Bankruptcies

[Casual Observer]

Don't forget, it's not just a case of wiping the slate clean, what about he people who were owed the money, often individuals or small businesses?

My brother in law lost his printing business, his home and his marriage, because his debtors declared themselves bankrupt and so he didn't get paid.

There's always a loser, no matter how easy it is to wipe your debts clean. To the economy as a whole it doesn't make any difference whether the debtor loses or the creditor instead.

[gone west]

Don't forget, it's not just a case of wiping the slate clean, what about he people who were owed the money, often individuals or small businesses?

My brother in law lost his printing business, his home and his marriage, because his debtors declared themselves bankrupt and so he didn't get paid.

There's always a loser, no matter how easy it is to wipe your debts clean. To the economy as a whole it doesn't make any difference whether the debtor loses or the creditor instead.

I was wondering about that. As the numbers rise and the economy slows there must be a small snowball effect. Debtors default and the creditors become bankrupt themselves and so on. This would be particularly true as general trading begins to slow and businesses become more reliant on a few or even a single customer.

[Casual Observer]

I was wondering about that. As the numbers rise and the economy slows there must be a small snowball effect. Debtors default and the creditors become bankrupt themselves and so on. This would be particularly true as general trading begins to slow and businesses become more reliant on a few or even a single customer.

Exactly. People seem to think that the new, more lax, bankruptcy laws are a win-win situation. They most definately are not, they just pass the problem along the line.

[deano]

Except that their creditors can pursue them even when they are out from under the bankruptcy protection. I will try to find the artical, but I think there are going to be a lot of very surprised people in a years time.

I know that bankrupts that managed to keep thier homes and later enjoyed house price inflation were later chased again when it was realised they could remortgage and repay the creditors. The limit on chasing a credit debt is 6 years but a mortgage debt is 12 years.

When the US recently upgraded thier bankruptcy laws they virtually abolished bankruptcy as a way out of clearing your debts, they can pursue the debtor now for a mind blowing 15 years. They should feel relieved though because the financial industry pushed hard for the reintroduction of debtor goals.

[liquid]

This very complexity is what makes the detail of a HPC so difficult to predict.

I agree. My interest stems from reading past economic predictions and to see whether they came to pass. For example, in Real World Economic Outlook by Ann Pettifor (2003 - which can be taken to be 2002), she quotes that the rise in bankruptcies will be portent. This and her other predictions are sound, but they're 3 years out, and counting. The interest is to establish why they didn’t come to past as soon as expected, if at all. This also helps me to find answers in regards to cycles and waves. There appears to be many underlying variables that are indeed the same as in the past, and are simply applied in the context of current times. On the other hand, as you say, it is the nature of the current times that also makes the timing of events somewhat unpredictable.

I have interpreted a phenomenon where certain folks are fixated on a sudden deathblow, i.e. a crash or a bust, when in reality and in hindsight there never was such a thing. When the ‘crash’ doesn’t come to pass, the unfledged, lull them selves into a false sense of security. Meanwhile, behind the scenes, the insidious process continues unabated and then shocks when it finally appears on TV, or perhaps to be more relevant to this thread, when the bailiffs turn up at the door!

[Guest Charlie The Tramp]

As an observation.

Personal bankruptcies have increased YoY since 1998.

[Bankrupt Idiot]

I know that bankrupts that managed to keep thier homes and later enjoyed house price inflation were later chased again when it was realised they could remortgage and repay the creditors. The limit on chasing a credit debt is 6 years but a mortgage debt is 12 years.

When the US recently upgraded thier bankruptcy laws they virtually abolished bankruptcy as a way out of clearing your debts, they can pursue the debtor now for a mind blowing 15 years. They should feel relieved though because the financial industry pushed hard for the reintroduction of debtor goals.

They can't chase you for any money. Only the officail reciever can. And I imagine the are inundated at teh moment.

[Tempest]

They can't chase you for any money. Only the officail reciever can. And I imagine the are inundated at teh moment.

