Bankruptcy

since student grants were abolished, 6000 students in scotland alone have gone down this route also.

If you are made bankrupt or declare yourself bankrupt any assets you have can be sold by the trustee in bankruptcy to deal with debts. No assets no debt repayment so it is not a case of more time it is very often a complete clean slate.
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Lee Schwartz Lime One Ltd www.limeone.com 01244 852550

Yes and thus by overspending on credit cards you 'gain' especially if you have bought services. You gain from the NT code and the removal of debts - what an encouragement! In this particular person's case she was never going to buy a house anyway (she'll inherit).
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chris
www.oxford-conferences.com

It's not that easy, or so I'm told. You're still liable for the debt for (currently) 2 years, and there is talk they will be pushing it back to 7. It also means you are black-listed for future credit agreements, from loans to mortgages. As I understand it. www.viewfinderdesign.co.uk - Affordable Web Design www.88template.co.uk - the best way to get a professional web site, cheap
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Yes but she won't pay off the £12,000 or so in the two years and then the slate's wiped completely clean. provided she doesn't want a mortgage before 2006 she'll have done OK - especially as she's not paying tax now as if bankrupt you get a NT code. http://www.inlandrevenue.gov.uk/manuals/samanual/samrec/samrec06113.htm
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chris
www.oxford-conferences.com

Yes Chris you are right and these days with a higher interest rate there are lots of companies willing to deal with loans to high risk clients. The law is there to facilitate the many who stray into debt unwillingly and unwittingly not those who want to exploit the system. If someone has deliberately lied on the credit applications to get access to credit and then spend in the knowledge they can never pay it back there are also criminal charges to consider IF the credit companies want to complain.
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Lee Schwartz Lime One Ltd www.limeone.com 01244 852550

But even without lying she may well be able to get a credit card. Even if not 2 years isn't that long a time. My surprise is over the NT code as this is giving her a definite advantage over those of us who make sure we only borrow what we can repay....equally bankruptcy as a whole seems to give borrowers a boost....
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chris
www.oxford-conferences.com

Anyone is prevented from getting credit over £200 whilst they remain undischarged as a bankrupt. It is really more to do with responsible lending.
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Lee Schwartz Lime One Ltd www.limeone.com 01244 852550

Dear Chris I am afraid that there are too many misconceptions, oversimplifications and basic prejudices expressed here. I for one am not happy to judge a woman on the reason why she became indebted to a position where she felt she could no longer manage. We do not know the full situation or background. This is the kind of one-dimensional, judgemental and simplistic thinking that got Hitler voted into power in the 1930’s! Is it the fault of every orphan that they don’t have parents, is the illness of every sick person their own fault, the circumstance of every lone parent the same, is it the fault of a starving child that they have no food, and indeed even if people have made genuine but non-malicious mistakes should they be dammed forever just like those deliberately committing criminal actions? It is up to a judge (for as I understand it a petition is given to a judge and the judge hears the reasons why they have ended up in this situation and checks they have considered other options). It is then further up to the official receiver to investigate the reasons why a bankrupt has arrived at the position and to check they have not been deliberately reckless or worse – otherwise more charges and restrictions on I believe up to 15 years can be imposed. Also, the control of assets can be extended from two years to any such period defined. The process and restrictions have far more implications than those listed here and I am reliably informed by some who work as official receivers that they are no walk in the park. Bankruptcy is not an easy option and certainly only one that should be considered in extreme circumstances. There are many other cheaper and less restrictive options that can be considered such as making an arrangement direct with creditors, or using a more formal arrangement supervised by a court. I would be very surprised to hear anyone being advised to file for bankruptcy with debts of 12,000 – the situation must have been exceptional. Regarding NT Tax Codes. These generally do not exempt people from being charged tax! These codes are NOT routinely given to bankrupts. They refer to the way tax is collected (i.e. the employer should not deduct the tax on behalf or the Inland Revenue) and are usually used when the tax is applied elsewhere. Furthermore student debt is NOT cancelled under bankruptcy. It remains in perpetuity until repaid and is not covered under bankruptcy agreements – so this myth about students getting out of debt granted to them under official student loans is also a fallacy! There will always be some who abuse any system, but that applies to tax, the law, etc., but I believe we should not start from a presumption that everyone is guilty and then further generalise processes and apply apply them to all. A modern bankruptcy system is essential to the functioning of any advanced society and the stimulation of enterprise. The government is actually modernising the laws on bankruptcy because they have recognised this. How would you feel as a self-employed small business owner if your two main customers suddenly went bust owing you money that should in large part pay your creditors? You may need to resort to the insolvency service to help you organise and manage your situation for the maximum possible benefit of all concerned. Rant over. :: Innovateur :: http://www.innovateurs.com The Support Network for Emerging High-Growth Ventures
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"Furthermore student debt is NOT cancelled under bankruptcy. It remains in perpetuity until repaid and is not covered under bankruptcy agreements – so this myth about students getting out of debt granted to them under official student loans is also a fallacy!" Does this apply to Scotland also?

