Bankruptcy... Is it to easy?

WTF?_2

repoamuse wrote: »

I have refrained from asking this question on the bankruptcy board as it's maybe a little too sensative.

Does anybody feel, as I do, that the bankruptcy system in this country, has too many loopholes and makes it too easy for a large section of society to 'wipe debt'.

Could this be a barrier to risk-taking and future investment? Could it deepen coming recession?

I know personally 2 couples that have gone 'bang', kept their cars, homes and jobs, repayed nothing, and been able to keep the consumer junk and big tv's that got them in the position in the first place.

I feel that it's a vital facility to have to prevent people becoming debt slaves and provide some sort of protection for those who find themselves deep in debt through a genuine business failure but it is much misused these days by people who have overborrowed to consume.

i.e. The idea of bankruptcy is not to allow you go out and live the life of Riley on credit which you couldn't possibly ever afford to pay back and then walk away from the debt.

That said, if the lenders had shown a bit of common sense and restricted their lending to what was sensible, the economy wouldn't be in such a mess today and there wouldn't be so many reckless idiots using it as an 'out'.

Broken_hearted

No a bankrupt can pay for sky and holidays out of their allowance, they have enough money to be able to do so. A single bankrupt living alone with no outside help is able to do this, not to mention how large the allowances for that are considered nessesities, yet those who pay the debts can't afford them.

I hear over and over again 'it'll take years to clear it and I just want my life back'. Hello it took in most cases years to run it up, by years they mean 5 to 10 not their entire lives.

Darth_Marty

I dont know how it works so couldnt comment...anyone care to enlighten me....

sjaypink

Darth_Marty wrote: »

I dont know how it works so couldnt comment...anyone care to enlighten me....

http://forums.moneysavingexpert.com/showthread.html?t=1056083

best i can do! i dont understand either.... but from having a quick look, it does seem too easy, and maks me pretty angry if im brutally honest...... but, would i do it? yes! although i like to think i would never get myself into that much debt.

not referring to genuine businesses though of course.

CLAPTON

Wrongly or rightly, the current system isn't intended to 'punish' people who become bankrupt, so the OR (Official Receiver) is only interested in things that he can easily sell.

Most household goods, even expensive Hi-Fi and flat screen TVs etc have very little resale value and so the OR doesn't even visit the homes.
Plus in general you put your own valuation of things so apart from the property and an expensive car most people don't actually lose any possessions. If the house has only a little equity then its usually possible for a friend/family to buy the equity off the OR at a decent discount and so retaining the house

The payments required for 36 months are based on the surplus of the difference between your income and your essential spending. They take approx half and leave you half which can provide a good standard of living

mower5

I disagree with the finger waging vindictive posts i have read here. I prefer the USA model which encourages risk taking and new start up businesses. It gives people a chance to learn from their mistakes. If your business fails you can walk away and try again without ignomy or debts around your neck.

Zelie

From the little I know about it, it does seem too easy. While the reactions of the past may have been too extreme I don't think it's a bad thing to have a stigma attached to being bankrupt. Being bankrupt is a sign of someone who is fundamentally unable to control themselves, it's not a minor problem with a creditor!

I'll readily admit to not knowing the exact details of how much money a person gets to live on but I'd have thought the equivalent of JSA, LHA and CT would be sufficient. And I don't think that a bankrupt needs to remain in the same house if they had owned it - that's an asset which should be sold.

mewbie_2

When the ostrich business went belly up I'm afraid my partner and I had no choice. I remember the feeling of desperation and not knowing what to do, for too long standing around with our heads in the sand.

olly300

Like with threads with single mothers it should be realised that not all people who go bankrupt are the same.

Some of them are business people whose business has failed for a reason while others are people who have got themselves into too much debt.

mower5

If you scare people into never taking a gamble with starting a new bussiness by making the risk if it fails a life time of debt or disoner you end up with a society of risk freee dullards who all work for asda/tesco/local government/etc. (Oh i think i just discribed wales, Sorry)