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A joint husband and wife loan was referred to LCollect showing that the husband was currently bankrupt.
A Bankruptcy search against his name showed a series of Bankruptcies against him over 20 years .Total number of bankruptcies was 3.
As a precaution the same search was done on the female borrower which returned a similar number of bankruptcies over the same period.
The interesting point was that the bankruptcies did not coincide so that one party was always bankrupt and one free from bankruptcy.
After examining the file it appeared that loans had been taken out in the period where neither was bankrupt. The loan referred to LCollect totalled $50K.
Neither party had declared on the application that they had been at some time bankrupt. In fact they had stated that neither had been bankrupt on the loan application.
Soon after borrowing the funds the principal earning partner had become bankrupt. The party not bankrupt was able to enter into new leases for accommodation but didn’t have capacity to repay the debt.
The bankrupt party was fully employed, however his income could not be used when undertaking enforcement action in the court to have the debt repaid.
LCollect contacted AFSA in an attempt to have the bankruptcy reviewed as the bankrupt party had mislead the lender by failing to advise of the bankruptcies and in fact stating he hadn’t been bankrupt. This failed.
The lender who referred the debt decided to cease action as there was no hope of recovery and the borrower who was not bankrupt was claiming hardship.
To avoid this happening to you, we would strongly recommend undertaking a Bankruptcy (and Insolvency for companies) search against all parties on all credit applications.