live on the misery of others. They treat their staff like crap, pay them very little and give them insufficient training to handle the personal abuse that will be thrown at them by people they are collecting debts from (this has been told to me by numerous people formerly employed by D&B).
 
Max Rockatansky said:
So while all your other mates end up with their own homes, your 'friend' is set for a lifetime of shared accomodation. Oh how they will envy him. :rolleyes:
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1) Do you think mortgages are the only way for people to own their own homes? Let alone the best way?

2) Did you miss the part where I explained that this guy earns good coin and can save enough money to buy a house outright in less time than it takes most couples to pay off a mortgage?

3) I don't think he is interested in whether or not people envy him. That this is how you frame your perception of him says a lot about you, imo.
 
Smiling Buddha said:
3) I don't think he is interested in whether or not people envy him. That this is how you frame your perception of him says a lot about you, imo.
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I own my home outright - did it with a loan too. No-one will want to be in "your friend's" shoes so good luck to him. He sounds like a pretentious twat.
 
I think your friend is under the wrong impression that all you need to do to file for bankruptcy is tick a box or something. It'd be very obvious to the courts and his creditors that his debts would be fraudulent, if he were to do what you have described (i.e maxing amount multiple credit cards in a short space of time) therefore, he would have a very hard time getting them discharged. I also doubt any lawyer would touch his case with a ten foot pole.

Banks and the government don't like getting ripped off by people - there are strict laws and procedures to make sure this kind of thing doesn't happen.
 
MrCharisma said:
I think your friend is under the wrong impression that all you need to do to file for bankruptcy is tick a box or something. It'd be very obvious to the courts and his creditors that his debts would be fraudulent, if he were to do what you have described (i.e maxing amount multiple credit cards in a short space of time) therefore, he would have a very hard time getting them discharged.
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Now we're getting somewhere. Can you please elaborate on this? I know nothing about bankruptcy procedure and was hoping somebody around here might be able to fill me in. If it is obvious that he went all out and tried to go bankrupt, what can happen to him? Can he be refused bankruptcy? Prison time?
Banks and the government don't like getting ripped off by people
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You can say that again - seems to me they've rigged the system so that it goes the other way.
Max Rockatansky said:
I own my home outright - did it with a loan too.
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Surprise surprise.
 
Smiling Buddha said:
Now we're getting somewhere. Can you please elaborate on this? I know nothing about bankruptcy procedure and was hoping somebody around here might be able to fill me in. If it is obvious that he went all out and tried to go bankrupt, what can happen to him? Can he be refused bankruptcy? Prison time?.
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Taking out credit is a declaration that you can pay the money back. If he never intended or had the means to pay it back, it is fraud. The creditor has the right to (and will) look into, and scrutinise your friends activities. And as I was saying earlier, a solicitor would take a look at his case and it would be fairly obvious what he's up to - I doubt any solicitor would be willing to represent him. Obviously, fraudulent debts are not going to be discharged, so he'd end up being charged with fraud on top of his big new debt.

Really, it's as good as saying 'holding up a bank is a quick and easy way to get cash - all you have to do is not get caught or convince the courts that you are innocent, and you'll be sweet.'
 

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I remember a friend of a friend that tried to convince me one once that you could take out loans credit cards etc, go bankrupt then all you had to do was change your name via deed pole and you'd be sweet to get a new line of credit. Wasn't the sharpest tool the shed, I wished him well in his endeavors.
 
Oz banks give credit out so easily. Every bloke and their dog seems to have a $20k card limit (and more than one).
 
Smash out loans using your drivers license, Medicare and bank card

Enjoy your fun os on a kick arse holiday

Move to another state on return - swap your license over - change your name by deed poll - have licence adjusted accordingly - you can then return to home state -when you change your license over it will have a new number. - smash out serious housing loan using new drivers licence - new passport and new bank card etc

New person as far as the system is concerned
 
2) Did you miss the part where I explained that this guy earns good coin and can save enough money to buy a house outright in less time than it takes most couples to pay off a mortgage?
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Sweet, saves $500K in 15 years, by which time the average $500k house is worth $1m+
 
kranky al said:
Smash out loans using your drivers license, Medicare and bank card

Enjoy your fun os on a kick arse holiday

Move to another state on return - swap your license over - change your name by deed poll - have licence adjusted accordingly - you can then return to home state -when you change your license over it will have a new number. - smash out serious housing loan using new drivers licence - new passport and new bank card etc

New person as far as the system is concerned
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Sounds like you've found a way to infinite riches
 
JuddsABlue said:
Sounds like you've found a way to infinite riches
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Yeah nah - I think that's a once in a lifetimer. - enjoy a few years overseas then come back and put your head down - I think you would have to spend at least three and probably more like five years before the skip tracers and debt collectors stopped seriously looking. Then you would have to come back as I said and build up a credit rating from scratch.


Know a guy who did a similar thing - maxed his cc's in Europe after working there for years - then emigrated to australia - dunno if I'd be keen on looking over my shoulder for the rest of my life but.
 
Smiling Buddha said:
Why?
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If one simply can't pay debts and did everything to manage their financial position but is swamped then "that's life".

If one actively seeks to not "honour" their debts by loading up on credit, not talking to the creditor and not trying to manage a budget then that is shameful.


Personally I struggle to comprehend how anyone could not have the compassion to allow someone to default and declare bankrupt if they acted with honour. If they didn't act with honour then it is akin to misleading and deceptive conduct, negligence or even fraud.
 
Power Raid said:
If one actively seeks to not "honour" their debts by loading up on credit, not talking to the creditor and not trying to manage a budget then that is shameful.
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How do you feel about the US bank bailouts and the Australian federal bank guarantee?
Personally I struggle to comprehend how anyone could not have the compassion to allow someone to default and declare bankrupt if they acted with honour. If they didn't act with honour then it is akin to misleading and deceptive conduct, negligence or even fraud.
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It has already been established in this thread that if somebody were to intentionally try to go bankrupt then they could possibly get done for fraud. I've done a little further reading on this and it still isn't clear to me how blatant the intentionality of the bankruptcy would have to be to get done for fraud, though.
 
Smiling Buddha said:
How do you feel about the US bank bailouts and the Australian federal bank guarantee?

It has already been established in this thread that if somebody were to intentionally try to go bankrupt then they could possibly get done for fraud. I've done a little further reading on this and it still isn't clear to me how blatant the intentionality of the bankruptcy would have to be to get done for fraud, though.
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The US bank bail outs is a very complex issue
1) It had to be done
2) The banks should never have found themselves in that position

why?
a) Banks that are too big to fail require government support
b) banks of this size can not be seen as a business rather national infrastructure like a road or a dam
c) these banks should not engage in the type of activities they did (ie no risky dealings).
d) So only smaller, non guaranteed banks and merchant banks should be allowed to deal in risky banking

how to practically deal with the issue?
1) only "infrastructure" banks can borrow from RBAs etc
2) "infrastructure" banks should have a greater focus on liquidity to risk ratios (which has now happened)

In short, I don't HATE the bailouts but I do HATE the fact the problem was avoidable and the fact that any bank which required a bailout should have resulted in shareholders losing their equity.


I agree with your thoughts that bankruptcy does not necessarily translate to fraud. It can be the case but the fraud relates to the gain by deception rather than the bankruptcy itself.
 
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