The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 made it mandatory for all debtors to receive credit counseling before they will be allowed to file bankruptcy. This credit counseling was made mandatory to ensure that all debtors understood their options before going bankrupt.
While it can be argued that credit counseling is a good thing, there are also three dangerous credit counseling traps to be aware of if you are considering filing bankruptcy.
First, and most importantly, your pre-bankruptcy credit counseling session must be completed within the 180 days prior to your bankruptcy filing. If you go to bankruptcy court to file bankruptcy, and you have not completed your credit counseling, you will not be permitted to go bankrupt. Your bankruptcy petition will be dismissed.
Having your case dismissed means that you will not get relief from your creditors. Obviously the purpose of going bankrupt is to prevent your creditors from taking any further legal or collection action against you, so having your case dismissed, simply because you did not attend a one hour counseling session, is a very serious trap.
Second, your credit counseling session must be completed by an approved credit counselor. Credit counseling services are approved by the Department of Justice's U.S. Trustee Program, except in Alabama and North Carolina where court officials (known as Bankruptcy Administrators) approve pre-bankruptcy credit counseling services.
Before you agree to credit counseling, check the Department of Justice's web site to make sure that your counselor is on the approved list. There is little point in completing the counseling if the credit counselor is not an approved credit counselor.
The third and final trap is that you must have proof of completion of your credit counseling for the court. Within 24 hours of the completion of your credit counseling you will receive a certificate of completion. Only credit counseling organizations that have been approved by the U.S. Trustee Program may issue these certificates. As a fraud prevention measure, these certificates are sequentially numbered, and produced through a central automated processing system.
If you don't have the certificate of completion when you appear at your bankruptcy hearing, your case will be dismissed.
The bankruptcy process was already complicated, and the credit counseling requirement adds another level of complexity, so either do your own research, or hire a competent bankruptcy attorney to represent you, so that you don't fall into one of these credit counseling traps.
http://www.content.onlypunjab.com/Article/Three-Credit-Counseling-Traps-to-Avoid-For-Your-Mandatory-Pre-Bankruptcy-Credit-Counseling/4200320092003234551
Friday, October 5, 2007
The Dangers of Not Having Credit Counseling Before you File for Bankruptcy
In order to apply for bankruptcy protection, either under Chapter 7 or Chapter 13, you must attend a mandatory credit counseling session. You must attend this credit counseling session within the six months preceding your bankruptcy filing.
You must receive this credit counseling from an organization approved by the Department of Justice’s U.S. Trustee Program, except in Alabama and North Carolina where court officials (called Bankruptcy Administrators) approve pre-bankruptcy credit counseling services. The pre-bankruptcy credit counseling session with the approved credit counseling organization will include an evaluation of your personal financial situation, a discussion of the alternatives to bankruptcy; and tools to help you make a personal budget plan.
A typical credit counseling session will last for about one hour. While these sessions are typically provided in a face to face meeting between the debtor and the credit counselor, they can also be conducted by phone or online.
The credit counseling organization will typically charge a fee of approximately $50 for the session, although these fees will vary based on where you live, the types of services you receive, you ability to pay, and how the counseling was delivered. The counseling organization must disclose all fees to you prior to starting the counseling session. If you cannot afford to pay the fee for credit counseling, you must request a fee waiver from the counseling organization before the counseling session starts. Credit counseling services are required to provide the counseling free of charge to debtors who cannot afford to pay the standard counseling fee.
Once your counseling session is completed, you will receive a certificate as proof of the completion of your counseling. Your credit counselor may not charge extra for this certificate, and they must provide you with the certificate within 24 hours of the completion of your counseling.
You must file a certificate of credit counseling completion when you file for bankruptcy protection. Only credit counseling organizations that have been approved by the U.S. Trustee Program may issue these certificates. As a fraud prevention measure, these certificates are sequentially numbered, and produced through a central automated processing system.
The point to remember is this: you must have your credit counseling session completed before you file for bankruptcy. If you do not have a certificate proving that you have completed your credit counseling, your bankruptcy case will be dismissed, and you will not receive relief from your debts.
http://www.content.onlypunjab.com/Article/The-Dangers-of-Not-Having-Credit-Counseling-Before-you-File-for-Bankruptcy/4200320092003232667
You must receive this credit counseling from an organization approved by the Department of Justice’s U.S. Trustee Program, except in Alabama and North Carolina where court officials (called Bankruptcy Administrators) approve pre-bankruptcy credit counseling services. The pre-bankruptcy credit counseling session with the approved credit counseling organization will include an evaluation of your personal financial situation, a discussion of the alternatives to bankruptcy; and tools to help you make a personal budget plan.
