chapter 7 in 1998. was almost there again 2 years ago then discovered the magic money in the internetz. Still have some debt , but it is all getting paid off. :thumbsup:
Have you ever declared bankruptcy?
- Thread starter Dwight Schrute
- Start date
I've had a company go through insolvency before some years back, which was scary at the time, but ultimately harmless and we should have done it earlier It was due to a business partnership which fell out, so everything else went to shit.
At the time, it screwed my personal finances good and proper, so I was seriously considering doing it personally as well.
In the end I decided not to, for four reasons:
1. In the UK, you can't be a limited company director while you're BR. That's a big deal if you want to keep running in business.
2. You're giving up control of your finances to the bureaucrat monitoring your BR for a year or two over here. No thanks.
3. Although it's wiped off your credit record after 7 years, some mortgages ask you "have you ever been BR". That can screw you in later life.
4. I see it as an "I give up" option of last resort. Yeah, it would get rid of debts quicker than paying them off, but I think learning to get yourself out of shitty situations by your own wits is a very handy skill if you want to be successful.
Now, if I wasn't an entrepreneur, and was just a regular dude with a job who bought too much on credit and then got made redundant? Yeah, I'd probably do it. The same as if I took a massive risk and ended up in £XXX,XXX of debt.
And for your buddy? The big issue in the long term isn't the money, it's what he'll learn from the process. If he's just going to wipe his debts temporarily and then do it again, then it's the wrong thing to do.
At the time, it screwed my personal finances good and proper, so I was seriously considering doing it personally as well.
In the end I decided not to, for four reasons:
1. In the UK, you can't be a limited company director while you're BR. That's a big deal if you want to keep running in business.
2. You're giving up control of your finances to the bureaucrat monitoring your BR for a year or two over here. No thanks.
3. Although it's wiped off your credit record after 7 years, some mortgages ask you "have you ever been BR". That can screw you in later life.
4. I see it as an "I give up" option of last resort. Yeah, it would get rid of debts quicker than paying them off, but I think learning to get yourself out of shitty situations by your own wits is a very handy skill if you want to be successful.
Now, if I wasn't an entrepreneur, and was just a regular dude with a job who bought too much on credit and then got made redundant? Yeah, I'd probably do it. The same as if I took a massive risk and ended up in £XXX,XXX of debt.
And for your buddy? The big issue in the long term isn't the money, it's what he'll learn from the process. If he's just going to wipe his debts temporarily and then do it again, then it's the wrong thing to do.
BK is usually seen through the consumer's lens. It's discussed as a way out, or a "do over." As guerilla stated, it does hurt someone. Useful to remember:
Debtors' prison - Wikipedia, the free encyclopedia
Voluntary slavery - Wikipedia, the free encyclopedia
* Rothbard in "Property Rights and the Theory of Contracts." Not sure I agree with the last sentence.
EDIT: No offense to those of you who have BK'd, or are thinking of doing it. But it's helpful to keep both sides of the equation in mind.
Possible solutions:
Debtors' prison - Wikipedia, the free encyclopedia
Voluntary slavery - Wikipedia, the free encyclopedia
* Rothbard in "Property Rights and the Theory of Contracts." Not sure I agree with the last sentence.
EDIT: No offense to those of you who have BK'd, or are thinking of doing it. But it's helpful to keep both sides of the equation in mind.
This is very true - I've lost thousands to people going BR on me in the past. It's pissing annoying (and why I am cash up front only these days).
IMO it depends who your creditors are. If they're individuals, you have a moral duty to pay them back, if they lent you money in good faith.
However if it's banks-meh... it's all part of the game for them. A lot of them (esp. credit card companies like MBNA) are essentially scams to get people into debt anyhow, and by the time most people go BR, it's been sold to the bottom-feeding debt buyers.
I'm not defending banks, but banks have shareholders, investors etc. Also, because central banks bail out the banks (cover losses) when you rip off the bank, you are ripping off everyone in society who underwrites the government (taxes) and uses the monetary system.
If there were no BK laws, then people would think 10 times before getting a loan. Systems of family and social credit would flourish.
But the current fiat debt system is so attractive because people can walk away and so there is a lot of moral hazard built in.
I'm not judging anyone who has had to go BK. It happens. I've had family go through it. The system we are on with fiat money and government intervention is the real problem.
If there were no BK laws, then people would think 10 times before getting a loan. Systems of family and social credit would flourish.
But the current fiat debt system is so attractive because people can walk away and so there is a lot of moral hazard built in.
I'm not judging anyone who has had to go BK. It happens. I've had family go through it. The system we are on with fiat money and government intervention is the real problem.
It does hurt the person or company that loaned the money. I will tell you this from personal experience that years latter it still bothers me that those companies lost the money they lent my business. Its part of the game & they know that there is a good chance that a small business will fail. In fact they know that 75% will fail in the 1st 3 years. This is why when you get a loan or lease or other lines of credit you pay as much as you do.
Some people will say fuck the banks but I don't really feel that way. It bothers me mainly because I failed and I broke my word. I promised I would give them their money back. I really had no choice in the matter. I couldn't keep the doors open and with out being open there was no way to pay it back. Even though I have no legal reason to pay back that money one day when I am in a position to I intend to fully repay every penny I borrowed. Will it happen? I dont know, but I can tell you this years latter that feeling still haunts me.
My advise to anyone that is considering BK, is to make sure you have zero other options. Take it as an opportunity to change your whole life. Promise yourself that you will never put yourself in that same position. Learn from your mistakes. Don't be afraid to take risks just make sure they are calculated and in your favor. Dont be a douche-bag with your money. My bankruptcy was my education. I learned so much about how the world works, and more importantly I learned who I am and became a stronger person because of it.
