Why feel sorry for bankrupts?

[Cutlass]

I was not aware of this . My premise that bankruptcy by definition involves borrowing is clearly not the case . Wow America ! How can you let this happen ?

In regards to whether I believe harsh treatment of bankrupts is appropriate . I don't . I'm more questioning the idea that ease of bankruptcy , if indeed it is easy , is as victimless as the story implied.

In medical care the main problem is that we've never had universal health care, and the prices of health care have been spiraling out of control for decades now. Health insurance is not affordable to all, but even among those that it is, it often has upper bounds and if those are exceeded, it cuts off. The system is also poorly regulated, so many people are cut off just because they are expensive, and not through any actions of their own.

Bankruptcy and debt are often considered a moral failing. And to people get self-righteous in claiming moral superiority and so they feel entitled to make harsh punishments for the debtor.

However, lenient bankruptcy is good for the economy as a whole. It allows people to return to being productive members of society, and it encourages businesses to take some risks and expand. What is lost in the debate is placing more of the responsibility on the lender. Harsh bankruptcy laws are really a free ride for the lender and absolve them of any responsibility for their actions. Where it is more ethical to say that both the borrower and the lender bear responsibility, placing all responsibility on the borrower encourages the lenders to be reckless and make loans that have no rational justification. A more balanced bankruptcy system would encourage more prudent lending. The change in the US bankruptcy laws in 2006 was actually a very strong disincentive to small business formation and prudent lending standards.

 

[brennan]

Free financial advice: if you can only afford to pay interest and are not repaying the original debt, demand (in writing) the creditor freezes the interest. If they do not do this, default and insist they take you to court. If you can show a judge that you cannot pay off the debt and have taken steps to obtain a mutually beneficial arrangement regarding this with your creditor a judge is unlikely to take the view that you are at fault. This should mean you start repaying the actual debt and accrue no more interest - the original agreement is voided and you simply owe the creditor a lump sum.

ofc, things may be different outside the UK.

 

[timtofly]

Free financial advice: if you can only afford to pay interest and are not repaying the original debt, demand (in writing) the creditor freezes the interest. If they do not do this, default and insist they take you to court. If you can show a judge that you cannot pay off the debt and have taken steps to obtain a mutually beneficial arrangement regarding this with your creditor a judge is unlikely to take the view that you are at fault. This should mean you start repaying the actual debt and accrue no more interest - the original agreement is voided and you simply owe the creditor a lump sum.

ofc, things may be different outside the UK.

That is what a bankruptcy is, although you do not owe the lump sum up front, but you have five years of strict budget to pay it off.

There are "walk" away bankruptcies, but one's credit is basically ruined for the next 7 to 10 years.

 

[brennan]

No, a bankruptcy is the final termination of all financial liabilities incumbent upon an individual. Perhaps it's different where you are, as I said. But that is very different in the UK from simply defaulting on a specific debt and landing yourself with something like a CCJ (county court judgement) to repay.

 

[Traitorfish]

So....and I mean this genuinely.... Why should I feel sorry for bankrupts ? Why not the creditor ?

Because the greater majority of money-lenders are parasites?

 

[RobAnybody]

Health insurance is not affordable to all, but even among those that it is, it often has upper bounds and if those are exceeded, it cuts off.

Just as an FYI to this point, Obamacare eliminates all Annual Maximums by 2014 (they're being phased out year-by-year) & already eliminated all Lifetime Maximums on coverage. Link

 

[Cutlass]

Just as an FYI to this point, Obamacare eliminates all Annual Maximums by 2014 (they're being phased out year-by-year) & already eliminated all Lifetime Maximums on coverage. Link

Which is a piece of the reason Republicans are so determined to repeal the law. It makes things too rational.

 

[warpus]

A lot of people in the west lead unsustainable lifestyles, paycheque to paycheque.

I'm not one to generalize and feel schadenfreude for everyone who goes bankrupt, but you know how it is.. you reap what you sow. There are sometimes mitigating circumstances, but oftentimes you have noone to blame but yourself.

edit: as for people who go bankrupt due to American's healtcare fiasco, I do feel bad for those people.

 

[Traitorfish]

A lot of people in the west lead unsustainable lifestyles, paycheque to paycheque.

You say that as if our entire economy isn't predicated on the assumption that people do exactly that.

 

[Zelig]

I feel sorry for most people.

