Employment contract - is this bankruptcy clause retrospective?

debtinfo

NeverAgain wrote: »

...Hmmm, Discharge suspended indefinitely...How do we find out why???...

Some info here:

http://www.thisismoney.co.uk/credit-and-loans/dealing-with-debt/article.html?in_article_id=516693&in_page_id=62

Ill save people some reading, they dont know, Although they use alot more words to say, they dont know

NeverAgain_2

...I'll save people some reading, they don't know...

debtinfo,

There is a general quote from the Insolvency Service, which won't tell someone such as yourself who has expert knowledge very much, but it may be informative for the rest of us.

Quoting from the article:

"A spokesman for the Insolvency Service said: 'If the bankrupt has failed or is failing to comply with the terms of the ruling. For example, any circumstances of non-attendance, obstruction, misinformation, delay or serious misbehaviour by the bankrupt. The trustee can apply to the court for the automatic discharge period to be extended beyond the normal period'."

debtinfo

I think JCS1 already covered that with "un-cooperative", still doesnt tell us what she did

dtsazza

First off, let me apologize for derailing the thread. I thought this post was in a different section of the forum, and as such my first reply wasn't as constructive as it could have been.

Extra apologies because I'm going to keep up the derailing, since I don't want to just ignore people who've responded to me.

alastairq wrote: »

That would be you then?

Because everybody succumbs to advertising at some time or other.

Whether it's for a car, a consumer product, or a financial product.

A visit to that 'financial adviser' is intended to result in purchase of a product....and if the adviser is good, it will be a product they will sell.

If I have (or am thinking of getting) an instant-access ISA with 3.3% interest, and the advisor's product offers 3% interest, then regardless of how good the advisor is, there's no way I'd take the ISA. It's quite simply a worse product when you get down to the facts, and there's no way to disguise it.

Likewise for cars or consumer products; I don't think I've ever walked into a shop and asked one of the employees to tell me about the range so I can decide what to buy. When I need a good or service, I decide which particular version/product I want in advance (based on independent research), and then go to whichever place can sell me that product most cheaply/conveniently.

If everybody exercised free will, advertising would't work, and it wouldn't be the multi-billion dollar industry it is.

There would be a sales careers going begging anywhere...no one would bother applying.

The very purpose of salesmanship, or advertising, is to overcome free will....as I said before.

For one, there's two aspects to advertising - one of which is the "brainwashing" type that you're describing. But the other is simply information.

All purchases are an agreement between a buyer and seller, whereby they both agree to the sale at a given price. There's a lot of value for companies simply in letting the public know "we are willing to sell product X, and we're willing to sell it for £Y". As I mentioned above, when I need something I need to find instances of it to buy, and places that will sell it. If a company is making the best widget, or selling them most cheaply, then simply letting people know of that fact is going to get them more sales than if they didn't.

And yes, the other part is convincing people to buy something they don't need, or convincing them that Apple products are higher quality and represent a more fulfilling lifestyle choice than other brands. I agree that this does "work" and that it shows that people on the whole aren't making decisions rationally. I think where we differ is at whose door we lay this. And as you might have expected, I fundamentally believe that everyone is fully responsible for their actions - ultimately they chose to buy that car/iPod/loan and if it wasn't right for them then they weren't asking the right questions, and/or basically got it wrong.

Every question has an answer, there's no mind control involved. If a salesman asks things like "how would your loved ones cope if you die?", then that's a genuine question that's worth considering. However, the options are either "on balance, bad enough given my chance of dying that is is worth buying life insurance" or "on balance, well enough that it's not worth buying life insurance." The question exists, and the correct answer exists, whether the salesman asks it or not. If the correct answer is "yes" to insurance then actually you should have had it before, and the salesman is doing you a favour by introducing you to the concept (i.e. "good" advertising as I described it above). If the correct answer is "no" then there is absolutely no problem telling the salesman this, and so long as you've arrived at your decision fully then you can justify it to him in a way that he won't be able to disagree with (because it's the truth).

Now not everything is black and white, perhaps you don't have the information available to make a decision there and then. Or perhaps you said "no", but the salesman raise a point that you really hadn't considered in your analysis. In these cases, the correct response is to think about it some more, which will almost certainly involve walking away and coming back after you've made your decision. And you can ignore any "today only" offers the salesman comes up with - if they're a reputable company and it's a fair and honest offer, you're sure that they'll want to take your custom if you call back in a few days' time having made a positive decision.