Some people will say fuck the banks but I don't really feel that way. It bothers me mainly because I failed and I broke my word. I promised I would give them their money back. I really had no choice in the matter. I couldn't keep the doors open and with out being open there was no way to pay it back. Even though I have no legal reason to pay back that money one day when I am in a position to I intend to fully repay every penny I borrowed. Will it happen? I dont know, but I can tell you this years latter that feeling still haunts me.
My advise to anyone that is considering BK, is to make sure you have zero other options. Take it as an opportunity to change your whole life. Promise yourself that you will never put yourself in that same position. Learn from your mistakes. Don't be afraid to take risks just make sure they are calculated and in your favor. Dont be a douche-bag with your money. My bankruptcy was my education. I learned so much about how the world works, and more importantly I learned who I am and became a stronger person because of it.
good for you guys to have such laws.
in some countries whole families commit suicide because of the bank debt (leaving their kids without parents)
in some countries whole families commit suicide because of the bank debt (leaving their kids without parents)
hmmm... Hasbro should do an Addendum to Monopoly... The game dosent end at bankruptcy... it only just begins!
You think Monopoly takes a long time to play now...with bankruptcy allowed I don't think it would ever end!
Possibly - although BR laws benefit several groups of people:
1. Regular people who get into serious debt through illness, redundancy, divorce or genuine poverty. These people often have no recourse other than BR. If BR was taken away, they'd be in debt for ever.
2. Entrepreneurs who take risks that don't come off. Not all risks can be kept within a corporate body. No BR would reduce entrepreneurship considerably, and harm the competitiveness of the economy.
3. People who gamble, or go crazy with credit cards. These people don't deserve the full protection of BR, and under the UK system at least, there are additional sanctions taken against them.
4. Out and out crooks. Again, in the UK these people are often made the subject of large restrictions on their behaviour, for up to 15 years after the original BR.
I think removing BR completely would hugely hurt the economy. It's fine for a mercantilist system like we had in the 17th/18th century, but if you need innovation for economic growth, you need entrepreneurs.
There's a reason why the US (which has fairly loose BR laws) massively outstrips places like Belgium (who have far more onerous laws) when it comes to entrepreneurship.
I agree about the Fiat currency/moral hazard problem. I personally think making banks partnerships instead of corporations again would solve that problem, and make them a lot more careful with lending, but that's another argument
I'm in Canada and filed a consumer proposal, which is a very good alternative to filing for bankruptcy over here. It's basically a settlement/arrangement to pay of the debt at a discount. Granted, your credit will be screwed up until 3 years after you pay it off but it lets you keep way more than a bankruptcy would - and you don't have to check in and give details about half as much shit as you do in a bankruptcy.
I worked bank collections a number of years in Canuckistan. Basic rule: If you can't pay off all your non-mortgage debt within 2 years -credit cards, HELOC, car loans, payroll advance etc, go banko. You'll start getting new credit card offers within a year of your discharge. Forget about proposals etc the banks consider it "just as bad" as a banko filing & you're stuck paying the debt longer.
As for America, I think your new banko laws would make me think long & hard about doing it unless I was really f^vked.
As for America, I think your new banko laws would make me think long & hard about doing it unless I was really f^vked.
I researched it recently when a significant part of my hubby's business failed. It turned out I made (way) too much still to qualify for Chapter 7 since we'd have to file jointly (community property/debt state) and Chapter 13 is a joke. We opted to sell some assets and settle the debt instead. I had new credit card offers in the mail within a month of settling - not that I needed them. He hasn't had any yet, but his stuff was the messiest.
If you can't file 7, there's really no reason to file in my opinion. Why get the courts in your business to garnish paychecks and go over your taxes for the last five years? Find a way to handle it yourself by selling assets and settling or just letting it all roll off over the next few years while fending a few phone calls and letters.
The only thing that caught us by surprise when he let some things default were the phone calls to family members trying to locate us. Be aware that if you leave the banks no way to get a hold of you, they will call anyone they think can confirm your location. They can't disclose the reason for calling, but when your parents get a call from Capital One looking for you, they might raise an eyebrow. We figured that out in time to keep private matters private though and we just spoke to the companies enough to insist on everything in writing.
When my husband declared 7 about a dozen years ago, he had a new car in less than a year, new credit cards in less than a year and his credit was fair to good in about two years. Of course, that was a while ago. If you want to rebuild quickly, don't default on secured loans apparently, or actually you just "reaffirm" them now.
There's some interesting articles and advice here as well. I've found quite a bit of it to be true although I just ignore the ads and email opt-ins: Bankruptcy - Chapter 7 Seven, Chapter 13 Thirteen
If you can't file 7, there's really no reason to file in my opinion. Why get the courts in your business to garnish paychecks and go over your taxes for the last five years? Find a way to handle it yourself by selling assets and settling or just letting it all roll off over the next few years while fending a few phone calls and letters.
The only thing that caught us by surprise when he let some things default were the phone calls to family members trying to locate us. Be aware that if you leave the banks no way to get a hold of you, they will call anyone they think can confirm your location. They can't disclose the reason for calling, but when your parents get a call from Capital One looking for you, they might raise an eyebrow. We figured that out in time to keep private matters private though and we just spoke to the companies enough to insist on everything in writing.
When my husband declared 7 about a dozen years ago, he had a new car in less than a year, new credit cards in less than a year and his credit was fair to good in about two years. Of course, that was a while ago. If you want to rebuild quickly, don't default on secured loans apparently, or actually you just "reaffirm" them now.
There's some interesting articles and advice here as well. I've found quite a bit of it to be true although I just ignore the ads and email opt-ins: Bankruptcy - Chapter 7 Seven, Chapter 13 Thirteen