A typical credit counseling session will last for about one hour. While these sessions are typically provided in a face to face meeting between the debtor and the credit counselor, they can also be conducted by phone or online.
The credit counseling organization will typically charge a fee of approximately $50 for the session, although these fees will vary based on where you live, the types of services you receive, you ability to pay, and how the counseling was delivered. The counseling organization must disclose all fees to you prior to starting the counseling session. If you cannot afford to pay the fee for credit counseling, you must request a fee waiver from the counseling organization before the counseling session starts. Credit counseling services are required to provide the counseling free of charge to debtors who cannot afford to pay the standard counseling fee.
Once your counseling session is completed, you will receive a certificate as proof of the completion of your counseling. Your credit counselor may not charge extra for this certificate, and they must provide you with the certificate within 24 hours of the completion of your counseling.
You must file a certificate of credit counseling completion when you file for bankruptcy protection. Only credit counseling organizations that have been approved by the U.S. Trustee Program may issue these certificates. As a fraud prevention measure, these certificates are sequentially numbered, and produced through a central automated processing system.
The point to remember is this: you must have your credit counseling session completed before you file for bankruptcy. If you do not have a certificate proving that you have completed your credit counseling, your bankruptcy case will be dismissed, and you will not receive relief from your debts.
http://www.content.onlypunjab.com/Article/The-Dangers-of-Not-Having-Credit-Counseling-Before-you-File-for-Bankruptcy/4200320092003232667
Announcing the Formation of Greystone Private Equity LLC: Financial Leader with Asset Acquisition
Jonathan Reich and Adam Reich, former principals and Co-Presidents of Michael Fox International, are pleased to announce that they have formed Greystone Private Equity LLC, a member of the Greystone family of companies.
Greystone Private Equity LLC specializes in purchasing all categories of assets, including industrial machinery & equipment, real estate, inventory, accounts receivables, as well as controlling and non-controlling equity investments in operating companies.
Jonathan and Adam Reich, Co-CEOs of the newly formed Greystone Private Equity LLC, are former practicing bankruptcy attorneys and have been assisting legal, financial and corporate clients with their surplus asset management needs for over 20 years. Additionally, they both have extensive experience representing debtors, and secured and unsecured creditors in asset sales arising from complex bankruptcy matters and over the years have recovered millions of dollars from asset dispositions on behalf of their clients.
“The financial support and strength that we have from joining the Greystone family of companies enables us to purchase all types of assets, ranging from complete facilities and entire companies as well as single assets,” commented Jonathan Reich, Co-CEO. “We will continue to service the legal, financial and corporate community with their distressed and non-distressed assets but can now provide them with a wider range of services, including asset acquisitions, equity investments, receivables portfolio acquisitions, real estate sale leasebacks, as well as arranging traditional asset disposition services such as auctions, liquidations, and negotiated sales,” said Adam Reich, Co-CEO.
http://www.content.onlypunjab.com/Article/Announcing-the-Formation-of-Greystone-Private-Equity-LLC--Financial-Leader-with-Asset-Acquisition/4200320092003216308
Greystone Private Equity LLC specializes in purchasing all categories of assets, including industrial machinery & equipment, real estate, inventory, accounts receivables, as well as controlling and non-controlling equity investments in operating companies.
Jonathan and Adam Reich, Co-CEOs of the newly formed Greystone Private Equity LLC, are former practicing bankruptcy attorneys and have been assisting legal, financial and corporate clients with their surplus asset management needs for over 20 years. Additionally, they both have extensive experience representing debtors, and secured and unsecured creditors in asset sales arising from complex bankruptcy matters and over the years have recovered millions of dollars from asset dispositions on behalf of their clients.
“The financial support and strength that we have from joining the Greystone family of companies enables us to purchase all types of assets, ranging from complete facilities and entire companies as well as single assets,” commented Jonathan Reich, Co-CEO. “We will continue to service the legal, financial and corporate community with their distressed and non-distressed assets but can now provide them with a wider range of services, including asset acquisitions, equity investments, receivables portfolio acquisitions, real estate sale leasebacks, as well as arranging traditional asset disposition services such as auctions, liquidations, and negotiated sales,” said Adam Reich, Co-CEO.
http://www.content.onlypunjab.com/Article/Announcing-the-Formation-of-Greystone-Private-Equity-LLC--Financial-Leader-with-Asset-Acquisition/4200320092003216308
Bankruptcy May Be Your Way Out
Have you suddenly found yourself swimming in rivers of debt? Have you found yourself avoiding the phone like the plague daily because of harassing creditors? Are you out of money? Have you, without knowing it, overextended yourself? If you can answer these questions with a yes, bankruptcy may be the answer for you. Many people who cannot pay their bills and are grossly involved in debt opt for bankruptcy. Within the United States, there are two specific bankruptcy types known as Chapter 7 and Chapter 13.