On the other hand, if you're sold something on the basis that it costs "less than a pint of beer a day", without you working out what that figure is, then it's your fault. Or if you defer to a salesman's recommendations because he "clearly knows more about the area than you", then that's your fault too. A salesman is just a source of facts to help you make your rational decision, hidden behind an annoying layer of patter and bias - to regard them as anything more is silly. (And often, the annoyingness is such that avoiding contact with them altogether is the best policy.)

It is very easy to pontificate from a standpoint of financial security.

Speaking as an acknowledged expert in driving and all associated skills, would it not be unfair of me to expect everybody else to exercise the same levels of driving skill as myself?

No, it wouldn't. But would it not also be fair to expect those with mediocre driving skills, to avoid driving in hazardous conditions? Or that if they were to do so (or enter a professional race), they would come off much worse than the expert drivers?

That to me is what this site, and the philosophy behind it, is all about - making yourself better at the skill of being a consumer. And fundamentally, if you can't trust yourself to make decisions that are in your own best interest, then probably you shouldn't let yourself make those decisions. Though of course I propose informing oneself beforehand, as it doesn't take long at all to look up what current best buy interest rates are, or remind yourself what your current budget slack is (everyone who earns should have a budget regardless of anything else) before going to a shop/bank/sales pitch.

Equally it is unreasonable for those who have not experienced, or fail to comprehend, the issues surrounding debt, to try to argue from a moral standpoint.

That may be true, but it does sound a lot like "if you don't agree with my viewpoints, then you couldn't possibly debate with me on this." It doesn't admit the possibility of a different argument.

My viewpoint is based on the morals and principles by which I've tried to lead my life, and which I believe have contributed directly to my current financial wellbeing. Of course, I'm just a sample size of one, so I can't discount at all the possibility that this is all just luck. However, anecdotally it seems that people that take responsibility for their own actions do better then those that blame their outcomes on others.

There is more debt in this country than anything else.
I dunno, there's quite a lot of rock.

The entire country is in debt.

Whole industries have crumbled under the weight of debt.

If by "the entire country" you mean the sovereign government then yes, they are in debt and running a deficit. I'm not sure that there are many transferable lessons for personal finance that one can take from macroeconomics. (And as it happens, I'm very disapproving of the degree to which the UK consistently spends more than it earns; in the long run the two need to match up, which means we'll need many years of running a budget surplus - asymmetrically too, to account for interest.)

If by "the entire country" you mean every individual, then no - clearly not.

And I'm not sure what your point is in the second line. Yes, debt is a risk and if mismanaged will bring down a company, possibly an industry. That seems to broadly support my earlier points about how it's a serious position to be in and should only be entered into rationally and cautiously.

Half the government is in a state of insolvency...yet all I see written is how irresponsible some individual is for petitioning bankruptcy.

Dealing with debt is something the vast majority of our population are going to have to do within the next decade...if not longer.

And Bankruptcy is a major part of dealing with debt.

Ah right - don't worry, the government doesn't escape my wrath just for being the government.

But equally, whether something is right or wrong doesn't change because someone else is doing something else which is more or less wrong. I consider bankruptcy irresponsible simply because you took out a covenant to pay back the money you owe, and you're reneging on that. Failing to fulfil your agreements is quite simply not responsible behaviour.

And I don't consider bankruptcy to be "dealing" with debt any more than I consider taking down speed cameras to be dealing with speeding. It's just a state-sponsored way of ignoring your debts, and hoping they go away (and this time, they do!). Now if bankruptcy was a state mandated freezing of interest, such that you were still required to repay the principle, that I could agree with. It stops people spiralling deeper into debt, and the creditors still get the money they were promised.

And if it had been criminalised, so deterring folk from entering into credit arrangements...this entire country's economy over the last 60 years would have crumbled...and we would be on the same economical level as Yemen.

Because our economy is built on credit.

I'd be interested to see the logic behind that. Elements of our current consumer economy, such as the housing price changes, are a clearly due to the availability of credit. But fundamentally, credit is the inverse of saving (deferred consumption) - you're having tomorrow's consumption today, but you still have to pay for it tomorrow. Thus in any medium term window (certainly over 60 years), credit can't increase spending but instead just shifts it around. In fact since credit is rarely interest free, items bought on credit are more expensive, henceover 60 years someone who doesn't take up credit will be able to spend more on consumer items than someone who does.

