Wednesday, November 08, 2006
Is Bankruptcy Becoming Too Easy?
Now here's a funny thing. Harry Redknapp's son Mark has been declared bankrupt. Wouldn't you think that his father (who's worth more than £10 million) or his brother Jamie would have lent him the odd thousand? It just shows that bankruptcy doesn't seem to carry the same stigma it once did. People seem to take it as the easy way out nowadays. Bankruptcies are at an all time high - this is usually a good sign that there is a recession on the way. But I suspect the reason is much simpler. You can now be discharged from bankruptcy within nine months. Now, where did I put those credit card bills...
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25 comments:
I’m afraid it is becoming a way out of debt for people who think they have little to lose (ie a house). It seems any easy way out, but the reality is it will condemn them to a life on benefits or low paid work.
In real terms (as a % of businesses) it is steady.
In Scotland, where the laws were not changed, it has also kept pace, so most analysts have concluded it is the continued rate is not associated with the law change although there was a little spurt when they changed.
What is easy is borrowing money as I found out to considerable cost.
Drug barons make less money than the credit industry, and are on about the same moral level.
I am waiting to go bankrupt and the threatening letters are outnumbered about 3:1 in favour of offers of credit.
The CC companies, to which I am in debt, factor in people like me who do not pay, and are quite happy with that. In fact they no longer own my debt and have sold it to a third party collection agency, presumably as a job lot.
I expect a few wagging fingers on this one, but please, I accept my portion of the blame. The fact is, it was all too easy to get where I am now.
I struggled for years to meet payments and had to give up because the strain was too much.
I don't owe money to real people and never have. Why should I spend years on subsistence because I have been exploited during a difficult point in my life, by companies who have no interest in my personal circumstances?
Not a Victim - part of the spawn of Tony Blair's culture of no one is to blame for anything so shouldn't be punished.
I was shocked, about three years ago, to read an article in the papers by the surviving fat lady (Two Fat Ladies) justifying the fact that she had gone bankrupt three times! And it was never her fault. One of the times had been fairly recently, while she was making Two Fat Ladies or just after the series ended. And of course, she was writing cookery books and making appearances.
IIRC, the first time was when she inherited money and blew it all and got into debt.
There was absolutely no hint whatsoever of any mea culpa. It was circumstances that forced her to borrow more money than she could reasonably expect to pay back. Nothing to do with her, really.
You can in fact be discharged in 6 months if the trustee in bankruptcy feels you are not to blame, and that there are no complications in the case.
The reason why people are going bankrupt is not that the law makes it easier, its more along the lines of mpre people getting in over their heads in debt for a variety of reasons one of which is change of circumstances.
Bankruptcy has not carried the stigma of which you speak for a while now. I persoanly think that is a good thing.
Lastly, if the Official receiver thinks that you are at fault in your bankrutcy they can keep you bankrupt for 15 years.
Oddly enough I just received a request to take part in a government survey about attitudes to bankruptcy. The letter seemed to hint that I might have direct experience, which I don't. I had to ring to check I had not been financially libelled. I hadn't. They thought the letter made that clear. It didn't.
brown eased bankruptcy laws to encourage entrpreneurship.
the only class of people that have not seen an up tick in bankruptcy...you've guessed it,entrepreneurs (self employed/business owners)
adn somepeople think he's able
I sympathise with those who get into debt through no fault of their own e.g. losing their job so they can't pay the bills
I have no sympathy for the clowns who live beyond their means because they want to "keep up with the neighbours" or "have it all".
Whilst I am not entirely without sympathy for "not a victim", the comment that he/she doesn't owe money to "real people" just don't wash. It is as fatuous an argument as saying that shoplifting from M&S is OK because they are a big company. In the shoplifting case, M&S has shareholders who are mostly pension funds, so you are stealing from pensioners, and secondly the retailer increases costs to cover for pilfered goods, so you are stealing from everyone else who has higher moral values than you. For bankrupts, who is picking up the tab? The same people, pension funds and those of us who stick by the rules and live sensibly within our means.
(Note to self: I'm starting to sound like my parents; must get out more.)
Anonymous at 12.57 I fear you've swallowed a line from the Executive. The Scottish position sees a much less marked increase (despite the assertions made by the Executive in their evidence to the Enterprise committee during the passage of the Bankruptcy and Diligence etc (Scotland) Bill). The last Accountant in Bankruptcy report is for 2004-5 in Scotland and there were 3,521 sequestrations (up from 3,309 in 2003-4) see http://www.aib.gov.uk/Statutory%20Documents/AnnualReport_04-05.pdf . The Insolvency Service in England and Wales gather figures for the whole UK on a quarterly basis. These figures include sequestrations and protected trust deeds (private arrangements). In Scotland the last four quarters have the following statistics (with Protected Trust Deeds being about 3/5 of the figures). The last quarter of 2005 saw 2,961 personal insvolvencies; the first quarter of 2006 3,111; the second quarter of 2006 3,544; and the third quarter of this year 3,601. There is an upward trend but year on year the increase is 0.2% (although sequestrations are up by nearly 5% year on year). A large number of the creditor-initiated sequestrations in Scotland are initiated by local authorities (for unpaid council tax or unpaid poll tax).
