For all financial history of mankind it has been made up only two ways to work with bankrupts. One – to sell property of the debtor and to divide the gain between the creditors. A rather fast way and reliable, but not the most effective. Another – to try to agree with the debtor and to allow it to delay debt payment.
Bankers and other creditors perceive this procedure unequivocally: that the blessing for the debtor, – is that bad of the creditor. But, if to judge by experience of many western countries, creditors can receive during such “rehabilitation” much more, than on property sale. Though for this purpose it is necessary to trust both to the debtor, and his health, and law-enforcement system which if something happens will interfere and will call the defaulter for responsibility.
Both variants have pluses and minuses, and “preferential” procedure of rehabilitation though it is claimed among debtors, on popularity still is far from the traditional variant.
It is popular – to agree
In Britain the run into debt citizens have some variants to agree with the creditors. The most widespread – is so-called “the individual voluntary agreement” (IVA), or the plan of payment of a debt confirmed by the court. To take advantage of it, the debtor should find the manager (usually the lawyer or the bookkeeper) and to agree about fee with him. The managing director – approximately the same as and at traditional procedure of bankruptcy, – co-ordinates arrangements with creditors and then watches the debt payment. He does not confiscate the property of the debtor, and if sells, only that part about which all participants have agreed.
There are the procedures of the agreement with creditors in many other countries, but British – is hardly probable the most liberal. In States, for example, these rules extend only on debts to 336 000 dollars (to 1 million dollars if it is a question of credits on the security of property), and in Canada where the procedure is called consumer proposal, – to 250 000 dollars.
For British people there are restrictions either in the sum, or in time: in the USA it is necessary to re-structure a debt within 3-5 years, in Germany – within 7 years, and in Britain – as you will agree with creditors.
It is possible even to enter into the agreement in Britain at any moment – both before the recognition of the person as the bankrupt, and after (the truth is that , in the second case there is less than flexibility at definition of payments). The main thing that you did not undergo through this procedure is last year. In Germany, on the contrary, bankruptcy process is considered to be as stage-by-stage activity: in the beginning the debtor should try to agree with creditors extra judicially, then with the help of the court and if it is impossible, then the standard procedure of bankruptcy begins.
Re-structuring procedure imposes certain restrictions. To agree, a certain free income is necessary for the debtor . As a rule, the agreement is counted this way, so that the creditors would receive more than at simple sale of property. The fact of such agreement, as well as the bankruptcy fact, should be reflected in a credit history (in Britain – 6 years, in the USA – 10 years). In Australia a person who has entered into the agreement, gets into to the state database for ever.
There are also certain restrictions on business activity. The American recognized as the bankrupt on this procedure (chapter 13 of the law on bankruptcy), cannot take credits without the court consent.
In Australia without the sanction of the court the debtors are forbidden to supervise the business.
British and here have become first: the debtor can take credits or supervise over the companies (though creditors under the agreement can forbid it).
Re-structuring of debts –is a popular procedure. Over the last ten years in Britain the number of wishing to take advantage of it has grown in 5 times, and about of 40 % of the procedures of an inconsistency are looked under these schemes, and in States – about third.
Practically all of us remember the times when it was possible to buy something even if one hadn’t got enough funds. Credit was a simple way out. It is little wonder that now many of those who applied for a loan, are looking around for how to avoid bankruptcy.
People who happened to get into the condition when their expenses exceed their earnings, definitely should look for ways to avoid bankruptcy.
Being in such condition it is wise to use any means to get over it. Use such wonderful chance as the web technologies. Using them at full capacity will give great results. Working with search engines, forums, social networks,web sites one will find lots of tips to avoid bankruptcy and a great deal of other respective info. Also signing up for RSS on this blog will assist to keep abreast of new publications and tips on the topic.
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