The most common form of bankruptcy is the Chapter 7. This option allows people to liquidate non-exempt assets by selling them to apply them to their debt.
A Chapter 13 bankruptcy allows a business or individual to undergo a court-approved reorganization of their debt. This type of bankruptcy gives the debtor time to repay their creditors, typically within a three to five year period of time. During this time, if a creditor wishes to pursue collection efforts, they can only do so through the courts. In most cases, those filing a Chapter 13 bankruptcy, are able to keep their property.
Over the years, the laws of bankruptcy have changed quite a bit. For example, now any person filing for bankruptcy, according the laws, must attend credit counseling. Furthermore, those filing bankruptcy must adhere to the new laws and go through what is called a means test. The means test is used to determine which type of bankruptcy the person can file under. If the person earns less than the state’s median income or not.
If they do earn less, they are required to file a Chapter 7 bankruptcy. This means they may be required to sell off some of their property and assets in order to cancel the debt. If they find that they earn more than the median income in the state, they are required to file a Chapter 13 bankruptcy and repay the debts through a plan.
Before you file bankruptcy, you should consider all of these aspects and talk to a lawyer that is well versed in the proceedings and laws as they pertain to bankruptcy. They will help you in knowing which chapter you must file under, by looking at your debt and your income.
http://www.content.onlypunjab.com/Article/Bankruptcy-May-Be-Your-Way-Out/4200320092003232022
The most common form of bankruptcy is the Chapter 7. This option allows people to liquidate non-exempt assets by selling them to apply them to their debt.
A Chapter 13 bankruptcy allows a business or individual to undergo a court-approved reorganization of their debt. This type of bankruptcy gives the debtor time to repay their creditors, typically within a three to five year period of time. During this time, if a creditor wishes to pursue collection efforts, they can only do so through the courts. In most cases, those filing a Chapter 13 bankruptcy, are able to keep their property.
Over the years, the laws of bankruptcy have changed quite a bit. For example, now any person filing for bankruptcy, according the laws, must attend credit counseling. Furthermore, those filing bankruptcy must adhere to the new laws and go through what is called a means test. The means test is used to determine which type of bankruptcy the person can file under. If the person earns less than the state’s median income or not.
If they do earn less, they are required to file a Chapter 7 bankruptcy. This means they may be required to sell off some of their property and assets in order to cancel the debt. If they find that they earn more than the median income in the state, they are required to file a Chapter 13 bankruptcy and repay the debts through a plan.
Before you file bankruptcy, you should consider all of these aspects and talk to a lawyer that is well versed in the proceedings and laws as they pertain to bankruptcy. They will help you in knowing which chapter you must file under, by looking at your debt and your income.
http://www.content.onlypunjab.com/Article/Bankruptcy-May-Be-Your-Way-Out/4200320092003232022
Bankruptcy Attorneys - Let Them Do The Work
If you are facing financial horrors such as property repossession, debt lawsuits, property liens, foreclosure, or just in some serious debts, you should consider a bankruptcy attorney. A bankruptcy attorney is well versed in the various laws of bankruptcy and can give you advice on the options you may have.
By providing legal assistance, bankruptcy attorneys, can help you eliminate your debt, as well as liquidating your assets to pay off your creditors. If you need to reorganize your debt, a bankruptcy attorney can help you with this as well, by helping form a court-approved plan to pay back the creditors in a specific period of time.
Furthermore, bankruptcy attorneys have full knowledge of the United States Bankruptcy code, such as Title 11. When it comes to bankruptcy proceedings, this is the regulation code. Because bankruptcy is an often confusing process, bankruptcy attorneys can help guide you through it. There are two general practices when it comes to bankruptcy attorneys and bankruptcy proceedings. These are Chapter 7 debt liquidation or reorganization and a repayment plan under Chapter 9, 11, 12, or 13 bankruptcies.
