Bankruptcy An Easy Quick Option?

[FTBagain]

A lot has been said on this Forum about the new bankruptcy laws making it easy to get out from under the kosh. Think again!

http://www.accountancyage.com/accountancya...tcy-soft-option

This artical was written in April 2004, just as the new law was coming into effect.

Some quotes from the artical that make sobering reading.

But individuals should be extremely wary of the popular notion that bankruptcy has become a soft option, and a painless way of resolving debt problems.

Although many of the old automatic bankruptcy restrictions have been abolished, we now have a more focused approach. It means that individual bankrupts can be subject to extended restrictions for up to 15 years after their discharge, if their actions prior to and during their bankruptcy are considered to warrant such treatment.

I like the "more focused" bit. It means if you are trying to have your cake and eat it, think again. The law anticipated the possibility that free loaders may try to exploit the new regulations. They can squeeze you dry for up to 15 years!!

And the best is saved to last.

Changes to the way bankrupts' homes are treated mean that, under the new regime, it may be more rather than less likely that the trustee will seek to sell the bankrupt's interest in her home. This is because the law now sets a time limit of three years from the date of the bankruptcy order, by which time the trustee must make a decision as to whether or not to sell the interest. Being time pressured in this way will invariably serve to concentrate the minds of trustees.

Could be alot of homes coming on the market in about 18 months time.

[rockdoctor]

The aim is not to ruin the lives of the majority of bankrupts but only the tiny minority.

So even if the majority of bankrupts exhibited what you or I would regard as reckless behaviour in running up their debts, they will not be subject to 15 years of pain simply because they are the majority.

I would predict that if a tidal wave of bankrupts develops, only 1-5% of the most extreme, hyper-reckless miscreants will be subject to the most stringent penalties.

The economy has to keep functioning, even if a large chunk of the workforce are numpties.

[FTBagain]

The economy has to keep functioning, even if a large chunk of the workforce are numpties.

Except of course it is not the courts job to worry about the wider economy. Another point to note is that the Bankrupt's spouse can be pursued as well.

http://news.bbc.co.uk/1/hi/business/4334296.stm

This happened to a very close friend of mine back in the late '80s his spouse went on a criminal spending spree behind his back. She went to prison, and he lost everything. Spent years paying off her debts! So one bankrupt can finish off more than one consumer. The numbers today probably mean something like double the number of consumers have lost there spending power!

I think too many people think that the one year discharge thing is all that matters. You are right they are numpties, and I suspect they do not understand what they are getting into. They will learn the hard me thinks.

As for the economy, that's already broken according to many top economists.

Another thing to remember is that the debt reclaimation industry is going to provide secure jobs for a lot of people in the near future, so there is little reason for them to be gentle with anyone, as they will be very keen to keep busy!

[Bankrupt Idiot]

A lot has been said on this Forum about the new bankruptcy laws making it easy to get out from under the kosh. Think again!

http://www.accountancyage.com/accountancya...tcy-soft-option

This artical was written in April 2004, just as the new law was coming into effect.

Some quotes from the artical that make sobering reading.

I like the "more focused" bit. It means if you are trying to have your cake and eat it, think again. The law anticipated the possibility that free loaders may try to exploit the new regulations. They can squeeze you dry for up to 15 years!!

And the best is saved to last.

Could be alot of homes coming on the market in about 18 months time.

You only get 15 years, if you try to fiddle the system. Very few people will get that.

If you turn up, answer the questions honestly and cooperate fully you coul dbe discharged sooner. Mine way 5 months.

[FTBagain]

You only get 15 years, if you try to fiddle the system. Very few people will get that.

If you turn up, answer the questions honestly and cooperate fully you coul dbe discharged sooner. Mine way 5 months.

Absolutely, mine friend was very honest with the bailiff and was allowed to get on with his life.

My feeling is that the current widely held view is that bankruptcy is an easy way to dodge ones responsiblities. It is not, and I think a lot of people are going to find that out the hard way. Too many people know their rights and not their responsibilities and I think this is borne out be the record numbers so far in this economic cycle.

Responsible poeple who have had a run of bad luck will be able to get themselves back on their feet quite quickly and good luck to them. The new law seems to be trying to differentiate between to two groups which is a good thing. The bad thing is that the hype around the law in the early days has created the wrong impression. Trouble is coming, I think.

[Bankrupt Idiot]

Absolutely, mine friend was very honest with the bailiff and was allowed to get on with his life.

My feeling is that the current widely held view is that bankruptcy is an easy way to dodge ones responsiblities. It is not, and I think a lot of people are going to find that out the hard way. Too many people know their rights and not their responsibilities and I think this is borne out be the record numbers so far in this economic cycle.

Responsible poeple who have had a run of bad luck will be able to get themselves back on their feet quite quickly and good luck to them. The new law seems to be trying to differentiate between to two groups which is a good thing. The bad thing is that the hype around the law in the early days has created the wrong impression. Trouble is coming, I think.

Agreed, it is not an easy option. My friends have said to me, what would stop me spending to the hilt and declaring bankruptcy. I say nothing.

But then they would lose their house, they nice car, their pension, £5000 home entertainment system, probably their wife as well.

I think they are idiots when they say things like that. Plus they would look at your spending trend. Mine was over 5 years and a gradual incline and I got boiled frog syndrome.