The new scheme is meant to save their property from foreclosure

Indebted Bulgarians have invented a new scheme to save their property from their creditors. They transfer their homes to offshore companies registered in the Cayman Islands, the Seychelles islands, or the Virgin Islands. Ten such deals have been detected in the coastal city of Varna in a month alone, the economic police said.

The scheme has quickly spread across the country. Here is how it works. After taking out a loan, the debtor contacts a private enforcement officer and asks him to make contact with companies registered in some offshore zone. These companies agree to fictitiously purchase the real property of the indebted person against a percentage of his loan.

The debtor then informs the bank or the crediting institution that he has no real property on his name that could be foreclosed.

Meanwhile, the debtor and the offshore company sign a leasing contract, under which he or she could use the property as a tenant, while the company becomes their landlord. The contract also stipulates that the offshore company has no right to sell his property or lease it to third parties.

Finally, the debtor buys his property back from the offshore firm once the bank has withdrawn its claims against him.

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