(Now loans to businesses are different, because they enable the businesses to be created and generate extra productivity/jobs/GDP increases. But an individual who takes out a loan so that they can have a nicer car isn't actually buying more cars, just changing the year in which the purchase occurred.)

It's not an economic issue, merely one of people's expectations/impatience.

But...if it still were criminalised, don't forget that in the days of Newgate debtor's prison, crime itself was far more rampant than today.....murder wasn't even a recorded crime.....

the fact is, society has moved on.

Bankruptcy is a valid method of dealing with debt, allowing as it does, closure for all parties involved.

It's valid in that it's endorsed by the state. Personally, I don't think it's a fair way of dealing with debt, and I'd rather than people were required to take full responsibility for their actions. (That applies in all situations, in all walks of life. In my view, any situation where someone doesn't bear the full brunt of success or failure is suboptimal and leads to distorted motivations.)

dtsazza

kepar wrote: »

So dtsazza in your ideal world there basically would be no credit.

No, just no defaults.

Seriously though, taking out credit is fine so long as you're prepared to deal with the responsibilities of paying it back. As I've mentioned above, I have no problems with some form of bankruptcy that froze the debts (sort of an IVA but an Involutary agreement from the creditors' side), so long as you did eventually keep your word and pay back the amount described in the credit agreement.

Have you got a mortgage, car loan etc. If you fell seriously ill tomorrow how would any of it get paid off.

Actually I don't at the moment, though as you can infer from my sig I do intend to take out a mortgage in future. I don't think I'd take out a loan for a car though, as it's much more reasonable just to save up the money to buy a second hand one, and use trains/buses/bikes/lifts/walking in the meantime. Then again that partly comes from living somewhere with good public transport links. If I lived somewhere where owning a car was considered essential, that'd be part of the lifestyle of living there just like anything else. I'd hopefully be able to buy a cheap car outright (perhaps with help from friends and family), though in that situation I may consider getting a loan for as small a balance as was reasonable.

In either situation I'd ensure that there were sensible ways to deal with it. Becoming ill is essentially being very unlucky, and you deal with luck in a sample size of one (i.e. your own life) via insurance. As it happens, the benefits at my current employment pay 75% of my salary for the duration of my incapacity, so there would be no extra expenses there. But otherwise, the much-maligned PPI is designed for exactly this. I've just done a quick search and PPI on the term of a £600/month mortgage would cost £5/month. Paying less than 1% extra for the surety of the loan being repaid is reasonably good value, but also reflects the unlikelihood of me needing it. On the balance of things, I might decide that I like the odds (probably 300 or 400 to one against me becoming ill*) and not taking out the policy.

Besides, I have six months' expenses put aside as an emergency fund, so that would cover the payments for anything but a chronic illness/accident. (Adding the £5 a month that I'm not paying to PPI would bolster this by a tiny amount as well). If I were likely to be incapacitated for two or three years... I suppose it depends on what the nature of the problem was, whether I could still earn an income freelance (something internet-related such as translation services/proofreading/anything) and what my partner was earning. I'd also let the bank know to see if they were willing to take a payment holiday (probably not), and otherwise to potentially switch to an interest-only mortgage for the period.

I think there's a reasonable chance that I'd be able to keep paying a mortgage under some forms of incapacity, depending on the exact nature.

But I'd probably still take the PPI (after checking that the terms of the agreement match those I want to be covered).

You buy a house with a mortgage and a 40% deposit, house prices collapse you have little or no equity, whose fault is that.

The equity isn't really an issue if you're talking about repaying. It's a problem if you want to move and now don't have any deposit; equally it's kind of a problem for the bank, since if you stop paying and they have to repossess, they won't get their principal back. But the current value of your house doesn't affect your salary or the size of the monthly payments, so I don't think it's relevant.

Not everyone is to blame, some have been reckless(me included) others misfortunes have befallen them. I take it from your posts you are not br, I hope for your sake and attitude it doesn't happen to you.

You know what they say Pride before a Fall

That's true, perhaps I have come across as quite proud. In one respect though, as I mentioned in the previous post, I do feel like I can be proud of my achievements, because I've thought about them and as far as possible removed uncertainty. I've paid for it - both in the literal sense of insurance premiums and in the sense of foregoing e.g. a fancy new car so that I could save up the money for a £1000 banger - but it's brought my situation more under my control, and let me plan for things more confidently. And of course, the further you get down the path of saving and prudence the easier it becomes.

