I have been reading comments in the media recently from people who have differing views on bankruptcy and debt agreements, the pros and the cons. Some of the comments are a bit out of focus.
Bankruptcy, whilst a safety net for those in desperate circumstances, is a desperate act. Filing a debtor's petition appears to be accepted lately as the best means to evade paying those from whom money has been borrowed.
Comments such as "I have no assets, so I have nothing to lose" and "why should I pay back my debts - bankruptcy seems easier". What ever happened to Good Faith, Integrity, Honesty and Honour? How would these individuals consider someone to whom they lent money who decided it was "easier" to file bankruptcy than pay back what was borrowed - what effect would that have on their own personal finances?
Creditors cannot always be categorized as being financial institutions, often they are friends and family, small businesses and employers that believed they could rely on receiving payment when the money was lent.
Someone in difficult financial circumstances always has options and those options should be thoroughly investigated before bankruptcy is even considered. A second job, a lesser life-style, a reduction in spending on unnecessary goods and services - counselling from a personal insolvency professional who should offer immediate free advice, explain all the options and give guidance.
Every bankruptcy in this country is a cause for concern. It's not only the bankrupt who suffers social degradation, it affects family, friends, local shops and trades, employees if there are any and social services.
A debt agreement serves the purpose of meeting indebtedness to some extent being based on the principal of capacity to pay, freezes all collection and court actions and also ongoing interest charges. It indicates the worthiness of the individual, tends to teach financial basics and household budgeting. Importantly, it is the only insolvency mechanism that protects the assets of those who have them.
I am not sure I can judge another until I have walked a path similar to them. There can be many external factors that will push a person to take extreme measures. For some it can be either a choice of bankruptcy or suicide. For others, it is far easier to sit in judgement and throw comments. The media will only report what they want. Why let the facts or truth get in the way of a good story? Why even bother about learning what circumstances got the person to that point?
I'm not attacking people who, by circumstance, have no other choice but to go bankrupt. I'm attacking those individuals who use the legislation to evade paying, when they have the ability to pay 'something' back. I agree on your comments about the media - difficulty is most people believe what they read.
I agree with the setiment however in reality there's nothing to encourage an individual to make a payment with a Debt Agreement! While technically it's different most financial companies regard it as the same as bankruptcy.
Ben, let's not lose the loop. How financiers view bankruptcy is not relevant to the discussion of an individual's capacity to pay something. Bankruptcy is being utilised as a means of evading debt obligations.