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Trending Issues on Debt & Bankruptcy Around The World
Are you allergic with the words: debt and bankruptcy? Most of us do. Big and small companies around the world often declare the latter when overcome by huge debts.
The first decade of this third millenium saw the inevitable world economic crash, just like the Great Depression in the USA way back the 1920s. Many businessmen declared bankruptcy and those who cannot bear such event committed suicide.
My experience on bankruptcy here in the Philippines
- The year of 1999 was the end of my career on radio broadcasting. This was because of the reason that the owner of the local radio station declared bankruptcy. Repercussions followed, like: unpaid salaries, filing of case at the National Labor Relations Commission (NLRC). I didn't pursued my petition because I was concentrating on my training as seafarer. Some of my colleagues won their petitions prompting the owner to pay for their unpaid wages plus other benefits. I still have the copy of my petition but didn't submit it at the city branch of NLRC. I left to restart my career in another field. Getting out of that bad episode was my way to end my radio career momentarily and focus on something new.
The Real Deal
The grim realities on debt and bankruptcy often affect the whole nation. For example, my country which belongs to the Third World has reached its debt to its trillion level; meaning even those unborn Filipinos have already incurred debts of our parents. That's why the workforce of this nation tends to look for greener pasture abroad to help stabilize the economy.
Trend of bankruptcy in the country
- The bankruptcy of some pre-education plan. Most parents were disgusted upon the announcement of the well-known pre-education plan provider in the country when it declared bankruptcy. Until now, that institution is being bombarded by their clients, claiming back the money they invested in the company for their children's college education.
- The bankruptcy of some rural banks. My former boss suffered a huge setback when his rural bank's depositors have withdrawn their stocks and deposits.
- The near bankruptcy of SSS. The public outrage made some high-ranking officials of the Social Security System (SSS) to resign due to the failure of one big company to return the big chunk of public's contribution that will be used fr calamity loans and the like.
- Closure of some big firms. Some big business companies' failure to comply with taxes and all, made their meltdown as expected.
Only a portion or nothing
When a debtor cannot pay for what he owes, his company should declare bankruptcy or his creditor in order to get a portion of the whole amount. That's why banks and big firms are insured so that their clients can get part and parcel of their deposits.
Depositors often whined when only a portion of their deposited money were given back to them by the bank which is on the verge of bankruptcy.
The declaration of bankruptcy can give both the lenders and creditors, whether individuals or companies, a new lease of life to continue pursuing for financial stability.
The plans under bankruptcy laws in every country will provide a fair procedure in paying back debts gradually and give each other the opportunity to succeed in other business ventures.
Businesses diminish like a natural death but sprang to life again with another vision for progress.
Going back to history:
- There are no provisions of bankruptcy in some cultures. However, all debts are forgotten and slaves are freed among the Jews due to teachings from the Bible (Deuteronomy 15:1-6). The law from the Holy Scriptures requires "One Holy Year" or "Jubilee" that takes place every half of a century to erase all those debts.
- In Europe, paying debts in ancient times often required hard labor among immediate family members. It will take years to toil such hardships. In Greece, five years was the maximum period to pay off debts.
- In Asia, when a businessman incurred bankruptcy three times, there was a provision in Genhis Khan's time that a death penalty should be served to the offender.
- The Anglo-American bankruptcy law is under the Statute of 4 Anne ch. 17. year 1705 with its characteristic discharge of debts.
Bankruptcy is legal in order for the debtor to declare his inability to repay debts, whether an individual or business company.
The main purpose of declaring bankruptcy is to:
- relieve the debtor most of his debts and allow him to start a new life
- to repay the creditors in an orderly manner once he got the means or new job.
Bankruptcy is also the result of overspending among individuals or big companies. Anomalies often plague such businesses that only some individuals benefited from it.
Rebuilding finances will be hard to accomplish, unless, a sound negotiation will be conducted between the debtors and creditors in order to impose Plan B or another solution.
Acquisition of properties, like house and lot embargo, can result after a judgment has been declared by the court.
A debtor with no assets or income will not be pursued by the creditor and the best option is the "Take No Action".
Outlook of Bankruptcy around the World
Terminologies and the proper ways to combat or eradicate bankruptcy are organized in every country, especially on developed nations, like Canada, UK & USA. Their methods serve as trend setters around the world in order to solve prevailing problems regarding debts.
Let's take a closer look:
- In Canada, a consumer proposal is the best alternative to filing bankruptcy. This applies to individuals who are promising to pay their creditors for a maximum of five years, even though the whole amount of debt is not paid in full. Creditors are also involved in meetings to clear out disputes among the trustees of estate which is on the brink of bankruptcy. Bankruptcy and Insolvency Act is applicable to both individuals and businesses in the country.
- In the UK, bankruptcy pertains only to individuals and partnerships. Legal insolvency procedures or liquidation or administration is most appropriate to talk about companies and corporations being investigated. Bankruptcy in Scotland means sequestration of properties and land titles. The Enterprise Act of 2002 allows the bankruptcy to last no longer than a year or less.
- In the USA, bankruptcy is placed under the federal jurisdiction by the US Constitution (Article 1, Section 8), allowing the Congress to enact unform laws regarding the matter. The implementation is incorporated under the Bankruptcy Code, Title 11 of the United States Code. Cases such as these are dependent under the State law. There are six types of bankruptcy under the Bankruptcy Code in the US, namely: 1) basic liquidation of individuals and businesses; 2) municipal bankruptcy; 3) rehabilitation or reorganization of business sectors; 4) rehabilitation for farmers & fishermen; 5) rehabilitation with a payment plan for individuals with source of income and 6) international cases.
After declaring bankruptcy, individuals or businessmen suffer from low credit scores or obtaining loans are extremely difficult. However, the declaration of bankruptcy will help them regain control on their lives and start to have financial stability.
Debt and Bankruptcy on HubPages
- Debt and Bankruptcy - Personal Finance - HubPages.com
Excess debt and the inability to repay creditors can lead to bankruptcy and insolvency at the personal, business and national levels. The financial crisis has brought record numbers of individuals, companies and countries to the brink of bankruptcy.