Dear Colin, I for one don't have the foggiest about Scotland! - and you are quite right to imply that the rules there may be different as the Insolvency services for both Scotland and Northern Ireland operate seperately from the insolvency service for England and Wales. Anyone with specific concenrs should contact the insolvency service for their region or the official student loans authority that covers them.
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Innovateur
Venture Resources for High Growth Potential Projects
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Was just wondering, im in scotland, thats why i asked

"Regarding NT Tax Codes. These generally do not exempt people from being charged tax! These codes are NOT routinely given to bankrupts. They refer to the way tax is collected (i.e. the employer should not deduct the tax on behalf or the Inland Revenue) and are usually used when the tax is applied elsewhere" Yes to reduce the bankruptcy!
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chris
www.oxford-conferences.com

I write financial content for a finance portal, and these two pieces may interest you all. Bankrupcy News: "Bankruptcy is becoming an increasingly popular option among students; the average student leaves university with debts in excess of £10,000 and this year three times as many students than in 2002 wrote of their debts by declaring themselves bankrupt. Last year 899 students filed for bankruptcy, compared to 276 in 2002; 11 years ago only 8 students filed for bankruptcy. Government legislation allows student loan debts to be cancelled out by bankruptcy, and new rules in April this year, as part of the Enterprise Act, plan to allow bankrupts to become discharged from their bankruptcy after one year or less – currently the law only allows bankrupts to become discharged after waiting three years. However the government plans to close this loophole for students as part of the Higher Education bill; the bill has strong opposition from Labour MPs, however if it becomes law, as is expected by the end of July, student loans will not longer be on the list of debts that can be cancelled out by bankruptcy. " So - according to my research student loans can indeed be cancelled out by bankruptcy, although this may be due to change. "Currently individuals declaring themselves bankrupt have to wait three years before their bankruptcy is discharged, however The Enterprise Act 2003 will allow people to be discharged in as little as one year, or less. Trustees will be limited to three years from the date of the bankruptcy to stake a claim on any remaining assets, including their home. Presently there are no limits, and the new regulations will give people added protection over their assets. Malcolm Shierson of Grant Thornton explains his concerns about the new rules giving the ‘wrong message’ about debt; “The message here seems to be that declaring bankruptcy is increasingly simple and painless, which is not the case. There is a danger the laws will encourage people to overspend, knowing there is an easy exit for them in due course.” “We already have record levels of debt in this country, with around 75 people going bankrupt every day. It is only going to get worse if people believe it is easy to wipe the slate clean after the event.” Mr Shierson warns there are many drawbacks to declaring bankruptcy, which can reach far beyond the discharged period; aside from the stigma, following the bankruptcy you may find your credit rating is negatively affected for five or six years, resulting in being declined for mortgages, loans, credit cards, or even saving accounts. There are alternatives to bankruptcy, such as the IVA (Individual Voluntary Arrangement), where the debtor and the creditor agree on a payment plan; often this is a better option if you can meet your payments." -Contrary to popular belief, you can pay off a bad debt, but it will still show up on your credit history for 6 years - alerting potential