No - The OR deals with your estate during the period prior to discharge of the Bankruptcy - post discharge, secured creditors (ie mortgagees) among others CAN still pursue you for their debts. And the 12 years runs from the date of the original repayment action/claim...

Bankruptcy is NO WAY OUT of mortgage debt if you own a home - they can come after it.

Edited November 4, 2005 by Tempest

[Pete95]

Its hardly surprising so many people are going bankrupt now - its become such an easy option. If you still had to wait 3years to be discharged, not 1 as it is now, then the figures would be much lower IMO (but probably still rising).

I know someone who declared themself bankrupt after uni - and cleared debts of something around 30-35k. Having gone bankrupt doesnt seem to be hindering him in any way, and it takes what, 5years for credit firms to clear your record?

Result? He can now save more of his salary for a house deposit because he'll nolonger be paying 200 a month (for the next 20years) towards paying off student loans - he would probably pay more for a mortgage within 5years of going backrupt, but chances are he wouldnt be getting a mortgage during that time anyway, so when he does get a mortgage he has a bigger deposit saved and can afford higher repayments because he has no student loan to pay back - so its actually been a BENEFIT

Edited November 4, 2005 by Pete95

[Tempest]

Its hardly surprising so many people are going bankrupt now - its become such an easy option. If you still had to wait 3years to be discharged, not 1 as it is now, then the figures would be much lower IMO (but probably still rising).

I know someone who declared themself bankrupt after uni - and cleared debts of something around 30-35k. Having gone bankrupt doesnt seem to be hindering him in any way, and it takes what, 5years for credit firms to clear your record?

Result? He can now save more of his salary for a house deposit because he'll nolonger be paying 200 a month (for the next 20years) towards paying off student loans - he would probably pay more for a mortgage within 5years of going backrupt, but chances are he wouldnt be getting a mortgage during that time anyway, so when he does get a mortgage he has a bigger deposit saved and can afford higher repayments because he has no student loan to pay back - so its actually been a BENEFIT

The Student Loans Company is one of the "among others" I referred to - you cannot bankrupt your way out of student loans - they are specifically excluded and you have to pay them back post discharge. Maybe he did this before they changed the law here - it can't be done now.

All I can say having know someone close to a bankrupt is that it was sheer hell - ever tried to live without short or long term credit for a few years in this day and age (or credit not at extortinate rates)? - or without the things you once had? On the surface it may appear easy but I assure you it is still a big issue and sets you back a long way in the life stakes.

Edited November 4, 2005 by Tempest

[Serpico]

Here is an interesting story on bankcruptcy.

I was made bankcrupt many years ago for solicitors alleged unpaid costs. I was pursuing a PLC for £500K through The Queens Bench Division of the High Court in a civil action, which had incurred several hearings for legal areguments prior to trial. A bankcrupt cannot, or could not be a litigant at that time, only the trustees in bankcruptcy could pursue a bankcrupts creditors. The Defendants solicitors wrote to me advising their interim costs were at £6K. My response was simply. "Stick you Bill of Costs up your **** and set fire to them, you can discuss your costs with me if and when you successfully defend and win my action against your client".

Out of the blue I received a bankcruptcy petition to appear in Birkenhead Court for this alleged £6K debt to this solicitor, I was 100% confident that I would leave blood on the floor. Then I received notice that the applicant had requested an adjournment and the case was re-listed, for a later date, I then received a new notice to appear again. Yet another adjournment was requested. this hearing was again cancelled I heard nothing further about anr re-listed date or venue, and assumed ith claim had been withdrawn because it was unsustainable.

Several months later I received a letter from the Chester O.R advising me the that I have been successfully petitioned for bankcruptcy in the Chester Court, due to my none appearance and offer a defence, and that I should attend at the O.Rs office with all the usually stuff, my cheque books credit cards, list of creditors etc. I met with the O.R with my court action papers and demanded to know why I had not been notified of the change of venue and hearing date. He explained that this Birkenhead solicitor who had requested the move to another Court and should have notified me.