 

[kronic]

How about strategic default? Over in the US, it seems to have become a national sport to default on your mortgage because it's "under water", not because you can't service the debt or the personal value of the house to its owners has changed. Should you be able to default just because the market price for your house has gone down?

 

[Core Imposter]

A lot of people in the west lead unsustainable lifestyles, paycheque to paycheque.

I'm not one to generalize and feel schadenfreude for everyone who goes bankrupt, but you know how it is.. you reap what you sow. There are sometimes mitigating circumstances, but oftentimes you have noone to blame but yourself.

edit: as for people who go bankrupt due to American's healtcare fiasco, I do feel bad for those people.

Yes some people live paycheck to paycheck but often this is not by choice. I am a conservative and not prone to having a lot of sympathy for those who are irresponsible but in this time I have seen a truly staggering amount of people who were certainly regarded as prudent and responsible go down in flames.

It has come down to those who lost jobs. In the majority of cases as far as I can tell it has been pretty arbitrary in the private sector.

There is this phenomenon where you have a group of people and half lose jobs and are forgotten by those who did not. It's easier to forget them and then dismisss them as somehow being faulty than to accept that you have been lucky. People do not want to acknowledge how close to the edge they are.

I personally know people who were very wise with their money who are nonetheless essentially walking dead, and know others who have just lucked their way through and can still roll up twenties to light their cigars. In many cases its been the unethical back stabbers who have survived. Society is sick in more ways than one and the worst of it is coming.

 

[emzie]

Even with health insurance, illness can bankrupt you. Sure, your medical costs are covered, by what of lost wages?

My wife and I had 10k in savings and no debt. We thought this was responsible, as it's 4-6 months of bills and rent. Then I got sick. Then she hurt her back. When her insurance company refused to pay her disability care, that 10k was gone within a 4 months.

Granted, we expected them to pay the disability so we didn't penny pinch as much as we should have. But mistakes happen.

 

[rugbyLEAGUEfan]

Because the greater majority of money-lenders are parasites?

I thought a parasite feeds of an unwilling host ? If I stick a leech on my leg , it's silly to complain if it drinks my blood.

 

[Traitorfish]

Because you drift freely throughout time and space, unconstrained by material context?

 

[rugbyLEAGUEfan]

Because you drift freely throughout time and space, unconstrained by material context?

Can you rephrase that ? Not sure what you mean .

Note , I am far from suggesting that somehow money lenders are this altruistic segment of society that get a bad wrap solely due to irresponsible bludgers who don't repay their debts . But similarly , in a capitalist one which I happen to live in , they appear to serve some purpose and in the case of a bank , one which also holds my savings . I believe I have worked hard and made a contribution to society and as a result , hold savings , of which a portion by definition goes towards offsetting the cost of bankruptcy.

 

[Traitorfish]

Can you rephrase that ? Not sure what you mean .

Your "choice" to attach the leeches to your skin is a choice conditioned by the material limitations placed upon you by your historical and social context, and so responsibility must be attributed not only to you, but to those responsible for bringing about that context insofar as it compels you towards those actions.

People don't take loans as the result of a wholly detached, rational weighing of pros and cons, but because their circumstances compel them to do so in the pursuit of maximised freedom-happiness, and the finance sector, having contributed to the development of a society in which it is necessary for them to do so, deserves whatever ills befall it as a result.

 

[rugbyLEAGUEfan]

Thanks TF . Sometimes I look back at my posts where I have given people a big wrap and cringe . I guess the cynics have affected me . But stuff it , I like to be positive , and explanations like this where I genuinely learn new ways of looking at things is the main reason I visit .

And no , I haven't recently been smoking crack .

 

[warpus]

You say that as if our entire economy isn't predicated on the assumption that people do exactly that.

Not your whole economy; you don't have to buy into that mindset if you don't want to.

It has come down to those who lost jobs. In the majority of cases as far as I can tell it has been pretty arbitrary in the private sector.

That would be one circumstance that I wouldn't hold against people... maybe. The job market is tough right now, but then again unemployment insurance should be there to protect you if you lose your job.

 

[Old Hippy]

you often get a chain of bankrupts in small bussiness.... 1 property developer goes under and a dozen self employed people go down too... a plumber or electrician then gets stuck with wages and suppliers debts, the suppliers get caught for 50-60K for copper pipe and bathroom fittings...

the property developer then restarts his business under his wifes name ... repeat
by the time its all sorted out dozens of people have lost everything

thats when "ACA" camera's film him jumping over a fence to get away from questions about his new business owing thousands to subcontractors