Personal Finance

Question for Banking Officers

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  • Mar 14th, 2012 12:50 am
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Member
Apr 19, 2008
388 posts
15 upvotes
Burlington

Question for Banking Officers

I have a friend who has about $38,000 in consumer debt, a car worth less than $5600 and a home with $10k in equity (at most and before real estate fees, etc.).
I'm recommending that he claim bankruptcy because he is older now (60's) and has an income of around $20k per year. There is simply no way to get out from under the debt.
The issue is that the banking officer is family and he has gone over and above what would reasonably be allowed (I'm assuming) by providing lines of credit, credit cards, second mortgages, etc.
If my friend claims bankruptcy, will it come back on the banking officer? We would like to avoid that at all costs for obvious reasons.
The credit was provided with a good heart, but it wasn't the best decision for obvious reasons.
Just want to know what the blowback might be.
3 replies
Deal Fanatic
Mar 24, 2008
6278 posts
2753 upvotes
Toronto
TheFinalWord wrote: If my friend claims bankruptcy, will it come back on the banking officer? We would like to avoid that at all costs for obvious reasons.
The credit was provided with a good heart, but it wasn't the best decision for obvious reasons.
Just want to know what the blowback might be.

No. It will not come to the banking officer.
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Deal Expert
Jun 26, 2011
15096 posts
5413 upvotes
GTA
TheFinalWord wrote: I have a friend who has about $38,000 in consumer debt, a car worth less than $5600 and a home with $10k in equity (at most and before real estate fees, etc.).
I'm recommending that he claim bankruptcy because he is older now (60's) and has an income of around $20k per year. There is simply no way to get out from under the debt.
The issue is that the banking officer is family and he has gone over and above what would reasonably be allowed (I'm assuming) by providing lines of credit, credit cards, second mortgages, etc.
If my friend claims bankruptcy, will it come back on the banking officer? We would like to avoid that at all costs for obvious reasons.
The credit was provided with a good heart, but it wasn't the best decision for obvious reasons.
Just want to know what the blowback might be.

From my personal experience when I used to work in lending, my head would be on the chopping block in this situation. Whoever took the loan application/approved or suggested it for approval will probably bite the bullet if they did not declare a conflict of interest in this situation.
Deal Guru
Feb 9, 2009
12381 posts
11307 upvotes
Well alot of banking officers do stuff for friends, though they advise to be cautious. Family is usually not allowed due to a conflict of interest (though it can be argued about friends but what prove can the bank find if they are related or not?).

Anyways, no it wont hurt the banking officer unless he gave the credit to your friend without his permission (no signed papers), though, atleast at TD, for visas you do not usually need a signature if the credit limit was pre-approved -- a simple yes is good enough.

Though in this situation I can only blame your friend for going above his head -- at 60 with $38k consumer debt and no equity in his house? sorry unless it was a life event (divorce, death of spouse, health issue) I cannot sympathize with your friend and neither will the bank, the ombudsmen or any other organization. Oh and if your friend declares bankruptcy, you do know the mortgage doesn't disappear right? Good luck to your friend.

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