Tuesday, 10 March 2009

Bankrupt friend gets a £75,000 loan

I saw this extraordinary post from the housepricecrash.co.uk forum....

Last night, I met up with a friend who left Uni 2001 with loads of debts and not just student loans. He had overdrafts with 2 banks, credit cards maxed out and had a car on finance that was subsequently repossessed.

Not deterred he took out even more debts for holidays (snow boarder) and got another car on finance. In 2004, he declared himself bankrupt and went through the procedure of the being bankrupt. He couldn't even get a bank account without telling the bank he was bankrupt and so they wouldn't open an account for him.

Eventually he got his salary paid onto a prepaid card and his bankruptcy came to end last year. Officially discharged. He got his credit file and he had a clean slate, thanks to some rather shady lane companies.

Yesterday he turned up at the pub in a brand new Mercedes ML320 (4 wheel drive). Very nice by the way. He also has a wallet full of credit cards and debit cards and is back up to his old tricks.

I had to ask him, didn't he learn the first time and replied, "Yes, run up as much debt as you can because the banks are falling over themselves to give it to you, then got to the court and declare yourself bankrupt and 3 years later, start all over again".

I said, "Don't you see anything wrong in what your doing ? " He replied, "Its just a game and if he didn't do it someone else would".

I found later in the conversation that he had taken out a £75,000 loan and that he intends to spend like mad. You have to ask yourself, is there a way out of this financial crisis or are we just propping up a system that is so very clearly open to abuse.

Help me out here; how could someone who is bankrupt get a £75,000 loan?


Anonymous said...

"Help me out here; how could someone who is bankrupt get a £75,000 loan?"

Well he's not bankrupt anymore. He's in the clear for now. Great system.

Besides, tha banks that give out the lone are bankrupt too, but will be made whole by the government :-)


Anonymous said...

"Help me out here; how could someone who is bankrupt get a £75,000 loan?"

Simple! The govt is leaning on the banks to lend, and the bankers have to do what the politicians ask them, don't they?

Anonymous said...

The corruption endemic to this economic system has made me pull almost all my money out of the stock market and banks. Just enough left in the bank to fund direct debits for monthly expenses. Thanks for confirming yet again that I've made the right decision.

And thanks for creating some of the most informative charts I've seen on an economics blog.

Anonymous said...

It used to be seven years; and perhaps will be again - soon hopefully.

electro-kevin said...

No shame, no contrition, no deterent.

I thought that the main problem with becoming bankrupt was to lose credit worthiness.

How can banks stay in business taking such suicidal risk ?

Anonymous said...

I thought that was Mr Brown's argument for rescuing banks was so they could make idiotic loans like this!

Anonymous said...

Money for nothing. Shameful .
Excuse, Some one else would do it.
Those with accumulated value/money invest it as capital to gain title over assets that then deliver incomes for free.Rents ,dividends interest etc. this is seen as right and just reward to titleholders.Those Lending credit.
Just like having a property title to a slave.
Thus the world is duplicated ,the one existing in reality and the one existing in the minds of those who own “titles” Some even believe it is the world of titles that is just.
These damn bankrupts stuff up a good system demanding income or credit for free too .
They don’t understand property title morality.
Psychotic ! criminals thinking the world owes them a living without official AAA proper titles.

Anonymous said...

This chap is right: it is a game. Remember, there is no honour in economics. It has no personality, no table totting up who is good or bad (like Father Xmas). It's only rule is this: can you get away with it? People only ever judge you on who you are now, how much wealth you have now, not how you got it, or where you come from.

Your problem is that you are looking at this through the lens of a constipated 1950s bank manager. Those people are dead and buried.

Obsidian said...

I've been doing this planning-for-my-future malarky all wrong haven't I?

Instead of working and saving, what I should've been doing is being a serial bankruptee and dumping 100k of borrowed readies into a safe, going bankrupt, getting my wage paid into a Credit Union and laughing my arse off for 3 years, then rinsing and repeating.

Anonymous said...

Would you know that is not currently happenning? The US is prying open the secret Swiss accounts, and I suspect a few interesting stories might emerge...

If you borrow 100k, then the bank owns you. However, if you borrowed 100m, then you own the bank! Isn't that the relationship between the banks and the taxpayer? I wonder who owns whom!?!

Liam said...

Clearly the economy is suffering from a lack of reckless borrowers (reckless lenders having now been fully reinstated by our government and funded by our taxes, debt and now the printing presses)

Perhaps Gordon Brown should consider reducing the personal bankruptcy period to 3 weeks and closing down the credit reference agencies, then people like this will have a free reign to pump money into the consumer economy.

fajensen said...

How can banks stay in business taking such suicidal risk ?

Very Easily:

They just package the fellah's debt into bonds and sell it while slicing off a few points fee for their service to society. There will always be plenty of dumb money buying those bonds with central banks backstopping the market!