MSE News: New Scottish bankruptcy law 'will cause misery', debt groups say

alastairq

Whats wrong with expecting bankrupts to pay towards what they owe? They ran it up. There are many reasons that people go bankrupt. But it is fair they pay back what they owe.

Because, by following on from your misplaced logic, there would be no need for bankruptcy if the above were the case.

The purpose of Bankruptcy is to allow creditors to be paid equitably, from the assets of the bankrupt.[after costs]...a situation that arises because , prior to the bankruptcy, that individual could no longer pay their debts as they fell due [insolvent].

A once-and-for-all solution to insurmountable debt.

The insolvent situation may arise from any number of circumstances.......and it is one of the OR's tasks to ascertain whether the individual deliberately placed themselves into an insolvent position...or not.

The bankrupt isn't 'paying back'...merely contributing any surplus income over a fixed period of time, after 'reasonable living expenses' are deducted.

Extending the IPA time limit can only lead to greater efforts to 'avoid' an IPA in the first place.

And is counter productive to the ethos of the Insolvency Service, in that, one aim of bankruptcy is to permit the debtor to make a fresh start.

Something those opposed to such moves will loudly proclaim.

Such a view as proclaimed above indicates a moral simplicity which I find alarming.

Duke203

TheGardener wrote: »

Like RBS...

Not all creditors are as evil as RBS, or even other (evil) banks. Some might actually be "bread winners", suffering from "ill health", "redundancy", and even in the "gutter and homeless" at this time, AND then to kick them while they're down, they can't get all the money owed to them after that.

http://www.bbc.co.uk/newsbeat/23158282

lazer

fermi wrote: »

Last year 20.1% of bankrupts in England had Income Payment arrangements agreed. The standard/maximum terms of those agreements is 3 years. Payments go according to disposable income, so actual payments can vary across the term from £0 upwards, and in some cases agreements can be discharged if an adverse change is permanent. So a broad spectrum.

That means there is almost 80% who pay nothing - to me this is not acceptable, there should at least be a taken payment for a minimum of 3 years.


I agree that BR is a necessary process, and that many people find they have no alternative other than to go BR, however the fact remains that they did run up the debt so it shouldn't be an easy process to get out of paying that debt.


BR is an emotive subject, some people know the reasons for it, and that its not an easy option, other people have seen family members lose their business because a client went BR and then the same client out driving a fancy car a year later.

jamesd

lazer wrote: »

That means there is almost 80% who pay nothing - to me this is not acceptable

The 80% don't pay nothing. Most of the value of any assets they have would normally be taken as part of the bankruptcy to repay creditors, aside from the things needed for day to day living. Before even getting to the bankruptcy stage most will already have lost most of whatever they had accumulated.

alastairq

BR is an emotive subject, some people know the reasons for it, and that its not an easy option, other people have seen family members lose their business because a client went BR and then the same client out driving a fancy car a year later.

that last part simply promotes the Daily Mails attitude, yet lacks a knowledge and understanding of what Bankruptcy actually is, and means.

What BR is not, is a punishment.

Yet, that is exactly what such statements are meant to intend.

Bankruptcy is solely the realm of the individual.

Not those who happen to be around that individual at the time.

That fancy car, means absolutely nothing.

Those statements are much the same a saying all those on job seekers allowance are wastrels and should not receive benefits.

And regarding the losses to others?

How can debts be repaid, if there is nothing, and never will be anything, to repay them with?

When trade is operated through credit, the future inability to re-pay is just one of hte hazards of such a system...and for most creditors, is factored into the deal.

rmelly

All I can say is sympathy is flowing towards those who go BR however what of the small businesses and individuals who suffer because of unpaid debts. It is not always big banks and institutions who end up out of pocket.

(Text removed by MSE Forum Team)

National_Debtline

I find it interesting that the AIB have taken this approach rather than increase the initial fee - to bring it more in line with the fee for those in England and Wales.

- David @ NDL.

JCS1

Surprised that the article by MSE is so badly worded, re the one year bankruptcy in England and Wales (but no mention of three year IPA).

longtermplanner

I think a lot of people misunderstand that even if you are discharged in a year or less, in England & Wales if an IPA is set it carries on for 3 years.

The whole point of bankruptcy is a clean break with the past. You lose your assets but get a fresh start. I think 3 years is a good compromise between making people who can afford to pay something contribute and still preserving the principle of a fresh start.

I don't know anything about the Scottish system, but I wonder if 4 years is brought in there if they will then try to extend it in England and Wales as well?

jennie65

At least in Scotland you get away with paying university fees and prescription charges while English citizens have to pay both of these things. Makes a refreshing change that its not the English getting financially screwed this time.