After a long discussion he agreed that there were really no grounds for me to be have been made bankcrupt. I was otherwise debt free with substantial assetts and the costs claimed had not been quantified because there had been no final hearing or judgement in respect of my £500K claim. He conceded that the petition had been irregular and designed to secure bankcruptcy to prevent me pursing my £500K claim. He advised that he was prepared to order my appointed trustee re-assign the right of action for the £500K claim back to me. but the bankcruptcy would have to remain and could not be overturned. He agreed that I did not have to surrender anything to him as I had no other debts and was in a position to immediately settle the £6K and costs. Effectively doing a Pontias Pilate job.

Ernst & Young, Liverpool were my trustees. when I first met with them I weighed into them really heavy demanding that they immediately re-assign the action or pursure my claim themselves as they were bound by law to do, I also demanded that they pursue the PLCs bent brief who had petitioned my bankcruptcy for substantial damages. they played around for three years writing a few letters to the PLC demanding settlement of the £500K, but they were way out of their depth. Eventually a week before my official discharge having achieved nothing they re-assigned the action to me.

I immediately hit the Birkenhead brief with a claim for damages through the the Solicitors complaints system, that was settled swiftly at arbitration without argument except that I did not get the £100K, I demanded but had to settle for £25K.

The actually bankcruptcy had no effect on me at all, I kept all my accounts and was even authorised by the the O.R to hold office as a Director of a large PLC Haulage company through the three years bankcruptcy.

[Guest Charlie The Tramp]

Meanwhile the Government is clearly cracking down on bankrupts in an effort to retrieve assets and cash for creditors. In the year to March 31, more than 6,500 bankrupts agreed, or were forced to, hand over part of their income towards payment of their debts. This is an increase of 127% on the previous year. The Insolvency Service estimates that some £22m will be recovered as a result of these agreements.

Mr Bangham said, "This proves that, despite what many people believe, the Enterprise Act was no soft touch and the effect on future income is something I'm sure people don't consider before turning to bankruptcy as a way out.

Interesting, maybe the new bankruptcy enterprise act is not the easy way out after all.

[oracle]

Are these your triggers, in that are you actively monitoring these as indications for the downturn in house prices? Basically, can you briefly say, for the uninitiated, why this is important? What other triggers are you monitoring? Interest rates is the one the masses tend to focus on with some element listening to the value of the dollar. Does the builders shares do anything for you?

I have a much better trigger for you than that!!!...and it's here!

check out BskyB.....they have taken a pummelling on the stockmarket today.Apparently there are a lot of subscriber reductions and cancellations,so there is conclusive proof that consumers are tightening the belts.

it's probably a "purer" play than Dr Bubbs housebuilders.....persimmon and co all have a bit of overseas exposure which flatters the figures,where what we are really interested in is UK domestic...and I don't know of any gym chains that are going strong here AND overseas.....even david lloyd is UK only as far as I know.

also worth watching.....fitness first(gyms).....restaurants....basically anything recreational.

......if you see takings down on these then it's time to worry!!!

....takings don't just go down,jobs get scaled back to compensate for lower profit.

Edited November 4, 2005 by oracle

[libitina]

I have a much better trigger for you than that!!!...and it's here!

check out BskyB.....they have taken a pummelling on the stockmarket today.Apparently there are a lot of subscriber reductions and cancellations,so there is conclusive proof that consumers are tightening the belts.

it's probably a "purer" play than Dr Bubbs housebuilders.....persimmon and co all have a bit of overseas exposure which flatters the figures,where what we are really interested in is UK domestic...and I don't know of any gym chains that are going strong here AND overseas.....even david lloyd is UK only as far as I know.

also worth watching.....fitness first(gyms).....restaurants....basically anything recreational.

......if you see takings down on these then it's time to worry!!!

....takings don't just go down,jobs get scaled back to compensate for lower profit.

I always thought that Sky would be one of the last things to go along with internet access. People will be staying in more, so Sky and dvd rentals should be OK for a while shouldn't they?