In England and Wales the figures are also provided by the Insolvency Service. There were 20,679 personal insolvencies in the last quarter of last year; 23,653 in the first quarter of 2006; 26,144 in the second quarter of 2006; and 27,644 individual insolvencies in England and Wales in the third quarter of 2006(http://www.insolvency.gov.uk/otherinformation/statistics/200611/index.htm ). Year on year the increase is 55%, the increase in bankruptcies (English equivalent to sequestration) being up 26%.
The Scottish bill is proposing to decrease the discharge period to one year. The bill is still in the Scottish Parliament but the line that the increase in Scotland is the same as that in England and Wales has been swallowed by MSPs from all sides. I'd suggest that the figures indicate otherwise.
Relaxing the bankruptcy rules is something the Lib Dems would welcome (especially if the name Michael Brown means anything to them!)
but shame that political parties (bankrupt of ideas if (possibly) not in honest money terms) cannot be bankrupted more easily.
We need a total cleanout. A lot of the leaders of all of them wouln't be given a cleaning job in a decent Sainsburies, but they just sit there, inert and draining the public purse, waiting for 'buggins' turn.
People are deliberatly planning for going bankrupt nowadays already, read MSE and weep.
Another thing to consider here is that if the bank loses 100k, that is 100k less profit which is taxed at 22%, and so, every bankrupt costs the taxpayer 22% of what they owe.
Bring back debtors' prison!
Its the law of unintended consequences at work. Right now there are 1000's of consumers deciding to run up massive debts to fund a 'lifestyle of the rich and famous' with full knowledge that in three years time they will apply for bankruptcy. In the same way 10,000 young girls will this year make the concious decision to get pregant and join the single mum gravy train. Its the incentives you see. Bleeding obvious other than to Westminster F---W---. Close the Dept of Social Welfare. We will be better for it.
As the self-appointed stateside commentator on this blog, let me point out that most of the ideas of fault/stigma attaching to bankruptcy expressed here are little more than Victorian pruddery...the notion that insolvent debtors should be put in debtors' prison...that people are down on their lack because of some kind of providential disfavor.
Well..in the new world of today...which is where we are in the US...the point of declaring bankruptcy is to give the insolvent a "fresh start". As with everything else, some people misuse the opportunity and others use it well...
Bankruptcy is discreditable. The bankrupt bilks his creditors. Does anyone now remember Wilfred Pickles whose quiz show "Have a Go" ran for many years on the radio? His father, a builder, went bankrupt before the war. Wilfred, when he prospered, after the war, repaid every one of his father's creditors, in full, with interest. An honourable man.
And in America, it is de rigeur. I posted on this some time back.
Maybe after your 'success' in calling the midterms you should try your luck with predicting this week's lottery numbers ??
I make good money out of debt, don't knock it.
IVA or debt management anybody?
in fact bankruptcy still isn't an easy option, a bankrupts credit record is still screwed for 6 years.
griswold (4:42pm) hit the nail on the head. Every single system in this country is designed to bail out people who screw up - where are the incentives for people to behave properly in the first place?
Sign of the times. We want nay demand instant gratification. Ours is a shallow consumer society. And easy credit the passport to those all important goods you buy on impulse. (Foot spar anyone?)
Credit cards are a quicksand financial product. Easy to slip into, but hard to escape. Besides debt is seen as no big deal anymore so there is no social restraint. We start em young in this country at "uni" (previously known as university). Many have monopoly money mortgages and probably started work with a shed load of student debt. Servicing that lot is enough to make Sisyphus weep. Do the maths.
Not a victim, you do owe real people. In fact you owe the likes of me, who make all our repayments on time (having borrowed only what we can afford to repay), and have increased charges as a result of having to cover the defaults of the irresponsible.
The reason you should spend years on subsistence is to teach you a lesson about what happens to people who borrow more than they can afford. Hopefully you won't then do it again.
What's the matter with you all? No one has had a pop at NuLab about this yet. The personal credit boom/bubble is an invention of G Brown esq, and is in fact a brilliant short term way of stimulating the economy and making the Chancellor look good. The problem is what happens when the bubble bursts? More NuLab brilliance, they make bankruptcy easy, offload the costs onto the rest of us and then top it off by being sanctimonius about wicked credit lenders and irresponsible individuals. You have to hand it to the tossers, they are very good at his sort of thing.
Hello. no one cares about debt. This country is like a debt ridden corpse waiting to be buried. If the police,politicians, banks, solicitors and accountants are bent and skim some really money from the system, and i don't mean 50/100k why would you expect the tax payer to care. You reap what you sow. Best thing you can do is live and enjoy your life as trust me thats what our MP's are doing. You try to get a duck house on your expenses, please don't make laugh. There is only one job for anyone..... MP get on the gravy train and you need never worry about money. Need a REVOLUTION in this country, and soon. Moral collapse was engineered by the haves while the have nots grow more and more wiser.Darren. Must say though NHS still something to be proud of, can't knock that.
It's that time again, more record bankruptcies due to be announced on Friday.
After seeing this site, I'm inclined to think bankruptcy is too easy:
http://i-went-bankrupt.com/
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