Any person thinking about filing for bankruptcy, needs to consider obtaining a bankruptcy attorney. Thanks to the new laws set forth in 2005 in regards to the bankruptcy laws, the United States government has made the process of bankruptcy that much harder. Which means if you are wanting to declare bankruptcy, you may very well need to talk to a few bankruptcy attorneys and find one you would like to work with. They will work with you and determine which bills you can eliminate, which property and assets you can retain, and what type of bankruptcy you can file. You may find that if you do not retain a bankruptcy attorney, the outcome in court may not be favorable to your situation.
Bankruptcy attorneys also help creditors at the same time, many people are not aware of this. They help in making sure that the creditor can retrieve their money, as much as possible. Though it does not happen very often, it is possible for a company to hire a bankruptcy attorney and seek an involuntary bankruptcy against you.
http://www.content.onlypunjab.com/Article/Bankruptcy-Attorneys---Let-Them-Do-The-Work/4200320092003232017
By providing legal assistance, bankruptcy attorneys, can help you eliminate your debt, as well as liquidating your assets to pay off your creditors. If you need to reorganize your debt, a bankruptcy attorney can help you with this as well, by helping form a court-approved plan to pay back the creditors in a specific period of time.
Furthermore, bankruptcy attorneys have full knowledge of the United States Bankruptcy code, such as Title 11. When it comes to bankruptcy proceedings, this is the regulation code. Because bankruptcy is an often confusing process, bankruptcy attorneys can help guide you through it. There are two general practices when it comes to bankruptcy attorneys and bankruptcy proceedings. These are Chapter 7 debt liquidation or reorganization and a repayment plan under Chapter 9, 11, 12, or 13 bankruptcies.
Any person thinking about filing for bankruptcy, needs to consider obtaining a bankruptcy attorney. Thanks to the new laws set forth in 2005 in regards to the bankruptcy laws, the United States government has made the process of bankruptcy that much harder. Which means if you are wanting to declare bankruptcy, you may very well need to talk to a few bankruptcy attorneys and find one you would like to work with. They will work with you and determine which bills you can eliminate, which property and assets you can retain, and what type of bankruptcy you can file. You may find that if you do not retain a bankruptcy attorney, the outcome in court may not be favorable to your situation.
Bankruptcy attorneys also help creditors at the same time, many people are not aware of this. They help in making sure that the creditor can retrieve their money, as much as possible. Though it does not happen very often, it is possible for a company to hire a bankruptcy attorney and seek an involuntary bankruptcy against you.
http://www.content.onlypunjab.com/Article/Bankruptcy-Attorneys---Let-Them-Do-The-Work/4200320092003232017
Avoid Bankruptcy with Debt Consolidation!
Bankruptcy should only be a last resort solution because it will remain on your credit report for 10 years, almost no lender will even consider you as a borrower for at least 2 years and if you are lucky enough to get a loan after going through a bankruptcy, the interest rates, fees and costs will be a lot higher than in other circumstances.
Bankruptcy no longer so easy
A recent modification to the law that regulates bankruptcy has made the bankruptcy process even more costly and difficult. It is not longer as easy as it was to get all your debts dismissed and get a fresh start. Chances are that you’ll be required to commit to repay some debt in a period of time agreed with the court.
Thus it makes no sense to resort to such an extreme solution to your debt problems when you can get some aid in negotiating with your creditors and avoid costly legal fees that would add up to your debt. There are debt consolidation agencies out there that can reduce your debt significantly and help you avoid the consequences of bankruptcy.
http://www.content.onlypunjab.com/Article/Avoid-Bankruptcy-with-Debt-Consolidation-/4200320092003230582
Debt Consolidation agencies
When you contact a debt consolidation agency you’ll be assigned an agent with a wide experience in negotiating with creditors that will interview you first in order to analyze your case. He will ask you questions regarding your assets, your income, your debt, your job, your expenses, etc. You will probably be required to provide documentation regarding these subjects too.
Then, he will work with you in order to arrange a reasonable budget leaving your debt repayments out so as to see what your essential expenses are. He will then arrange meetings with your creditors and negotiate with them new repayment programs.
This will have many effects: For starters, debt will stop accumulating. The amount of money you spend on interests will be considerably reduced. The loan terms will be extended and you may also be able to get a reduction on your debts’ principals. Sometimes by means of debt consolidation people can get a reduction on their debt of up to 65%.
Repayment
Once the consolidation process has ended, you’ll have to start repaying your debt. There are different ways this can be arranged: If after debt negotiation, you’ve applied for a debt consolidation loan and been approved, then you’ll only have to make a single payment towards cancellation of your consolidation loan.