Perhaps that's what I was trying to get at before - if you feel like you're ultimately responsible for everything you do, you start to look at ways of mitigating your risks, even though you have to pay a little premium for it. Depending on your attitude, a lot of things that you might consider "unpredictable/unavoidable misfortunes" can in fact be insulated against, if you have the motivation and mindset to do so.


* Edit: Having compared the quotes from the same company for 6 month vs. 12 month payment cover, there's only a 6p difference in the premium. Which I think, assuming their other overheads/profit margins are the same, implies that their actuarial probability of my making a claim is one in five thousand.

dtsazza

alastairq wrote: »

Why not the same attitude towards infidelity within marriage?

I'm not sure why you think I don't have the same attitude towards infidelity within marriage.

Why are you not targeting those who, from a position of apparent 'responsibility', allowed some of our largest banks to get to a stage of near collapse?

I'm fine with the banks collapsing per se; I think the greater problem is who let them become an apparently essential part of the daily fabric, while remaining as private companies.

You can't have private profits but socialised losses. The banks arguably should be free to play their capitalist games; but they should be completely free to fail, without any sort of support, just like a coffee shop would if it made bad business decisions.

If we need banking services to carry out our daily lives (which I suspect we do), then there should be a public sector organisation that provides these services (like the NS&I or the Post Office bank). Private banks could still provide retail services, but at the consumer's own risk (no FSCS backing). That way you get the best of both worlds - safe, unspectacular service for those who just want that, and better returns/private sector whizziness with greater risk for those who are prepared to accept the pros and cons of that arrangement.

If a major company [read..'employer''..read...'provider of financial security]...goes bust, why do we not see those who appear to be in a position of 'responsibility' actually being pilloried, actually being made physically accountable for their mistakes.. their inability to exercise proper [financial] control?

See, I don't consider a company to have a responsiblity as a 'provider of financial security'. Companies operate on the basis of what is profitable (as they're required to be company law), not on the basis of what's most suitable for their employees.

To make this situation work, employees need to have a decent alternative to paid employment. In this respect, I think the self-employed sector is massively under-represented, for a variety of reasons. Without going into it too much, I really believe that self employment ought to be considered the default state of economic being, with employment contracts entered into because they provide real benefits for both the employee and the company.

The more tenable the situation is as a self-employee, the better the conditions would have to be to make employment enticing. Anyway, that's entirely different. But I do believe that companies should act in whatever ways they consider most profitable, and that they should fail when they make the wrong calls.

Why should directors hide behind the legal shield provided by Limited liability status?

It's an interesting viewpoint, though ultimately it comes down to the differences involved between a large limited company and an individual.

Large companies in particular are huge entities made up of not necessarily motivated employees. If you were a director of such a company, you'd have a huge potential liability of many times your entire net wealth. Furthermore, the realisation of this liability could be brought about by many events completely outside of your control (e.g. especially in America, you could lose millions over a court case if one of your minimum-wage employees did something really, really stupid on company time).

It would be like and highly-leveraged product, a move of a few percent could wipe you out. No individual could personally take on the liabilities
of a large corporation.

So what you're proposing would be to more or less remove companies that weren't within the feasible control (both economic and behavioural) of one person. That's an interesting idea, and would completely change the economic landscape. There would definitely be both pros and cons to it; I'm not sure what I think the balance would be, as I haven't considered this before and it's not clear what things would actually look like once the dust settled. I fear the Law of Unintended Consequences would rear its ugly head quite a lot.

But if we're talking about one-person LLCs, there's less of a justication for these to exist, for the same reasons. I believe the argument is that
the limited status is effectively a sort of societal subsidy for taking risks, on the basis that a successful company benefits society as a whole (by providing a new product, or making it cheaper, or more convenient, etc.). I'm not sure just how true that is nowadays.

Why indeed, should there be one moral standpoint for some, but another for others?

I don't think it is a different issue. When a company goes into debt restructuring, that's roughly equivalent to what I'd want to see individual bankruptcy looking like. It gets a black mark on its credit record, and gets to pay back its creditors over longer terms with more generous interest rates, that hopefully lets it get back on its feet and start turning a profit again.

A company only gets to ignore all debts when it ceases to exist. I'm happy that when someone dies, their estate doesn't inherit the debts. (Well, I think the creditors should be paid out of any assets of the estate. But the liability for any remaining negative balance shouldn't pass onto next of kin.)