[Saving For a Space Ship]

Here is an interesting story on bankcruptcy.

I was made bankcrupt many years ago for solicitors alleged unpaid costs. I was pursuing a PLC for £500K through The Queens Bench Division of the High Court in a civil action, which had incurred several hearings for legal areguments prior to trial. A bankcrupt cannot, or could not be a litigant at that time, only the trustees in bankcruptcy could pursue a bankcrupts creditors. The Defendants solicitors wrote to me advising their interim costs were at £6K. My response was simply. "Stick you Bill of Costs up your **** and set fire to them, you can discuss your costs with me if and when you successfully defend and win my action against your client".

Out of the blue I received a bankcruptcy petition to appear in Birkenhead Court for this alleged £6K debt to this solicitor, I was 100% confident that I would leave blood on the floor. Then I received notice that the applicant had requested an adjournment and the case was re-listed, for a later date, I then received a new notice to appear again. Yet another adjournment was requested. this hearing was again cancelled I heard nothing further about anr re-listed date or venue, and assumed ith claim had been withdrawn because it was unsustainable.

Several months later I received a letter from the Chester O.R advising me the that I have been successfully petitioned for bankcruptcy in the Chester Court, due to my none appearance and offer a defence, and that I should attend at the O.Rs office with all the usually stuff, my cheque books credit cards, list of creditors etc. I met with the O.R with my court action papers and demanded to know why I had not been notified of the change of venue and hearing date. He explained that this Birkenhead solicitor who had requested the move to another Court and should have notified me.

After a long discussion he agreed that there were really no grounds for me to be have been made bankcrupt. I was otherwise debt free with substantial assetts and the costs claimed had not been quantified because there had been no final hearing or judgement in respect of my £500K claim. He conceded that the petition had been irregular and designed to secure bankcruptcy to prevent me pursing my £500K claim. He advised that he was prepared to order my appointed trustee re-assign the right of action for the £500K claim back to me. but the bankcruptcy would have to remain and could not be overturned. He agreed that I did not have to surrender anything to him as I had no other debts and was in a position to immediately settle the £6K and costs. Effectively doing a Pontias Pilate job.

Ernst & Young, Liverpool were my trustees. when I first met with them I weighed into them really heavy demanding that they immediately re-assign the action or pursure my claim themselves as they were bound by law to do, I also demanded that they pursue the PLCs bent brief who had petitioned my bankcruptcy for substantial damages. they played around for three years writing a few letters to the PLC demanding settlement of the £500K, but they were way out of their depth. Eventually a week before my official discharge having achieved nothing they re-assigned the action to me.

I immediately hit the Birkenhead brief with a claim for damages through the the Solicitors complaints system, that was settled swiftly at arbitration without argument except that I did not get the £100K, I demanded but had to settle for £25K.

The actually bankcruptcy had no effect on me at all, I kept all my accounts and was even authorised by the the O.R to hold office as a Director of a large PLC Haulage company through the three years bankcruptcy.

Thanks for that very interesting tale

[winkie]

I have a much better trigger for you than that!!!...and it's here

restaurants....basically anything recreational.

......if you see takings down on these then it's time to worry!!!

....takings don't just go down,jobs get scaled back to compensate for lower profit.

Agree, 1st thing people cut down on I would say is eating out / take aways.

Never seen so many take away Pizza, Kebab, Indian, Chinese flyers stuffed though letter box, together with the usual Estate Agent leaflets, we have 6 people with a genuine interest in purchasing in your road rubbish.

The recession has well and truly started.

Edited November 4, 2005 by winkie

[Guest Charlie The Tramp]

Vince Cable, the Liberal Democrats' economics spokesman, called for the Government to tighten laws on personal lending and offer more support to debtors.

"There is currently a considerable degree of irresponsible lending and aggressive marketing to individuals which leads to people taking on more debt. Lenders have an obligation to stop these practices and to provide greater levels of debt advice," he said.

So a politician has called on the government to tighten up on personal lending.