However, if you didn’t apply for a consolidation loan, sometimes you can also get a single payment because some credit agencies agree with creditors as part of the negotiation process that they’ll collect your payments and deliver the money to the creditors. Thus, you make a single monthly payment to the credit agency and the agency takes care of repaying all of your debt.
http://www.content.onlypunjab.com/Article/Avoid-Bankruptcy-with-Debt-Consolidation-/4200320092003230582
Bankruptcy no longer so easy
A recent modification to the law that regulates bankruptcy has made the bankruptcy process even more costly and difficult. It is not longer as easy as it was to get all your debts dismissed and get a fresh start. Chances are that you’ll be required to commit to repay some debt in a period of time agreed with the court.
Thus it makes no sense to resort to such an extreme solution to your debt problems when you can get some aid in negotiating with your creditors and avoid costly legal fees that would add up to your debt. There are debt consolidation agencies out there that can reduce your debt significantly and help you avoid the consequences of bankruptcy.
http://www.content.onlypunjab.com/Article/Avoid-Bankruptcy-with-Debt-Consolidation-/4200320092003230582
Debt Consolidation agencies
When you contact a debt consolidation agency you’ll be assigned an agent with a wide experience in negotiating with creditors that will interview you first in order to analyze your case. He will ask you questions regarding your assets, your income, your debt, your job, your expenses, etc. You will probably be required to provide documentation regarding these subjects too.
Then, he will work with you in order to arrange a reasonable budget leaving your debt repayments out so as to see what your essential expenses are. He will then arrange meetings with your creditors and negotiate with them new repayment programs.
This will have many effects: For starters, debt will stop accumulating. The amount of money you spend on interests will be considerably reduced. The loan terms will be extended and you may also be able to get a reduction on your debts’ principals. Sometimes by means of debt consolidation people can get a reduction on their debt of up to 65%.
Repayment
Once the consolidation process has ended, you’ll have to start repaying your debt. There are different ways this can be arranged: If after debt negotiation, you’ve applied for a debt consolidation loan and been approved, then you’ll only have to make a single payment towards cancellation of your consolidation loan.
However, if you didn’t apply for a consolidation loan, sometimes you can also get a single payment because some credit agencies agree with creditors as part of the negotiation process that they’ll collect your payments and deliver the money to the creditors. Thus, you make a single monthly payment to the credit agency and the agency takes care of repaying all of your debt.
http://www.content.onlypunjab.com/Article/Avoid-Bankruptcy-with-Debt-Consolidation-/4200320092003230582
Bad Debt Blues or Bankruptcy?
If you were doing the logical thing and sunning yourself on holiday at the start of August 2006 you may have missed some pretty scary news about personal debt in the UK.
As if from nowhere, a flurry of announcements arrived in the space of a few days.
The Bank of England raised interest rates for the first time in two years, making debts just that little bit harder to service in the coming months.
The DTI reported that IVAs (Individual Voluntary Arrangements) went up to 23,000 in the first quarter of 2006. That is a 73% increase over quarter one 2005. If you thought that sounded bad, the second quarter saw 26,000, a 66% rise.
HSBC, Barclays, Lloyds TSB and Royal Bank of Scotland all reported rises in impairment charges or provision against bad debts in the first half of 2006. To pick just one, Lloyds TSB set aside £632 million in the first half of 2006, that is a 16% increase.
Going back to June, it was announced that UK mortgage debt passed the £1 trillion mark and in May the debt counseling charity Citizens Advice issued a report explaining that the average person they help would need 77 years to repay their debts! Having just checked on a government website, I found that girls and boys born in 2002 have a life expectancy of 81 and 76 respectively.
Does this qualify as a serious problem?
If you are still unsure, consider this. In early 2006, the Office of Fair Trading told many credit card firms to cut their average default fees. As you may be aware, default fees can be pretty high and are a great source of revenue for the card firms. Losing this revenue was not part of the card companies plan, so they have been looking for ways to recover that lost income. Many have chosen to increase their interest rates. This will of course, impact many credit card borrowers and hasten the collapse of some families finances.
To help me with a little research, I logged on to a forum for people with debt problems in the UK. Rather amazingly, it appeared that the flavour of the month is to be declared a bankrupt. When I suggested the obvious (spending less and trying to earn more) I was abused with a torrent of angry posts for being 'unrealistic'.
No matter how hard I try, I cannot seem to get away from the logic that if a person gets into debt by continually spending more than they earn, doing the exact opposite will (sooner or later) help them to escape these debts. Think of it as a financial diet.