So to my mind the question should be asked the other way round - currently I think there are tougher rules for companies than for individuals, and what I'd prefer effectively unites the two: individuals to pay off their debts if they're not dead.

debtinfo

sorry i fell asleep there

Your not Sepp Blatter's speech writer are you?

You are incorrect about company insolvency being tougher than personal insolvency but i dont expect you to take my word for it so since you have time to spare obviously and seem to like the sound of your own voice why dont you go do some research and prepare an article comparing bankruptcy, DRO's, IVA's and administration orders against liquidation, company administration (prepack and normal), receivership and CVA's both in this country, Scotland, USA, China, and 1 European country of your choice.

Try to keep it to less than 1 million words and we will see you back here in 2014

alastairq

. I consider bankruptcy irresponsible simply because you took out a covenant to pay back the money you owe, and you're reneging on that. Failing to fulfil your agreements is quite simply not responsible behaviour.

And I don't consider bankruptcy to be "dealing" with debt any more than I consider taking down speed cameras to be dealing with speeding. It's just a state-sponsored way of ignoring your debts, and hoping they go away (and this time, they do!). Now if bankruptcy was a state mandated freezing of interest, such that you were still required to repay the principle, that I could agree with. It stops people spiralling deeper into debt, and the creditors still get the money they were promised.

I think you have a basic misunderstanding of what Bankruptcy means?

Perhaps it is this very forum which endeavours to get people to see bankruptcy not quite for what it is?

Maybe making it a bit less frightening?


Bankruptcy cannot be anything other than the final solution to dealing with an insurmountable debt.

A parallel in business must be the company whose directors could not manage their finances equitably,so the company is wound-up......and the assets sold [or, company bought and assets stripped]....

In our case, the individual has arrived at the same turning point....

But the very principle of bankruptcy is, for an individual to literally hand-over control [interest] to a professional [the Receiver], all that individual's worldly goods and assets.

This is what, in essence, happens.

And those assets and worldly goods have their value realised, and the proceeds equitably distributed amongst creditors.

That is the greatest facing-up of responsibility I can imagine.....after parenthood.

And is something that sadly, those in charge of vast multi-million pound companies are never likely to experience, if they 'get it wrong'!

Bankruptcy terminates all financial legal agreements [for those debts included in the BR].......so there is no reneging on contracts....it is in fact a mutual process, involving debtor and creditor....or rather, Receiver and creditor, since the Receiver has full control over the BR's assets and finances....in fact, the debtor
has no control or input whatsoever, once the Judge signs the order.


Consider the alternative?

A creditor cannot get any more out of a debtor than what the debtor possesses. Or is likely to possess. The debt may never ever be fulfilled. Yet, the creditor must expend time and effort collecting that debt. It cannot be offset as a 'financial loss'....even resorting to a Court can be fraught with problems....since the Court is in fact an arbiter...hearing both sides of the story...and fully aware that...if deciding in favour of the creditor, that the debtor can only pay what they have....not what the creditor would like them to pay.

Newgate debtors prison closed because it failed to meet creditor's needs....locking someone up means zero income, means no chance of re-payment.


Your assumption of irresponsibility implies that a BR has deliberately placed themselves into a position whereby they no longer can pay what they owe.....[and I allow, after reasonable living expenses are deducted].

That may be true of a minority of BR's.......but the vast majority [certainly those on here]...have arrived at this point through circumstance, usually beyond all control.

Those circumstances can be many and varied....but one thing is for sure....all those circumstances could affect any person, any time, anywhere....meaning...everybody.

How prepared are you?

fiveyearplan

bankrubber wrote: »

I was sent a job offer and employment contract with a fairly standard bankruptcy clause.

Can any of you advise me if this clause covers a situation where the employee is bankrupt before signing the contract, or if it only applies to going bankrupt after the employment contact is signed?

"[FONT=&quot]If the Employee commits a serious or persistent breach of or shall neglect to perform their duties under this Agreement or brings himself, the Company, its directors or employees into disrepute or shall have committed an act of bankruptcy or compounded with their creditors generally the Company may by written notice terminate this Agreement forthwith."

[/FONT][FONT=&quot]If it is a grey area, I am sure the best thing is to advise them of BR, or intention of going BR before signing it. Would you ask them to omit the clause or just confirm in writing that they are ok (or not) with the BR?
[/FONT]

Sorry but I can't go through this whole thread as I don't believe it is related to your original question. I recently got offered a job and had to declare my bankruptcy. It wasn't an issue for the role I was applying for so not a problem - I got the job. What is the position you are applying for?