An IVA is essentially a voluntary bankruptcy for an individual. Rather than being forced into bankruptcy by a lender who is chasing the individual for repayment, the individual can 'opt out' as it were. Once the IVA has been declared, the lenders are no longer allowed to chase these debts. The rules are obviously far more complex than this, I am just trying to offer a flavour.
If you are anything like me, you probably think of bankruptcy as something that happens to entrepreneurs who borrowed millions to expand a business. It seems however, that now, any debts above £15,000 might be worth 'opting out' of. Amazing.
In 2004 The Enterprise Act changed the rules relating to bankruptcy. It is now possible to be discharged in just one year rather than three. In other words, my new forum 'buddies' seem to feel that bankruptcy is the least worst option. It seems that the act of repaying debts is now less appealing than bankruptcy!
I can't deny that I have an issue with this. Someone, somewhere will need to make good on those bad debts. Right now, it seems as though the responsibility will fall to shareholders in the major high street lenders. As a small shareholder myself, I'm not sure I am too happy with this outcome. I had always been of the opinion that someone else paying my debts was 'unrealistsic'.
Whatever the outcome, I fear that the crest of this particular wave is still in the distance.
http://www.content.onlypunjab.com/Article/Bad-Debt-Blues-or-Bankruptcy-/4200320092003230206
As if from nowhere, a flurry of announcements arrived in the space of a few days.
The Bank of England raised interest rates for the first time in two years, making debts just that little bit harder to service in the coming months.
The DTI reported that IVAs (Individual Voluntary Arrangements) went up to 23,000 in the first quarter of 2006. That is a 73% increase over quarter one 2005. If you thought that sounded bad, the second quarter saw 26,000, a 66% rise.
HSBC, Barclays, Lloyds TSB and Royal Bank of Scotland all reported rises in impairment charges or provision against bad debts in the first half of 2006. To pick just one, Lloyds TSB set aside £632 million in the first half of 2006, that is a 16% increase.
Going back to June, it was announced that UK mortgage debt passed the £1 trillion mark and in May the debt counseling charity Citizens Advice issued a report explaining that the average person they help would need 77 years to repay their debts! Having just checked on a government website, I found that girls and boys born in 2002 have a life expectancy of 81 and 76 respectively.
Does this qualify as a serious problem?
If you are still unsure, consider this. In early 2006, the Office of Fair Trading told many credit card firms to cut their average default fees. As you may be aware, default fees can be pretty high and are a great source of revenue for the card firms. Losing this revenue was not part of the card companies plan, so they have been looking for ways to recover that lost income. Many have chosen to increase their interest rates. This will of course, impact many credit card borrowers and hasten the collapse of some families finances.
To help me with a little research, I logged on to a forum for people with debt problems in the UK. Rather amazingly, it appeared that the flavour of the month is to be declared a bankrupt. When I suggested the obvious (spending less and trying to earn more) I was abused with a torrent of angry posts for being 'unrealistic'.
No matter how hard I try, I cannot seem to get away from the logic that if a person gets into debt by continually spending more than they earn, doing the exact opposite will (sooner or later) help them to escape these debts. Think of it as a financial diet.
An IVA is essentially a voluntary bankruptcy for an individual. Rather than being forced into bankruptcy by a lender who is chasing the individual for repayment, the individual can 'opt out' as it were. Once the IVA has been declared, the lenders are no longer allowed to chase these debts. The rules are obviously far more complex than this, I am just trying to offer a flavour.
If you are anything like me, you probably think of bankruptcy as something that happens to entrepreneurs who borrowed millions to expand a business. It seems however, that now, any debts above £15,000 might be worth 'opting out' of. Amazing.
In 2004 The Enterprise Act changed the rules relating to bankruptcy. It is now possible to be discharged in just one year rather than three. In other words, my new forum 'buddies' seem to feel that bankruptcy is the least worst option. It seems that the act of repaying debts is now less appealing than bankruptcy!
I can't deny that I have an issue with this. Someone, somewhere will need to make good on those bad debts. Right now, it seems as though the responsibility will fall to shareholders in the major high street lenders. As a small shareholder myself, I'm not sure I am too happy with this outcome. I had always been of the opinion that someone else paying my debts was 'unrealistsic'.
Whatever the outcome, I fear that the crest of this particular wave is still in the distance.
http://www.content.onlypunjab.com/Article/Bad-Debt-Blues-or-Bankruptcy-/4200320092003230206
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